Corporate tax, reduced VAT rates and the fight against tax fraud… The French EU Presidency will be striving to conclude several sensitive taxation debates by the end of the year.

CORPORATE TAX: UNCERTAINTY

Paris has already announced its intentions: its objective is to attain conclusions in the Council (on 2 December, according to Ecofin’s provisional agenda) concerning the creation of a Common Consolidated Corporate Tax Base (CCCTB). Everything will depend on the results of the final impact study (whose conclusions are not expected before late June or early July). In a best-case scenario, the European Commission could adopt a proposal for a directive (in September) which will then have to be discussed within the ad hoc taxation groups before going back to the Council. The European Parliament’s opinion is also expected before the end of the year (Berès report). Paris is convinced that no unanimous agreement is possible. For all that, France does not want to anticipate the debate regarding a formal request for enhanced cooperation which would necessitate another formal legislative proposal from the Commission. Given the EU’s political agenda in 2009 (the presumed hostility of the future Czech EU Presidency, new Commission, European elections), this subject risks being postponed to 2010. Regarding fiscal coordination, the French Presidency is banking on the adoption of ‘useful’ conclusions for the continuation of work (on 4 November) following the Commission’s communication on this matter in December 2006 (see Europolitics3207 and 3208). This dossier is arduously moving forward.

At this stage, the French Presidency does not plan decisive conclusions on the revision of the Directive on the taxation of savings (a proposal is expected in October at best – 3530) even if Paris intends to stimulate discussions.

The Commission intends to present, by the end of the year, a legislative proposal aiming to reinforce Directive 77/779 regarding mutual assistance (direct taxation).

Following the Ecofin Council of 3 June, it will fall on the French EU Presidency to reach an agreement on adopting the work programme of the Primarolo group (on unfair tax practices), currently deadlocked.

CONCLUSIONS IN NOVEMBER

The French Presidency hopes, on the other hand, to reach more evidential results on indirect taxation. Ecofin’s provisional agenda is counting on conclusions (on 4 November) concerning the introduction of a revised scheme for reduced VAT rates (the Commission’s legislative proposal is expected on 16 July – 3530).

During the Ecofin Council, on 7 October, the French Presidency hopes for the adoption of the VAT package presented in November 2007 concerning the revision of the VAT exonerations regime granted to financial services and insurance (3421). The Parliament’s opinion is expected this summer.

Regarding the fight against VAT fraud, Paris wants a political agreement or a formal adoption (on 7 October) of the Commission’s first legislative proposals presented in March 2008 (the so-called ‘conventional’ measures – 3471). Parliament’s opinion is planned for the autumn.

In November, the Commission will formally open a new debate: in response to France’s suggestion aiming to create a ‘Eurofisc’ destined to reinforce fiscal cooperation and the exchange of information, the Commission could present a legislative proposal on the matter (3506 and 3526).

The Presidency will also have to manage two other taxation dossiers: Paris is counting on the adoption of a political agreement (this autumn) on the recasting of the horizontal Directive on products subject to excise duty (92/12/EEC), for which the European Commission presented a proposed modification, on 14 February this year. Work must conclude by April 2009, in compliance with Decision 1152/2003/EC on computerising the movement and surveillance of excisable products.

Finally, the French Presidency foresees the adoption of the new tax scheme (increase in duty) applicable to diesel oil for professional use following the Commission’s proposal of March 2007 (3267).