The unprecedented move of stripping veto powers would unlock reforms that have long been pushed by bigger EU nations, but consistently blocked by smaller states.
Regulation deadlock
Reuters is now reporting this stalemate may come to an end as the European Commission is considering triggering a neglected EU constitutional treaty article that would suspend states’ veto powers on tax matters.
Article 116 of the EU Lisbon Treaty gives the EU Commission the power to compel states to drop the unanimity rule.
This is replaced by an approach where tax matters are decided by majority when competition in the EU market is distorted.
“We certainly don’t exclude using it. We will work on it. We will make proposals in that direction,” EU tax commissioner Pierre Moscovivi said a news conference on 30 November.
If the article in enforced, it would potentially apply to current EU discussions looking to enforce tech giants like Amazon and Facebook to pay higher taxes.
This move against the tech companies has been opposed by smaller, low-tax, EU states like Ireland and Luxembourg.
Additionally, if the article is unlocked, stricter rules on tax advisers who help devise aggressive tax schemes could be established.
This is been an issue for Luxembourg and the Netherlands, which have a growing industry of advisers which aid global corporations hold about €10trn ($9trn, £8trn) in the two countries for tax purposes.
Tax reforms are on the agenda of many EU nations at present as public outcry continues following the Paradise Papers leak.
‘Nuclear option’
The treaty article has been described by one EU official as a “nuclear option” as it would end several long running tax legislative deadlocks.
The article does have a flipside, however, as Moscovici alluded to at the press conference, it may be viewed as a measure that interferes with national powers.
“We will work on Article 116 having in mind the idea of having results, not to make a coup,” Moscovici said.
