European Council Conclusions Expected to Dilute Tax Convergence

A draft EU leaders’ statement that refers to the need for more convergence on tax matters in the EU single market has unsurprisingly drawn criticism from member states.

EU heads of state and government will gather for an informal meeting in Budapest November 8. A draft joint statement proposed to EU ambassadors October 25 and leaked to media outlet Agence Europe says “more convergence in the Single Market on tax matters would increase productivity and growth.”

In the draft, leaders invite the EU Council to proceed with work “on fostering tax convergence to promote cross-border savings and investment in the Union, particularly by building on existing instruments.”

EU ambassadors mounted a barrage of objections against that overture when they met October 25, repeating a similar episode in April. A draft statement for the April 17-18 EU leaders’ meeting called for the harmonization of corporate tax law to advance the Capital Markets Union project, but the idea was diluted after strong opposition from ambassadors from Ireland, Luxembourg, Malta, Sweden, and in particular, Poland.

The final April EU leaders’ statement urged member states to work on “harmonizing relevant aspects of national corporate insolvency frameworks,” omitting the reference to harmonizing corporate tax law in the same sentence.

The November 8 draft joint statement says EU countries will work to introduce new own resources (levies) to finance the EU budget. While some EU ambassadors reportedly welcomed that plan, others said it comes too early and that member states should wait for the new European Commission to come up with proposals.

In his answers to the European Parliament’s written questions, Piotr Serafin, commissionerdesignate for budget, anti-fraud, and public administration, told the EP that the EU “will be faced with clear choices” for the multiannual financial framework. He said it is not feasible to simultaneously reimburse the €800 billion joint