18.8.2006   

EN

Official Journal of the European Union

C 195/58

1.1

The EESC notes that it supports the harmonisation of tax rules in the EU in the long term. However, unfortunately many obstacles still stand in the way of harmonisation and consequently the EESC:

2.1

After several proposals in recent years, the Commission is presenting the communication under discussion here as a new initiative in the tax area — in particular corporate tax — which is designed to provide new opportunities for the development of small and medium-sized enterprises (SMEs), whose importance for job and wealth creation in the EU has been repeatedly highlighted, inter alia in the Lisbon Action Plan.

2.2

The European Economic and Social Committee has been consulted on a number of occasions since the end of the 1990s on proposals, recommendations and communications addressing this or related subjects. Below, it refers to its recent consultative and own-initiative opinions dealing with, inter alia, the concept of the ‘European company’ as applied to SMEs and the tax simplifications that are needed to quickly remove the obstacles faced by SMEs:

2.3

In citing extracts from eight of its opinions stretching back over five years, the EESC wishes to:

2.4

However, the EESC regrets that five years have elapsed without the emergence of effective arrangements for addressing these issues. In addition, it urges the Parliament and the Council to take a decision to finally remove the clearly identified obstacles.

3.1

Whilst it feels that its previous opinions largely anticipate the Commission's proposals, the EESC would like to make some additional comments on a number of points.

3.2

In its communication, the Commission states that the participation of SMEs in the internal market is considerably lower than that of larger companies, not least for tax reasons. It argues that action is needed to foster the cross-border expansion of SMEs and recommends a solution based on the ‘Home State Taxation’ approach. As regards company taxation, especially corporate tax, the Commission suggests that Member States and companies test the Home State Taxation concept by means of an experimental pilot scheme.

3.3

The EESC has already advocated and agreed in principle to such an initiative. However, it would point out that only a small number of SMEs plan to expand across borders; moreover, a pilot scheme of this kind could only take place with the participation of a limited number of companies who have a strategy, based on their geographical location or business purpose, aimed at establishing in another country. Looking beyond this shared position in principle, the EESC would like the Commission to provide more detail on the following:

3.3.1

The aim of the initiative is to foster growth and employment by making it easier for SMEs to operate. In view of the limited budgetary resources available at EU level, the EESC feels that spreading resources too thinly should be avoided and that priority should be given to a limited number of measures to promote efficiency. Therefore available statistical data should be used to ascertain the effectiveness of the proposed measure and to compare its effectiveness with other, potentially more relevant measures. The EESC is surprised that, because of the lack of adequate information on this matter, the Commission is unable, in its impact study, to measure the costs associated with the implementation of the proposed measure.

3.4

To back up its proposal, the Commission draws on the results of a survey of SMEs and business organisations it conducted in the 25 Member States in the second half of 2004. Only 194 questionnaires were returned to the Commission, and 168 of these were from German companies (see appended document).

3.4.1

The EESC notes that the number of responses to the survey is not significant given the fact that there are several million SMEs in the EU, some two million of which are in the construction sector alone. Moreover, the Committee is surprised that no information is given on the contributions made by business organisations and the social partners. The EESC would ask the Commission to forward these contributions to it for information, provided they are not confidential.

3.4.2

The EESC feels that, as the survey offers very little useful information, the Commission should not have drawn conclusions from it which could be inadequately founded.

3.5

The EESC feels that the Commission should:

3.5.1

Moreover, could it perhaps be the case that some SME managers who have the firm intention of setting up business in other Member States do not consider the way they will be taxed to be one of their main concerns, but prefer instead to find locally-based sales teams, invest in marketing and eventually earn profits?

3.5.2

Maybe other SME managers take the view that when they are planning to set up in another Member State they are confronted with numerous administrative, legal, social, tax and other problems of such complexity that the way in which their subsidiary would be taxed is a marginal and premature concern to them, and they prefer instead to set up a joint venture with a local company (a positive step from the point of view of European cohesion).

3.6

The scope and objectives set by the Commission for the proposed pilot scheme are as follows:

Thus the costs for SMEs associated with the plethora of national corporate tax rules, which usually makes it necessary for SMEs to resort to expensive specialist services, would be reduced.

3.7

The EESC notes that the proposed scope and objectives correspond to those envisaged earlier. It therefore reaffirms its endorsement of the scheme while at the same time recommending that, if the experiment proves successful, a European system be swiftly put in place for monitoring and, if necessary, controlling fiscal dumping so as to prevent companies, for example, from relocating the head office of their parent company in a Member State where the calculation of the company tax base would be more favourable to them.

3.8

The Commission asks Member States to negotiate and conclude bilateral agreements establishing the practical arrangements for implementing the pilot scheme, taking into account the Commission's general and non-binding guidelines. Support and assistance would be available from the Commission services in preparing and running the agreements.

3.9

The EESC understands that there are limits to action and involvement by the Commission and welcomes the fact that the Commission's role is confined to one of making suggestions and providing encouragement. This will enable interested SMEs to conduct pilots on an experimental basis as part of the bilateral agreements concluded between some EU Member States. On the basis of the results of the experimental pilots, the Commission will, in due course, propose the prolongation of the most successful pilots.

3.10

The EESC agrees with the Commission that the vast array of national rules is a major obstacle for SMEs. As the bilateral agreements concluded between 25 Member States would, in theory, all differ from each other, this will make it necessary for SMEs to restrict themselves to a limited number of such agreements. The diversity of the agreements would not therefore bring SMEs the hoped for simplification.

3.11

Moreover, the EESC is concerned about the practical consequences of the Commission's stated desire not to lay down more detailed provisions for the proposed pilot experiment. How will it be possible to harmonise tax rules (which is desirable in the long term) after the implementation of numerous bilateral agreements, if agreement has not first been reached on certain basic convergence criteria?

3.12

Finally, the EESC notes that no detailed research has been undertaken to determine whether schemes already exist in the Europe between states or regions, such as Switzerland, Lichtenstein or the Vatican, or with principalities such as Monaco, San Marino, Andorra, etc., to eliminate or reduce the impact on companies (especially SMEs) of the plethora of national, regional and local tax rules.