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.
LAWANDTAX-NEWS.COM
