Luxembourg: FinMin Explores Advantages Of Uniform EU Tax

Luxembourg’s Finance Minister Luc Frieden has expressed his views regarding taxation in Europe, and has emphasized Luxembourg’s commitment to collaborating on a European taxation strategy.

In order to enable both business and individuals within the European Union (EU) to benefit fully from a single market, while at the same time guaranteeing fair taxation for all, Frieden has highlighted the need to discuss the introduction of a European tax – a uniform withholding tax levied on certain forms of income, minimum rates of direct and indirect taxation, a coordination of taxable bases, as well as common international standards designed to combat tax fraud.

According to Frieden, the introduction of a European tax, imposed on certain services or products, would also serve to finance the EU’s budget, used to fund a number of key projects.

Given the cross-border nature of certain activities, a European ecological tax, such as a carbon tax, or possibly a tax levied on certain financial transactions, would be particularly suitable for this purpose, Frieden added.

Eager to achieve a greater harmonization of both taxation and practices within the EU, Frieden has called for the introduction of a 25% withholding tax imposed on a wide range of revenue, with the revenue derived from the tax then returned in part to the country of origin of the beneficiary.

He is also keen to establish minimum – and even maximum – rates of taxation within EU member states, as has already successfully been achieved with value-added tax and excise duties. Corporate taxation, and certain types of income such as dividends, royalties and exceptional pay, all lend themselves well to a minimum rate, provided that there is a political will to advance in terms of an EU tax, Frieden continued.

Finally, turning to tax fraud, he emphasized the need to implement uniform international regulations in order to guarantee the taxation of revenue and to avoid relocation of capital. He underlined Luxembourg’s commitment to the strict application of the Organization for Economic Cooperation and Development’s international standards in terms of tax information exchange upon request, reflected in the signing of bilateral agreements containing the extended administrative assistance clause, with key economic partners. This mechanism is fully compatible with banking secrecy, Frieden added.

He nevertheless expressed his view that it would be counterproductive to introduce a system of automatic information exchange between banks and tax authorities at European level, as a system of information exchange upon request is applied outside of the EU. This, he argues, would simply lead to the relocation of capital.

Quelle: Tax-News.com

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