Europe widening and tax competition

Résumé du document

Taxation is by definition a regulation defining the taxes of a local community, a country or an international organization. It gathers three types of obligatory deductions in advance: direct taxes, indirect taxes and social security contributions. The distribution of these three types of deductions in advance varies according to Member States, like the obligatory rate of deduction in advance in the produced richness. Taxation, of which one of the finalities is to feed the budget of the State, concerns by definition the Member States, and the rules concerning this field are in the jurisdiction of the law. Thus, in European countries, the determination of the rate and the tax base is the subject of the vote of the national Parliaments. However, the creation of a domestic market in Europe changed the tax structure. The goal formulated in the article 3 of the EC treaty that aimed at eliminating "duty between the Member States, like all other measurements which could have the same effect" and to ensure that "competition is not distorted in the domestic market". This involves an action of the Community regarding taxation. How may this intervention of the community in a field which essentially concerns the States be justified? Which are the admissible arguments of a Community intervention regarding tax? What are the limits of this Community action?

Extraits

[...] Which are the limits of this Community action? The intervention of the community regarding taxation is justified by its willpower to ensure the correct domestic market functioning The taxation is a field of action of the community because this lever allows: - To ensure movement freedom of people, goods and services and also capital within the domestic market. - To avoid a too strong tax competition between the Member States which would be prejudicial with the Union on the whole? [...]

[...] Measures ensuring an effective minimum level of imposition about saving incomes are taken. Then in 2003, the Council adopted a directive aiming to ensure an effective imposition minimum of the saving incomes in all the Community. Under the terms of this directive, all the Member States will have, in the long term, carried out an automatic exchange of information regarding payment of interests to non-residents. It was applied since January But, because of the rule of the unanimity, the harmonization regarding direct taxation remains limited. [...]

[...] The principle selected is taxation in the country of consumption. The introduction of minimum rates for alcohol and drinks, cigarettes and tobacco was carried out in 1992. It is expected that every two years, the Council examines the minimum rates, including the correct functioning of the domestic market and the actual value of these rates. Direct taxation requires a harmonization when it affects the four freedoms and about the establishment right of people and companies On direct taxation (saving and company), we realized in particular since the completion of the domestic market and the birth of the economic and monetary Union, that this type of taxation could affect "four freedoms" (freedom of movement of people, goods, capital and services) and on the establishment right of people and companies. [...]

[...] Following the ECOFIN council of Verona in 1996, Ministers for Finance adopted unanimously, December a "tax package" of measures dedicated to fight against the detrimental tax competition which includes in particular ethics in the taxation field of the companies. The ambition of the tax package is to tackle detrimental tax competition and to eliminate a certain number of distortions affecting the single market. The imposition of the saving is one of the urgent files of the Commission The taxation of the saving is one of the other urgent files approached in the tax package. [...]

[...] - At the international level, the taxation can represent a competitive advantage. The States belonging to the zone need to keep an operating margin on the taxation since they lost their policy of exchange and their monetary policy. The taxation is indissociable with social models of the States Moreover, structure of the tax systems strongly diverges between the member states because of the differences in economic and social structures and also the divergent concepts on the tax role. The total imposition and the contributions of social security vary, expressed as a GDP percentage, between 34% for Greece and nearly 55% for Sweden (the average of the Union is 42,6%). [...]