France and Germany plan to spell out, at the Ecofin Council on 21 February, the work they have already carried out to strengthen their bilateral cooperation on corporate taxation. Their goal is not to short-circuit the EU’s debate on introducing a common consolidated corporate tax base (CCCTB), but on the contrary to help take it forward by presenting certain technical solutions to the problems involved.

The French and German Finance Ministers, François Baroin and Wolfgang Schäuble, will present their ‘Green paper on Franco-German cooperation: Areas of convergence on corporate taxation’. Their document was approved, on 6 February, by both Nicolas Sarkozy and Angela Merkel. The paper outlines possible areas of convergence on national and local corporate taxes in France and Germany, related to both the tax base and rates. It is currently being put through a public consultation. Paris would like to be able to propose implementation of certain measures in 2013.

At the Ecofin Council, France and Germany will pursue two aims, according to a diplomatic source. First, they hope to trigger a “process” at EU level and in so doing help advance the debate on the CCCTB. They also intend to suggest certain “technical solutions” to problems that have been raised during discussions by member states.

France attaches special importance to enhancing tax coordination in the EU.

Its determination will be mirrored in the conclusions that the 23 EU states of the ‘euro plus pact’ (the 27, less the United Kingdom, Sweden, the Czech Republic and Hungary) will adopt, on 21 February, on the progress of their work. This text, to be submitted to the European Council of 1-2 March, reads as follows: “ In addition, work on the structured discussions on the coordination of tax policy issues under the ‘euro plus pact’ will be further pursued focusing on areas where more ambitious activities can be envisaged. Particular attention should be paid to how tax policy can support economic policy coordination and contribute to fiscal consolidation and growth”. The finance ministers and the Commission will report on progress in June 2012.

SAVINGS TAXATION

Meanwhile, the Danish EU Council Presidency still hopes to work out a solution on another taxation issue, discussion of which was nevertheless taken off the 21 February Council agenda, namely revision of EU rules on savings taxation. It will be put back on the table “as soon as possible” provided there is a “realistic” hope of making progress, Copenhagen announced.

A diplomatic source notes that Luxembourg and Austria are not yet ready to waive their veto on opening new discussions with Switzerland on enlarging the scope of this country’s 2004 agreement with the EU. Luxembourg and Vienna first seek assurances that they will be placed on the same footing as the Swiss Confederation and that they will therefore not be forced to abolish banking secrecy if Berne does not have to do the same. Switzerland, however, rules out that possibility.

There is also another legal and philosophical issue, raised indirectly by Switzerland with signature of its Rubik agreements with the United Kingdom and Germany. Can member states conclude bilateral agreements in policy areas where the EU has inherited certain competences (taxation of interest income on savings, in this case) and under what conditions?

“In theory, they are free to go further” – which is the case with the Rubik agreements, since these also concern dividends and capital gains. “But in practice, this is very complex.” The Commission’s legal service has put out a very critical opinion on the Rubik agreements. In short, “this is a huge subject that will have to studied carefully”.