Finally, some good news on the financial side! A New Year’s resolution on the part of the European Commission to address a number of tax issues commonly encountered by Europeans who are living or investing their money in another member state.
The European Commission is often bombarded by queries from EU citizens who seek to make head or tail of complex foreign tax rules or conflicting tax systems in the different member states. Cross-border workers often encounter difficulties in obtaining tax allowances, relief and deductions from foreign tax authorities and are frequently subject to double taxation. Citizens buying foreign real estate often miss out on tax exemptions or must pay higher property taxes than residents.
Another very common issue is that of a double registration tax system encountered by individuals who seek to move their vehicle from one member state to another or to purchase a car from another member state. Individuals who have foreign investment income often find it difficult to claim entitlements to relief from withholding taxes applied by foreign countries. Furthermore, many people with foreign pension funds experience problems with deductions and cross-border transfers, while inheritances from another member state are also, often subject to higher succession duties or double taxation.
It seems that the Commission has now finally taken the bull by its horns and has published a communication which not only highlights all these concerns but also promises to find practical solutions to them. The Commission is examining where further action could be taken, at both EU and national level, to make member states’ tax systems more compatible so that citizens will not be deterred from engaging in cross-border activities.
To this end, it is proposing to adopt over the next two years a number of legislative and non-legislative measures which would examine the various tax issues in greater detail and seek to address the difficulties arising from them. The Commission is also ruminating over a number of other simplification measures that could be adopted such as standardised tax claims and declaration forms throughout the EU, single information points where workers and investors could get clear and reliable tax information as well as the adoption of special tax measures at national level to cater for the needs of mobile and border workers.
It is interesting to note that half of the tax infringement proceedings opened by the European Commission every year in relation to taxation are spurred by citizens’ complaints. If we are to truly speak of a borderless Europe, there is, therefore, no doubt of the dire need to address the practical tax issues encountered by EU citizens on a daily basis whenever they seek to engage in financial activity which involves more than one member state.
mariosa@vellacardona.com
Dr Vella Cardona is a practising lawyer and a freelance consultant in EU, intellectual property, consumer protection and competition law. She is also a member of the National Commission for the Promotion of Equality.