Taxation

Double taxation hampers the single European market

An excessive tax burden due to ongoing double taxation for companies and citizens engaging in cross-border activities constitutes a serious obstacle for the internal European market. The EU Commission wants to eliminate this obstacle in order to further ease investments and business activity in the EU. In this regard Algirdas Šemeta, EU Commissioner for Taxation and Customs Union, stated: "We have to send a signal to all citizens, companies and trade partners: there is no double taxation in the EU."

As long as double taxation is not discriminatory, current EU law does not obligate any member state to prevent it. Bilateral and multilateral double taxation conventions do exist, but these are insufficient according to the EU Commission in its statement dated 11 November 2011. The lack of a uniform legal framework is said to make cross-border business activities more complicated and expensive in addition to slowing them down.

With the elimination of double taxation in the EU, the EU Commission also wants to eliminate its counterpart of double tax exemption. Loopholes between the national tax systems should therefore be closed.

In the current year, the EU Commission has already submitted a proposal to the EU committees in order to reduce double taxation through the so-called Common Consolidated Corporate Tax Base (CCCTB). The new proposals of the EU Commission relate to the taxation of interest and licensing fees. Proposed regulations on cross-border inheritance tax and dividend payments are being developed.

According to the EU Commission, every fifth case of the double taxation of companies involves more than EUR 1 million. In at least one third of the cases, the sum for private individuals exceeds EUR 100,000.

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