COORDINATION OF MEMBER STATES' TAX SYSTEMS
(17066/06, 17067/06, 17068/06)
Letter from the Chairman to Rt Hon Dawn
Primarolo MP, Paymaster General, HM Treasury
Thank you for your Explanatory Memoranda dated
16 January. Sub-Committee A considered these on 20 February and
cleared the documents from scrutiny. I would be grateful if you
could write with details of the discussions on this subject after
these occur in ECOFIN next month. The Sub-Committee would also
appreciate advanced notice should it appear likely that the Commission
will begin to develop legislative proposals for specific initiatives
in this area.
21 February 2007
Letter from Rt Hon Dawn Primarolo MP to
the Chairman
I am writing in response to your request in
your letter of 21 February for details on developments relating
to the above-mentioned Communications at the ECOFIN Council meeting
on 27 March.
The ECOFIN Council adopted the conclusions which
are set out in the Council press notice (attached at Annex) on
"Co-ordinating Member States' direct tax systems in the Internal
Market".
As you will see, these Conclusions highlight
amongst other things that Member States are free to design their
direct tax systems to meet their domestic policy objectives and
requirements, provided they exercise their competence in a way
which is consistent with Community law. The conclusions also emphasise,
for instance, that "while respecting national competences",
there is a role for cooperation on taxation among Member States
and where appropriate at European level and acknowledge the need
for effective use of the administrative cooperation mechanisms.
Member States have been invited by the Council
to continue work with the Commission "with a view to establishing
in which areas there may be need for greater co-ordination".
I hope you find this information helpful.
23 April 2007
Annex A
COUNCIL CONCLUSIONS
ON CO-ORDINATING
MEMBER STATES'
DIRECT TAX
SYSTEMS IN
THE INTERNAL
MARKET
2792ND ECONOMIC
AND FINANCIAL
AFFAIRS COUNCIL
MEETING: BRUSSELS,
27 MARCH 2007
The Council adopted the following conclusions:
"The Council held a debate based on the
Communications from the Commission on `Co-ordinating Member States'
direct tax systems in the Internal Market', `Exit taxation and
the need for co-ordination of Member States' tax policies', and
`Tax Treatment of Losses in Cross-Border Situations'."
The Council and the Commission recalled that
Member States are free to design their direct tax systems so as
to meet their domestic policy objectives and requirements, provided
that they exercise that competence consistently with Community
law.
The Council underlined that the functioning
of the internal market may be improved through co-operation on
taxation among Member States and where appropriate at the European
level, while respecting national competencies. While recognising
the principle of preserving an effective allocation of the power
to tax, the Council recognised the value of discussions on enhancing
co-operation between Member States in specific areas of direct
taxation to ensure that their domestic direct tax systems work
together within the framework of Community law. The Council noted
that appropriate solutions may take a variety of forms, in accordance
with the subsidiarity principle.
The Council acknowledged the need for an effective
use of the mechanisms of administrative co-operation such as those
provided for in the Mutual Assistance and Recovery Directives.
Against this background the Council took note
of the Commission proposals towards improved co-ordination of
national tax systems. The Council invites the Member States to
continue to work with the Commission with a view to establishing
in which areas there may be a need for greater co-ordination.
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