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European Commission communication on unanimity in taxation

European Commission communication on unanimity

Will voting on all EU tax policies change from unanimity to qualified majority voting?

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Director, Tax Policy

KPMG in the UK


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On 15 January 2019, the European Commission issued a communication on extending qualified majority voting to all EU tax policies. The document suggests a progressive approach to phase out national vetoes on matters of taxation by the end of 2025 and replace the current unanimity rule with Qualified Majority Voting (QMV). Under QMV, the European Parliament and EU Council are co-legislators on an equal footing, and a minimum of sixteen Member States, representing at least 65 percent of the EU population, must vote in favour of the legislation.

Talk of a move to QMV in the area of taxation has returned to the negotiation table following unsuccessful attempts to introduce a Financial Transactions Tax, the Common Consolidated Corporate Tax Base and more recently a Digital Services Tax. The document cites the unanimity requirement as a major stumbling block when deciding on matters of EU taxation policy.

The European Commission considers that unanimity has been used by EU Member States as a means of protecting specific national interests rather than seeking to reach the compromise necessary to safeguard the EU’s general interests. Moving away from unanimity is considered essential for creating a fair taxation system in the EU. They have suggested a staggered, four-phased approach for moving to the QMV system. The first two steps will see the introduction of QMV for measures that improve cooperation and mutual assistance between Member States in combating tax fraud and tax evasion and in respect of administrative initiatives, as well as for matters in which taxation supports other policy goals including fighting climate change, protecting the environment and improving public health. A third step would be to transition to QMV to update EU tax rules that are already harmonized, such as VAT and excise duty. Finally, QMV would be adopted for major tax projects, such as the Common Consolidated Corporate Tax Base and for the taxation of the digital economy.

It is pertinent to note that moving from unanimity to QMV requires the unanimous consent of all EU Member States, as well as agreement by national parliaments and the European Parliament. Unanimity may yet again prove to be a stumbling block to this bold move of changing the very foundation of tax policy decision-making in the EU.

For more details on the European Commission’s communication, please refer to the Euro Tax Flash published by KPMG’s EU Tax Centre.

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