-The European Commission has a comprehensive strategy for the EU's future taxation policy. Tax policy is intended to support broader EU policy objectives such as the goal set by the Lisbon European Council of making the EU the most competitive economy in the world by 2010. But while the Commission believes that a large measure of harmonisation is necessary in indirect taxation, in other tax fields tax co-ordination does not imply harmonisation of tax rates.
A key tax policy initiative is the Monti tax package, which aims to ensure a minimum effective level of savings taxation within the EU and to address concerns about forms of tax competition between member countries which the EU Commission regards as unfair. The commission's plan for integrating financial services markets by 2005 are proceeding more or less according to the timetable set out in 1999.
Incompatibilities in tax regimes of the member countries will become increasingly visible obstacles to cross-border provision of financial services. For example, there has been progress in agreeing an approach on the draft Pensions Directive, but national taxation rules remain a key obstacle to building an integrated single market for pensions. The commission has stated that certain national tax rules on pensions may contravene rights of free movement of labour and capital as guaranteed under the EC Treaty, and that it may ensure effective compliance through the European court of Justice.
Similar concerns about tax obstacles exist in other areas, such as the Collective Investment Undertakings (UCITS) industry, where promoters of these funds are discouraged by national tax rules from selling UCITS in particular EU countries. Preferential tax incentives forms of long-term savings may also be acting as a barrier to a single market. Such tax obstacles may stand in the way of a fully functioning single Market for financial services.
Briefing paper
© EPFSF - European Parliamentary Financial Services Forum
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