The Nordic countries need to block EU assault on tax veto

NEWS Published

TAX For countries with a common currency and a limited common budget, it is particularly important to be able to pursue an active national fiscal policy when an external shock is encountered, writes Claes Hammarstedt.

Claes Hammarstedt

Claes Hammarstedt

Foto: Ernst Henry Photography AB

The EU-Commission has presented a Communication introducing a roadmap to move from unanimity to qualified majority voting (QMV) in tax decisions. This would effectively put an end to smaller countries possibilities to block unwanted tax proposals made by big countries. The proposal for a digital service tax (DST) is the most recent example. The DST constitutes a fundamental change to the international tax system and would shift taxation rights to larger economies with potentially severe tax revenue loss for smaller economies. Thanks to the tax veto, the Nordics and a few other small countries managed to block this populistic proposal at the ECOFIN meeting in December.

Tax sovereignty is essential for countries to implement their national financial and social economic policy. For countries with a common currency and a limited common budget, it is particularly important to be able to pursue an active national fiscal policy when an external shock is encountered. Otherwise, social and business objectives may not be attainable. Introducing QMV in tax policy could infringe on the possibility of countries to react in a suitable way. Furthermore, to retain the policy options may be even more important for smaller Member States since they would be the ones most affected by QMV.

The rules on non-discrimination, the four freedoms and state aid under the Treaty safeguard the fulfilment of the Single Market. The developments in recent years regarding new EU tax rules, state aid and infringement cases have shown that the EU already has the necessary means to secure and strengthen the Single Market. Already under the current rules for the adoption of EU regulation, the reality is that countries are cautious to veto a proposal unless very strong national interests are at stake. The recent Anti-Tax Avoidance directives are examples that illustrate the EU countries’ pragmatism.

It is of utmost importance that tax regulation within the EU strikes a balance between different interests of countries, be it the different size, geographical location or business structure. Introducing QMV would enable larger countries to push for tax initiatives such as the DST at the expense of smaller countries. The risk of abstracting from relevant concerns expressed by a small country if QMV is introduced must be carefully considered. Any EU tax initiative must be based on the principle that it shall result in a fair and equitable economic outcome for all countries in the EU.

How EU decisions impact international cooperation should also be taken into consideration. The need to take decisions in line with major trading partners so that international double taxation is avoided is another concern which may be aggravated if only larger country concerns are taken into account.

Needless to say, we strongly oppose a policy change to remove the unanimity decision in the field of taxation. Our business community is in favour of competition, including fair competition in the field of income and profit taxation because it will lead to an optimization of the allocation of capital and labour. It has and will not lead to a race to the bottom. On the contrary, tax competition makes more investments economically viable thus increasing tax revenues.

Ironically, the Commission needs a unanimous decision by Member States in order to fulfill its plan to change the voting procedure. It is time for the Nordic governments to join forces again and put an end to this biased initiative.

News

NEWS Published:

Coronavirus crisis: Seven trade actions that need to be taken now

COMMENT The coronavirus outbreak is placing unprecedented pressure on the EU and international trade. The goal should be to lay the foundations for the best possible conditions post-Corona that keeps as many companies – and jobs – viable. We have no time to wait, writes Anna Stellinger, Deputy Director General Confederation of Swedish Enterprise
NEWS Published:

Information on coronavirus / COVID-19 for you as a business owner

CORONA (UPDATED REGULARLY) Due to the recent developments in the spread of the coronavirus, we have summarised the sources where you, as a business owner/operator entrepreneur, can find the latest information.
NEWS Published:

In times of crisis, barriers are not the answer

COMMENT EU must now take powerful measures in the field of trade policy. A constructive measure would be to completely remove import duties on necessary medical equipment, hand soap and disinfectants, imported from third countries, writes Anna Stellinger, Deputy Director General International and EU Affairs.
NEWS Published:

EU industrial strategy: "Now the real work will begin"

COMMENT The European Commission has presented an industrial strategy. This will lay out the course for the coming five years. The strategy presented today is simply the starting point. Now the real work will begin, says Göran Grén, Director Head of Business Policy and Law Division at the Confederation of Swedish Enterprise.
NEWS Published:

"Most important a trade agreement with the UK"

FREE TRADE How should the EU relate to major powers such as the US and China? How does the EU best approach the defence of free trade and an open and a favourable investment climate? To find what our Swedish MEPs in the Trade Committee think, we asked Jörgen Warborn (M, EPP) a few questions.
NEWS Published:

"The US and China are blending trade policy with geopolitical goals"

FREE TRADE How should the EU relate to major powers such as the US and China? How does the EU best approach the defence of free trade and an open and a favourable investment climate? To find what our Swedish MEPs in the Trade Committee think, we asked Karin Karlsbro, L, Renew Europe.
NEWS Published:

This is how to shape Europe's digital future

COMMENT The European Commission is launching its strategy for Europe's digital future. “The debate on the surveillance society, the mapping of citizens and the profiling of consumers is an important consideration as we move into this future, writes lawyer Carolina Brånby.
NEWS Published:

A Competitive European Industry

EU The European Commission will present its industrial strategy on 10 March. In response to this, Swedish Enterprise has produced the position paper, "A Competitive European Industry". This summarises the organisation's views on a range of issues.
NEWS Published:

11 exciting climate projects from Sweden

Swedish companies have long been at the forefront of combining sustainability and environmental ambitions with growth and innovation. From fossil-free steel to CO2 capture, Sweden’s businesses are leveraging tomorrow's technology for a greener world. As innovation and climate-smart solutions become an increasingly important element in our competitiveness, we have listed 11 ground-breaking climate projects currently underway in Sweden’s business world.
NEWS Published:

"There are no long term winners in a protectionist world"

EU Anna Stellinger, Deputy Director General International and EU Affairs, believes that the new European Commission must demonstrate that it can manage several issues simultaneously. “It must keep the Union and the single market together, stand up for free movement and maintain its focus on core areas.”
NEWS Published:

Swedish Enterprise about the Green Deal

EU – There are several elements contained in the initiative that will be important for Swedish industry, says Lina Håkansdotter, Head of Sustainability and Infrastructure.
NEWS Published:

Worries over Brussels minimum wage initiative

EU The Swedish Labour Market Council for EU Affairs has sent a letter to Ursula von der Leyen, President of the European Commission. The letter contains several sharp messages to the Commission, where one is that EU lacks competence in the area of pay. 
NEWS Published:

Stellinger on Trade Policy Day: "Protectionism means everyone loses"

INTERNATIONEL TRADE What is the way forward for EU trade policy during these turbulent times? This was the central issue during the European Parliament’s discussions on trade policy. "We live in an entirely new trade world" said Anna Stellinger, Deputy Director General, international and EU affairs.
NEWS Published:

The GDPR alone is insufficient

GDPR The GDPR compromise from 2016 has been shown to have both strengths and weaknesses - particularly from a business perspective. It is vitally important to delivering proper data protection and trust, but it is demanding and costly to adhere to vague and overly-detailed legislation. This creates compelling reasons to discuss how to support compliance and important processing in order to remain technological competitive, says lawyer Carolina Brånby at the Confederation of Swedish Enterprise. The report, entitled “What’s wrong with GDPR?”, is now available in English.
NEWS Published:

Questions vital for the future of the industry

SEMINAR The Swedish Construction Federation and MEP Abir Al-Sahlani (RE) have organised a seminar "Building Europe - Future of work the construction” in the European Parliament.
NEWS Published:

Anna Stellinger: Director of International and EU Affairs at Confederation of Swedish Enterprise

NEW LINE OF WORK Anna Stellinger today takes up the newly created position of Director of International and EU Affairs at the Confederation of Swedish Enterprise. She will also join the management team.
NEWS Published:

Review the Swedish Exemption Regarding Financial Transactions

TAX The VAT exemption regarding financial transactions is often used in Sweden as an argument to raise taxes in the financial sector. However, the exemption is harming the business climate as well as growth and development.
NEWS Published:

EU lose much of its attraction without the single market

EU A fully developed single market is central to fight climate change, promote sustainable development, to fully harness the potential of digitalisation and strengthen Europe’s competitiveness. Without the single market, the EU would lose much of its attraction.
NEWS Published:

Proposals for competitiveness

REPORT The Confederation of Swedish Enterprise, in co-operation with its experts and membership organizations, has produced concrete proposals for measures to ensure that Europe will maintain its competitiveness in the global arena.
NEWS Published:

How EU-decisions affect Swedish companies

REPORT The Confederation of Swedish Enterprise has evaluated how the major decisions taken within the EU during the last mandate period affect Swedish companies. Our evaluation shows that 24 of the 57 legal acts we have chosen to look at have been positive for Swedish companies.