The EU Faces Its Make-or-Break Moment on Taxes
The bloc will decide whether to limit the smaller member states’ ability to set their own levies to attract companies.
In 2016, the European Commission ruled that Apple should pay back taxes to Ireland.
Photographer: Steve Dawson/Bloomberg
The current European Commission could go out with a bang if it moves ahead with a plan to grab more tax-setting authority from EU member states. We could find out next week whether multinational companies using various tax-avoidance strategies in Europe will have more to fear than they do with the current periodic harassment disguised as enforcement of the EU’s state-aid rules.
On Jan. 15, Commissioner Pierre Moscovici, responsible for taxation issues, is expected to make public a proposal requiring that certain tax decisions — for example, on digital levies, sales taxes and tax-base harmonization between countries — be made by a qualified majority of national leaders in the European Council. The current requirement of unanimity is a major obstacle to tax harmonization in the EU and to any moves against tax avoidance, as some of the bloc’s smaller members, such as the Netherlands, Ireland, Malta, Cyprus and Luxembourg have always objected to bigger states’ attempts to limit their tax competitiveness. These countries specialize in allowing multinationals’ tax-avoidance tactics, which often involve large royalty payments for the use of intellectual property held by offshore entities.