Both consultations are on the European Commission's website, and are open to comment from "all stakeholders", including EU citizens, EU-member countries, tax administrators, government and business organisations, tax practitioners and academics.
Comments are being taken for both consultations until 3 July.
The first consultation is a general one, on the "tax problems faced by EU citizens when active across borders within the EU". The second focuses specifically on cross-border inheritance tax problems inside the 28-country area.
An estimated 14 million EU citizens live in an EU country other than their own, and for many of them, double taxation has long been a problem, typically requiring costly advice to avoid. At the same time, many of the bloc's largest member states are in the process of cracking down on tax evasion, making the likelihood of being taxed twice for the same income potentially greater than ever.
Philip Woolfson, a Brussels-based partner in Steptoe & Johnson and an expert on EU financial services and tax legislation, noted that “any cross-border consultation by the European Commission is always important and relevant for Europe’s cross-border insurance and adviser community”. The Commission’s objective, he explained, "is always to liberalise markets, and make it easier for cross-border business to take place".
However, he added, the Commission’s power to make significant changes in the tax arena “is constrained by the fact that tax is the core of national sovereignty, and the exchequers of the various countries guard their rights [to tax] jealously".
'Different/additional tax issues'
The consultations were not a surprise, Woolfson and others noted, as cross-border tax issues have long been a concern of the European Commissioners, and as far back as 2010 they announced their intention to "launch a debate on ways to simplify tax compliance in cross-border situations".
Outlining the problems that lay behind the general consultation, the consultation paper's authors note that individuals "exercising cross-border activities" within the EU "are often confronted with different/additional tax issues compared to individuals who are active only within a single EU country".
"The issues that can arise may include complex administrative procedures, language barriers, different interpretations of tax treaties by the member states involved, difficulties in accessing relevant tax information and difficulties in identifying officials responsible in national tax administrations," the consultation paper continues.
"The problems often stem from the fact that two or more EU countries may have the right to tax the income of an individual. Even if procedures exist in theory, to prevent double or multiple taxation, the application of those procedures may be very complicated in practice."
To read and download the general cross-border tax consultation questionnaire, click here. More details on this consultation may be found on the EU Commission's website, by clicking here.
To read and download the consultation questionnaire having to do with cross-border inheritance tax problems, click here. More details on this consultation may be found on the EU Commission's website, by clicking here.
