SME Chamber

Vince Farrugia on double-taxation in the EU

 The European Economic and Social Committee study group on the EU Communication on Double Taxation in the Single Market approved the report submitted by Vince Farrugia, Maltese enterprise owners representative at the EESC, as Rapporteur responsible for the EESC Opinion on double taxation.


In the Opinion Mr Farrugia presented he argued that double taxation is a serious obstacle to cross-border activity impeding the effective functioning of the Single Market with negative economic implications on investment and employment. Double taxation discourages investment and jeopardises competitiveness thus impinging negatively on economic growth and the attainment of the EU2020 targets. The EESC is therefore in favour of initiatives towards the removal of double taxation as outlined in the communication by the Commission by promoting the efficient interfacing of different tax regimes.

Vince Farrugia also made the following recommendations:

· The removal of double taxation should be undertaken in a manner which is proportional to the objectives being sought and respects the fiscal sovereignty of individual Member States.

· Issues which arise from double taxation have a disproportionately higher impact on individuals and small and medium sized firms which typically do not have the resources to deal with such problems. As a result proposals aimed at dealing with double taxation need to be coherent with measures which deal with double taxation for citizens and encompass solutions for individuals and SMEs.

· The EU Forum on Double Taxation forum is considered as a first step towards the establishment of an EU Commission observatory. The Forum would also include representation from social and organised civil society.

· The establishment of a code of conduct which would allow for a common understanding and application of tax concepts between different Member States, so as to avoid situations of double taxation and reduce instances where Double Tax Conventions (DTC) are not effective.

· Efforts should be aimed at ensuring limited need for arbitration.

· Studying the full scale of the double non-taxation phenomenon and its economic and social implications, as well as those that would potentially occur through measures aiming at its removal.

· All proposals should be assessed by means of thorough social and economic assessments and that such assessments should present impacts on each Member State.

This is the second report submitted by Vince Farrugia on issues related to tax burdens affecting EU citizens and EU businesses. The first Farrugia report endorsed by the EESC Plenary session as an EESC Opinion dealt with the EU Communication on Removing Cross Border tax obstacles for EU citizens (COM (2010) 769), the third report on taxation related issues which will be presented shortly to the EESC, for which Mr Farrugia is Rapporteur, is on two Commission documents, the Commission Communication on Tackling cross-border inheritance tax obstacles within the EU and the Commission Recommendation on is on the relief for double taxation of inheritances.

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