EATLP – Manfred Mössner Lecture
The crisis, a window of necessity for
EU taxation
Frans Vanistendael
Academic Chairman IBFD
Director European Tax College
Leuven, 29.05.2010
WWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise
© 2007 IBFD
Where is Europe I ?
WWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise
© 2007 IBFD
Where is Europe II ?
WWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise
© 2007 IBFD
Major Questions
•
•
•
•
•
•
Decisive reasons in favour of the EURO?
Minimal institutional requirements for
common fiscal and budgetary policy
Consequences for national tax systems
Organisation of political accountability for
common fiscal and budgetary policy
How to implement reforms within framework
of EU treaties?
Tax reforms necessary for the internal
market, without EURO
WWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise
© 2007 IBFD
Do we need the EURO?
•
British Euroscepticism vindicated?
•
Non-decisive advantages of the EURO
•
Need for mobilising motive for transfer of
national sovereignty
•
Defending the European way of life in a
globalised world as the decisive argument
WWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise
© 2007 IBFD
Which institutions are necessary ?
•
Traditional recipe: the federal state
•
What Euroland is willing to accept: EUMF
and coordination of economic policies
•
What Euroland needs to accept: temporary
federalism in times of crisis
•
Which institutions? A new institution in the
EURO-group
WWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise
© 2007 IBFD
Impact on national tax systems
•
Full federalism is no option
•
Little impact on substance of tax rules,
because tax policy is how to use tax rules,
much less how to change tax rules, except
for tax privileges
WWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise
© 2007 IBFD
Political accountability
•
One iron constitutional rule: « No taxation
without representation »
•
Which body exemplifies best « No taxation
without representation » at Euroland level?
•
•
•
•
•
Not national parliaments
Not European Central Bank
Not the EU Commission
Not the EU Council of Ministers
That leaves the European Parliament
WWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise
© 2007 IBFD
How to implement reforms in EU treaties?
•
Is reform of EU treaties inevitable to
accomodate common fiscal and budgetary
policy for Euroland?
•
Which reforms are needed?
•
Transfer of taxing and spending decisions in
times of crisis to Euroland institution
Define powers and determine operating
rules of Euroland institution
Reorganisation of European Parliament
•
•
WWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise
© 2007 IBFD
How to implement reforms in EU treaties?
•
•
•
New arrangements in additional commitment
outside existing EU treaties for (1) transfer of
taxing and spending powers, (2) clear
definition of operational conditions for Euroland institutions
New arrangement in form of « Enhanced
Cooperation »
Reorganisation of EU parliaments makes
amendments in treaties almost inevitable:
enhanced cooperation or new treaty for new
parliament: EUROPE A DEUX VITESSES
WWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise
© 2007 IBFD
Tax Reform: Internal Market without
EURO
•
Clear difference between transfer of
sovereignty and tax adaptations for the
internal market
•
Limits of ECJ: (1) double taxation resulting
from parallel non-discriminatory rules, (2)
freedom to allocate taxing power between
MS, (3) more narrow view of comparability,
(4) no protection for taxpayer moving out of
his own state, if there is no disadvantage.
WWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise
© 2007 IBFD
The Missing Links (1)
•
•
•
•
•
•
Over-all limit to tax rate competition in
coroporate income tax (50% average rate)
CCCTB
Symmetric tax consequences for moving in
and out of Member States
New rules on sharing capital gains between
source and residence state
New rules on recapture of tax benefits
between source and residence state
No tax on transfer of economic functions
without corresponding assets
WWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise
© 2007 IBFD
Missing Links (2)
•
•
•
•
•
Elimination of double economic taxation by
way of exemption
Elimination of double juridical taxation by
elimination of source tax, or tax credit
Rule of no double non-taxation in EU
New rules for multistate employment and
services income (fractional taxation?)
Effective VAT on intracommunity supplies in
country of origin and transfer of revenue to
country of destination
WWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise
© 2007 IBFD
Alternative procedures for tax reform
•
No change in the rule of unanimous voting
•
Wide debate on proposals for missing links
•
Debate on fundamental principles should
be in European parliament, with
recommendations and resolutions
•
Enhanced cooperation
WWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise
© 2007 IBFD
Final Conclusion: Sweat and Tears
•
•
•
•
•
In times of crisis academics should come
out of their ivory towers to connect with
reality
In the real world Euro-land needs quick and
important decisions on taxing and spending
Such decisions need a galvanising and
mobilising force, like “no more war” 60 years
ago
The theme now is “Economic war” and the
“Defence of the European way of life”
It is our duty to mobilise our fellow citizens
WWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise
© 2007 IBFD