Is Article 113 of the Treaty on the Functioning of the European Union (TFEU) concerned only with indirect taxation, not direct taxation like company tax or income tax?
Are the words added by the EU Treaty of Lisbon (ToL) – and to avoid distortion of competition – a fairly innocuous clarification or even an additional requirement for new tax legislation, or are the sappers at work, undermining the castle walls?
What did the European Convention propose with regard to harmonising taxes, and what happened to these proposals during the intergovernmental conference (IGC 2004), which led to the Treaty establishing a Constitution for Europe?
The first post, EU TFEU: Tax harmonisation I, mapped the road of the provisions on EU tax legislation from Article 93 on the Treaty establishing the European Community (TEC), through the draft Constitution and the Constitutional Treaty, to the Treaty of Lisbon and the consolidated version of the amended EU treaties.
We checked the Lisbon Treaty amendments against our usual sample of the best general comments on the new treaty. The selected documents gave little cause to become wrought up, but something seems to have been afoot, so there seemed to be cause to double-check.
The fate of the Convention’s proposals looked intriguing, but this may require a post of its own.
This left us with the first two questions above. Let us start on the first one.
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Direct or indirect taxation?
My preliminary reading of Article 113 TFEU (Article 93 TEC) led me to believe that its scope was restricted to various forms of indirect taxes. That was my understanding of ‘turnover taxes, excise duties and other forms of indirect taxation’.
This was substantiated by the UK House of Commons Library Research Paper 07/86, which presented a number of examples of such indirect taxes. This was further corroborated by the draft ratification bill of the Swedish government ‘Lagrådsremiss – Lissabonfördraget’, which mentioned turnover taxes (VAT type taxes), selective purchase taxes and other indirect taxes or charges in the internal market.
The Finnish government’s ratification bill spoke of the harmonisation of indirect taxation, but had I not concluded in my 6 June 2008 post ‘EU TFEU: Prohibited remissions, repayments and countervailing charges’ that the drafters seemed to have confused direct and indirect taxes (the first direct mistake I have encountered)? Surely an additional reason to check again, in spite of the evidence at hand? So I did reread my sources.
***
In addition, flying in the face of these sober assessments, assertions to the contrary abound. Here are a few from Ireland, mainly emanating from or echoing Anthony Coughlan, and branded ‘legally accurate’:
Free Europe “Harmonizing Company taxes in the EU – The Lisbon Treaty amendment to Article 113: a significant and virtually ignored amendment affecting Ireland’s company tax”
The National Platform EU Research & Information Centre “EU Misinformation: Barroso, Bonde and Ireland’s company taxes”
The National Platform EU Research & Information Centre “Lisbon Treaty: Mandatory Tax Harmonisation”
Bruce Arnold “Yes vote would open way for Europe to outlaw our low tax” (Independent.ie)
Irish Issues . org “Treaty amendment on EU harmonized taxes”
Citizens’ European Movement Network “Tax & Investment”
***
These ‘legally accurate’ allegations, variations on the same theme, seem to require a logic of its own kind to concoct (and to follow).
Naturally, it is easy to assert that few EU leaders have been inventive enough to trumpet the consequences for company taxes (direct taxes) of an Article and an amendment concerning VAT and other indirect taxes. Because the Commission or the responsible national leaders have not discussed pears in the context of apples, it has been easy to brand this lack of communication as a conspiracy, misleading the public, not to mention the worst allegations.
Suddenly, an Article on harmonisation of indirect taxation would open the doors to force Ireland to scrap its low corporate tax (direct taxation).
This is nonsense.
***
What does the amendment mean?
The amendment – ‘and to avoid distortion of competition’ – was described by the Swedish government as a clarification and by the Finnish government as an additional requirement.
Neither sheds more light on the meaning of the added words, and I remain in some doubt about how they should be interpreted. On the face of it, joining ‘necessary to ensure’ with an additional ‘AND to avoid’ reads like an additional requirement, in other words one hurdle more.
If the drafters wanted to open up an alternative base for legislation, they should have said ‘OR to avoid distortion of competition’).
But the added words appear in the context of ‘the establishment and the functioning of the internal market’, of which undistorted competition is a fundamental aspect.
Therefore, it may be reasonable to understand the added words as an effort to underline one aspect of a functioning internal market, thereby giving it more visibility and some added weight.
In other words, this aspect may be brought to light when the Commission prepares proposals in the area of VAT, excise duties and other indirect taxes, and the Court of Justice may be called upon to interpret the provision.
But it has nothing to do with company tax or other direct taxes.
***
The texts of the detractors make for confusing reading. Shortly, the ‘truths’ first trumpeted are abandoned in favour of a new line. Even if the Article 113 TFEU is restricted to indirect taxation and the unanimity requirement is preserved, the European Commission and the Court of Justice of the European Union could possibly somehow circumvent the whole provision by applying the rules on undistorted competition in the internal market in order to erode Ireland’s low rate of corporate tax. The chain between the amendment and the allegations is broken, because all of a sudden a new set of rules is called into play.
How could the Court of Justice enter into this? Does Article 113 TFEU bear any of the hallmarks of a directly applicable treaty provision? Is the Article clear, precise and unconditional, in order to have direct effect?
The answer is no. It offers a base for secondary legislation on VAT and other indirect taxes, requiring unanimous decisions by the Council.
With or without the Lisbon Treaty, the Court of Justice will have to assess and to demarcate areas of competence described in general terms, and to find the predominant features in a specific case. Situations leading to future court cases are hard to predict, and the outcomes are going to be based on the facts of the individual cases.
***
An outside observer would expect the representative business interests of a member state threatened by erosion of its favourable company tax to be up in arms at the least hint. What does IBEC (Irish Business and Employers Confederation) say about the Lisbon Treaty?
In short, Irish business supports the Lisbon Treaty, vote yes. All EU member states remain free to determine their own policies regarding taxation and foreign direct investment. No change can be made in the area of taxation without the approval of all member states, including Ireland.
***
For reasonable people – but only for them – this should put the allegations concerning Article 113 TFEU to rest.
***
Direct taxation
Back to the difference between indirect and direct taxation. There is no explicit treaty provision on the harmonisation of legislation on direct taxes, but the current Article 94 TEC allows unanimous directives for the approximation (harmonisation) of laws, regulations and administrative practices which directly affect the establishment or functioning of the common market. With cosmetic change, this will become Article 115 TFEU, and it will continue to be the legal base for harmonising direct taxes.
Why were the allegations mentioned above based on the wrong Article?
***
Pressures
As far as I understand, the position of the member states, including Ireland, in matters of EU harmonisation of indirect taxes does not change at all or only marginally as a result of the Treaty of Lisbon.
There has been and will continue to be political pressure towards elimination of tax obstacles in the internal market and against harmful tax competition. The European Commission has tried to convince the member states to move from unanimity to qualified majority voting, at least in some fiscal matters, but it has failed to move them.
The Commission has presented reasons for a single consolidated tax base for companies with EU activities, and it may dream of future harmonised company tax rates, but very little will probably happen as long as the unanimity rule stands.
Critical voices, sometimes even strident ones, from some member states have shown the existing tensions between countries with different levels of taxes for companies and capital. Member states with high taxes tend to see low rates as unfair competition.
Harmonising taxes, especially direct taxes, has been a frustrating field of endeavour for the Commission. Little progress has been possible, but the Commission has been able to investigate and to define tax arrangements seen to be unfair or distorting. Here is an opportunity for those who want to dig deeper, preferably with a cool head.
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The history of European integration shows how decisive the shift from unanimity rule to qualified majority voting has been in order to achieve results. To name just one example, without the Single European Act there would still be mainly the idea of a common market, not the reality of a working internal market, in spite of its shortcomings.
The general European interest would be better served by fewer areas hampered by veto powers, but the reality is that our common mansion continues to be a house of cards in the fields where unanimity rules, and the deepening of European integration is a long term project.
***
What did the European Convention propose with regard to harmonising taxes, and what happened to these proposals during the intergovernmental conference (IGC 2004), which led to the Treaty establishing a Constitution for Europe?
The third question and post may shed some additional light on the tensions and the exertions in the field of European taxation.
Ralf Grahn
Showing posts with label direct tax. Show all posts
Showing posts with label direct tax. Show all posts
Sunday, 8 June 2008
Friday, 6 June 2008
EU TFEU: Prohibited remissions, repayments and countervailing charges
According to Article 112 of the EU Treaty on the Functioning of the European Union (TFEU), the Council could, for a limited period, approve remissions and repayments in respect of exports to other member states or countervailing charges in respect of imports from member states. Otherwise they are prohibited.
As far as I know, exceptions concerning these forms of direct taxes on the basis of current Article 92 of the Treaty establishing the European Community (TEC) have never been granted, so the prohibition has stood unassailed.
***
Article 112 of the Treaty on the Functioning of the European Union (TFEU) is found in the consolidated version of the Treaty on European Union and the Treaty on the Functioning of the European Union, published in the Official Journal of the European Union, OJ 9.5.2008 C 115/93:
Part Three ‘Union policies and internal actions’
Title VII Common rules on competition, taxation and approximation of laws
Chapter 2 Tax provisions
Article 112 TFEU
(ex Article 92 TEC)
In the case of charges other than turnover taxes, excise duties and other forms of indirect taxation, remissions and repayments in respect of exports to other Member States may not be granted and countervailing charges in respect of imports from Member States may not be imposed unless the measures contemplated have been previously approved for a limited period by the Council on a proposal from the Commission.
***
In Article 2, point 78 of the Treaty of Lisbon (ToL) the IGC 2007 amended Article 88 of the Treaty establishing the European Community (TEC) and in point 79 it dealt with Article 93 TEC. This means that no specific amendments were made to Article 92 TEC. Cf. OJ 17.12.2007 C 306/69.
***
The TFEU table of equivalences tells us that Article 92 TEC first became Article 92 TFEU (ToL) in the original Treaty of Lisbon, but later renumbered Article 112 TFEU in the consolidated version (OJ 17.12.2007 C 306/211).
***
The current Article 92 of the Treaty establishing the European Community (TEC) is found under Title VI ‘Common rules on competition, taxation and approximation of laws’, Chapter 2 ‘Tax provisions’, in the latest consolidated version of the treaties in force (OJ 29.12.2006 C 321 E/79).
Although thee was no specific amendment, we notice the disappearance of the words ‘acting by a qualified majority’ from Article 112 TFEU according to horizontal amendment 2(d) of Article 2 of the Treaty of Lisbon (OJ 17.12.2007 C 306/41), when we look at the wording of Article 92 TEC:
Article 92 TEC
In the case of charges other than turnover taxes, excise duties and other forms of indirect taxation, remissions and repayments in respect of exports to other Member States may not be granted and countervailing charges in respect of imports from Member States may not be imposed unless the measures contemplated have been previously approved for a limited period by the Council acting by a qualified majority on a proposal from the Commission.
***
We have now seen that 92 TEC in force and 112 TFUE are the same, except for one horizontal amendment. .
Still, for the sake of systematic comparison, we look at the arcana of the Article during the intervening treaty reform stages.
First, we turn to the European Convention, the closest thing to a constituent assembly EU citizens have had. The Article in question is located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter I ‘Internal market’, Section 6 ‘Fiscal provisions’.
Article III-61 of the draft Treaty establishing a Constitution for Europe differed from Article 92 TEC slightly, without altering the substance. The word ‘measures’ was replaced by ‘provisions’, the act of approval was categorised as ‘by a European decision’ and the draft Constitution consistently used ‘Council of Ministers’ instead of ‘Council’ (OJ 18.7.2003 C 169/38):
Article III-61 Draft Constitution
In the case of charges other than turnover taxes, excise duties and other forms of indirect taxation, remissions and repayments in respect of exports to other Member States may not be granted and countervailing charges in respect of imports from Member States may not be imposed unless the provisions contemplated have been previously approved for a limited period by a European decision adopted by the Council of Ministers on a proposal from the Commission.
***
In the Treaty establishing a Constitution for Europe the tax provisions were located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter I ‘Internal market’, Section 6 ‘Fiscal provisions’.
The IGC 2004 created Article III-170 with three paragraphs by housing Articles III-59, III-60 and III-61 of the draft Constitution under the same roof (OJ 16.12.2004 C 310/73. Cf. OJ 18.7.2003 C 169/37–38).
Article III-170(3) of the Constitutional Treaty was the same as Article III-61 of the draft Constitution, except for the ‘Council’ reappearing in shorter form:
Article III-170 Constitution
1. No Member State shall impose, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products.
Furthermore, no Member State shall impose on the products of other Member States any internal taxation of such a nature as to afford indirect protection to other products.
2. Where products are exported by a Member State to the territory of another Member State, any repayment of internal taxation shall not exceed the internal taxation imposed on them whether directly or indirectly.
3. In the case of charges other than turnover taxes, excise duties and other forms of indirect taxation, remissions and repayments in respect of exports to other Member States may not be granted and countervailing charges in respect of imports from Member States may not be imposed unless the provisions contemplated have been previously approved for a limited period by a European decision adopted by the Council on a proposal from the Commission.
***
What has anyone been able to say about Article 112 TFEU, with the wording practically unchanged from the current Article 92 TEC?
United Kingdom
Professor Steve Peers covered the Treaty of Lisbon in a number of Statewatch Analyses. ‘EU Reform Treaty Analysis no. 3.3: Revised text of Part Three, Titles I to VI of the Treaty establishing the European Community (TEC): Internal Market and competition’ (Version 2, 23 October 2007) includes the current Title VI Common rules on competition, taxation and approximation of laws.
Peers indicated the changing numbering of Article 92 TEC and TFEU (ToL), to be renumbered Article 112 TFEU in the consolidated version, without comment (page 29).
The analysis 3.3 and other useful Statewatch analyses are available through:
http://www.statewatch.org/euconstitution.htm
***
The Foreign and Commonwealth Office (FCO) offers a convenient source of brief annotations on Lisbon Treaty amendments in ‘A comparative table of the current EC and EU treaties as amended by the Treaty of Lisbon’ (Command Paper 7311, published 21 January 2008). It offers the following comment on Article 112 TFEU, Article 92 TFEU (ToL) in the original Lisbon Treaty (page 12):
“Unchanged from Article 92 TEC.”
The FCO comparative table is available at:
http://www.official-documents.gov.uk/document/cm73/7311/7311.asp
***
The UK House of Commons Library Research Paper 07/86 ‘The Treaty of Lisbon: amendments to the Treaty establishing the European Community’ (published 6 December 2007) discussed taxation on page 60 (although the heading ‘2. Taxation’ continued with (tax) harmonisation from page 60 to 61).
Having found at least one general comment in English, we gratefully reproduce the text on Articles 90 to 93 TFEU (ToL), later renumbered Articles 110 to 113 TFEU in the consolidated version:
“Articles 90–93 (Constitution Articles III-170 – III-171) concern taxation. They incorporate the existing tax provisions set out in Articles 90 to 93 TEC. There is a considerable body of European law concerning the harmonisation across Member States of indirect taxes: that is, VAT and excise duties on alcoholic drinks, hydrocarbon oils and tobacco products. At present the Treaty base for this legislation is Article 93 TEC, which states:
The Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, adopt provisions for the harmonisation of legislation concerning turnover taxes, excise duties and other forms of indirect taxation to the extent that such harmonisation is necessary to ensure the establishment and the functioning of the internal market within the time limit laid down in Article 14. (122)
The new Article 93 (Constitution Article III-171) has one substantive change. Legislation for harmonising indirect taxes may be adopted (emphasis added) “provided that such harmonisation is necessary for the establishment or the functioning of the internal market and to avoid distortion of competition.” It remains the case that any such legislation must be agreed by the Council acting unanimously.”
---
Footnote 122 stated: Article 14 refers to the establishment of the single European market on 1 January 1993.
---
The Library Research Paper 07/86 is available at:
http://www.parliament.uk/commons/lib/research/rp2007/rp07-086.pdf
***
The House of Lords European Union Committee report ‘The Treaty of Lisbon: an impact assessment, Volume I: Report’ (HL Paper 62-I, published 13 March 2008) is a valuable resource on the Treaty of Lisbon, but I found no reference to Article 112 TFEU (Article 92 TEC and ToL).
The report is accessible at:
http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf
In case anyone wants to dig deeper, taxes, unanimity and harmonisation are discussed ‘passim’ in Volume II of the report ‘Evidence’.
***
Sweden
The consultation paper ’Lissabonfördraget’ is still valuable as a description of the Lisbon Treaty amendments, and it is available at:
http://www.regeringen.se/content/1/c6/09/49/81/107aa077.pdf
The Swedish government’s draft ratification bill ‘Lagrådsremiss – Lissabonfördraget’, was published 29 May 2008 and sent to the Council on Legislation (Lagrådet) for an expert opinion. The draft deals with the EU’s internal policy areas in Chapter 23 ‘Unionens interna åtgärder’, and section 23.1 presents the internal market (Inre marknaden), on pages 175 to 181.
Tax provisions are dealt with on page 179 in a section called ‘Bestämmelser om skatter’. The government of Sweden remarks on the essentially unchanged nature of the tax provisions in general and it then explains the clarification of Article 93 TFEU (ToL):
”Bestämmelser om skatter
Bestämmelserna om skatter är i princip oförändrade. I artikel 93 i EUF-fördraget om harmonisering av lagstiftningen om omsättningsskatter, punktskatter och andra indirekta skatter eller avgifter på den inre marknaden görs ett förtydligande. Som nödvändig förutsättning för att harmonisera lagstiftning anges som tillägg “att undvika snedvridning av konkurrensen”. Rådet ska, i likhet med nu gällande EG-fördrag, fatta beslut med enhällighet i skattefrågor efter att ha hört Europaparlamentet. (Se artikel 2.79 i Lissabonfördraget.)”
The draft bill ‘Lagrådsremiss – Lissabonfördraget’ can be downloaded through:
http://www.regeringen.se/sb/d/5676/a/106277
***
Finland
The Finnish ratification bill, ‘Hallituksen esitys Eduskunnalle Euroopan unionista tehdyn sopimuksen ja Euroopan yhteisön perustamissopimuksen muuttamisesta tehdyn Lissabonin sopimuksen hyväksymisestä ja laiksi sen lainsäädännön alaan kuuluvien määräysten voimaansaattamisesta’ (HE 23/2008 vp), under the heading Provisions on taxes and charges (Veroja ja maksuja koskevat määräykset), offers a brief statement on the unchanged nature of Article 92 TFEU (ToL), renumbered Article 112 TFEU (page 208):
”92 artiklaa (uusi 112 artikla), jonka mukaan välillisistä veroista ei vapauteta tai niitä ei palauteta jäsenvaltiosta toiseen tapahtuvan maastaviennin yhteydessä ilman neuvoston määräaikaisia toimenpiteitä koskevaa päätöstä, ei muuteta.”
The Finnish ratification bill is available at:
http://www.finlex.fi/fi/esitykset/he/2008/20080023.pdf
The Swedish language version of the ratification bill ‘Regeringens proposition till Riksdagen med förslag om godkännande av Lissabonfördraget om ändring av fördraget om Europeiska unionen och fördraget om upprättandet av Europeiska gemenskapen och till lag om sättande i kraft av de bestämmelser i fördraget som hör till området för lagstiftningen’ (RP 23/2008 rd), makes the same remark under ’Bestämmelser om skatter och avgifter’ on the unchanged nature of Article 92 TFEU (ToL), the future Article 112 TFEU, on page 211:
”Artikel 92 (blivande artikel 112), enligt vilken befrielse och återbetalning i fråga om indirekta skatter vid export till andra medlemsstater inte får medges utan att rådet beslutar om åtgärder för en begränsad tid, ändras inte.”
The ratification bill in Swedish can be accessed at:
http://www.finlex.fi/sv/esitykset/he/2008/20080023.pdf
My comment: Here the drafters of the Finnish government bill seem to have made a mistake, missing the meaning of ‘other than’ the forms of indirect taxation mentioned, which translates into charges of a direct, not an indirect, nature.
Ralf Grahn
As far as I know, exceptions concerning these forms of direct taxes on the basis of current Article 92 of the Treaty establishing the European Community (TEC) have never been granted, so the prohibition has stood unassailed.
***
Article 112 of the Treaty on the Functioning of the European Union (TFEU) is found in the consolidated version of the Treaty on European Union and the Treaty on the Functioning of the European Union, published in the Official Journal of the European Union, OJ 9.5.2008 C 115/93:
Part Three ‘Union policies and internal actions’
Title VII Common rules on competition, taxation and approximation of laws
Chapter 2 Tax provisions
Article 112 TFEU
(ex Article 92 TEC)
In the case of charges other than turnover taxes, excise duties and other forms of indirect taxation, remissions and repayments in respect of exports to other Member States may not be granted and countervailing charges in respect of imports from Member States may not be imposed unless the measures contemplated have been previously approved for a limited period by the Council on a proposal from the Commission.
***
In Article 2, point 78 of the Treaty of Lisbon (ToL) the IGC 2007 amended Article 88 of the Treaty establishing the European Community (TEC) and in point 79 it dealt with Article 93 TEC. This means that no specific amendments were made to Article 92 TEC. Cf. OJ 17.12.2007 C 306/69.
***
The TFEU table of equivalences tells us that Article 92 TEC first became Article 92 TFEU (ToL) in the original Treaty of Lisbon, but later renumbered Article 112 TFEU in the consolidated version (OJ 17.12.2007 C 306/211).
***
The current Article 92 of the Treaty establishing the European Community (TEC) is found under Title VI ‘Common rules on competition, taxation and approximation of laws’, Chapter 2 ‘Tax provisions’, in the latest consolidated version of the treaties in force (OJ 29.12.2006 C 321 E/79).
Although thee was no specific amendment, we notice the disappearance of the words ‘acting by a qualified majority’ from Article 112 TFEU according to horizontal amendment 2(d) of Article 2 of the Treaty of Lisbon (OJ 17.12.2007 C 306/41), when we look at the wording of Article 92 TEC:
Article 92 TEC
In the case of charges other than turnover taxes, excise duties and other forms of indirect taxation, remissions and repayments in respect of exports to other Member States may not be granted and countervailing charges in respect of imports from Member States may not be imposed unless the measures contemplated have been previously approved for a limited period by the Council acting by a qualified majority on a proposal from the Commission.
***
We have now seen that 92 TEC in force and 112 TFUE are the same, except for one horizontal amendment. .
Still, for the sake of systematic comparison, we look at the arcana of the Article during the intervening treaty reform stages.
First, we turn to the European Convention, the closest thing to a constituent assembly EU citizens have had. The Article in question is located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter I ‘Internal market’, Section 6 ‘Fiscal provisions’.
Article III-61 of the draft Treaty establishing a Constitution for Europe differed from Article 92 TEC slightly, without altering the substance. The word ‘measures’ was replaced by ‘provisions’, the act of approval was categorised as ‘by a European decision’ and the draft Constitution consistently used ‘Council of Ministers’ instead of ‘Council’ (OJ 18.7.2003 C 169/38):
Article III-61 Draft Constitution
In the case of charges other than turnover taxes, excise duties and other forms of indirect taxation, remissions and repayments in respect of exports to other Member States may not be granted and countervailing charges in respect of imports from Member States may not be imposed unless the provisions contemplated have been previously approved for a limited period by a European decision adopted by the Council of Ministers on a proposal from the Commission.
***
In the Treaty establishing a Constitution for Europe the tax provisions were located in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter I ‘Internal market’, Section 6 ‘Fiscal provisions’.
The IGC 2004 created Article III-170 with three paragraphs by housing Articles III-59, III-60 and III-61 of the draft Constitution under the same roof (OJ 16.12.2004 C 310/73. Cf. OJ 18.7.2003 C 169/37–38).
Article III-170(3) of the Constitutional Treaty was the same as Article III-61 of the draft Constitution, except for the ‘Council’ reappearing in shorter form:
Article III-170 Constitution
1. No Member State shall impose, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products.
Furthermore, no Member State shall impose on the products of other Member States any internal taxation of such a nature as to afford indirect protection to other products.
2. Where products are exported by a Member State to the territory of another Member State, any repayment of internal taxation shall not exceed the internal taxation imposed on them whether directly or indirectly.
3. In the case of charges other than turnover taxes, excise duties and other forms of indirect taxation, remissions and repayments in respect of exports to other Member States may not be granted and countervailing charges in respect of imports from Member States may not be imposed unless the provisions contemplated have been previously approved for a limited period by a European decision adopted by the Council on a proposal from the Commission.
***
What has anyone been able to say about Article 112 TFEU, with the wording practically unchanged from the current Article 92 TEC?
United Kingdom
Professor Steve Peers covered the Treaty of Lisbon in a number of Statewatch Analyses. ‘EU Reform Treaty Analysis no. 3.3: Revised text of Part Three, Titles I to VI of the Treaty establishing the European Community (TEC): Internal Market and competition’ (Version 2, 23 October 2007) includes the current Title VI Common rules on competition, taxation and approximation of laws.
Peers indicated the changing numbering of Article 92 TEC and TFEU (ToL), to be renumbered Article 112 TFEU in the consolidated version, without comment (page 29).
The analysis 3.3 and other useful Statewatch analyses are available through:
http://www.statewatch.org/euconstitution.htm
***
The Foreign and Commonwealth Office (FCO) offers a convenient source of brief annotations on Lisbon Treaty amendments in ‘A comparative table of the current EC and EU treaties as amended by the Treaty of Lisbon’ (Command Paper 7311, published 21 January 2008). It offers the following comment on Article 112 TFEU, Article 92 TFEU (ToL) in the original Lisbon Treaty (page 12):
“Unchanged from Article 92 TEC.”
The FCO comparative table is available at:
http://www.official-documents.gov.uk/document/cm73/7311/7311.asp
***
The UK House of Commons Library Research Paper 07/86 ‘The Treaty of Lisbon: amendments to the Treaty establishing the European Community’ (published 6 December 2007) discussed taxation on page 60 (although the heading ‘2. Taxation’ continued with (tax) harmonisation from page 60 to 61).
Having found at least one general comment in English, we gratefully reproduce the text on Articles 90 to 93 TFEU (ToL), later renumbered Articles 110 to 113 TFEU in the consolidated version:
“Articles 90–93 (Constitution Articles III-170 – III-171) concern taxation. They incorporate the existing tax provisions set out in Articles 90 to 93 TEC. There is a considerable body of European law concerning the harmonisation across Member States of indirect taxes: that is, VAT and excise duties on alcoholic drinks, hydrocarbon oils and tobacco products. At present the Treaty base for this legislation is Article 93 TEC, which states:
The Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, adopt provisions for the harmonisation of legislation concerning turnover taxes, excise duties and other forms of indirect taxation to the extent that such harmonisation is necessary to ensure the establishment and the functioning of the internal market within the time limit laid down in Article 14. (122)
The new Article 93 (Constitution Article III-171) has one substantive change. Legislation for harmonising indirect taxes may be adopted (emphasis added) “provided that such harmonisation is necessary for the establishment or the functioning of the internal market and to avoid distortion of competition.” It remains the case that any such legislation must be agreed by the Council acting unanimously.”
---
Footnote 122 stated: Article 14 refers to the establishment of the single European market on 1 January 1993.
---
The Library Research Paper 07/86 is available at:
http://www.parliament.uk/commons/lib/research/rp2007/rp07-086.pdf
***
The House of Lords European Union Committee report ‘The Treaty of Lisbon: an impact assessment, Volume I: Report’ (HL Paper 62-I, published 13 March 2008) is a valuable resource on the Treaty of Lisbon, but I found no reference to Article 112 TFEU (Article 92 TEC and ToL).
The report is accessible at:
http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf
In case anyone wants to dig deeper, taxes, unanimity and harmonisation are discussed ‘passim’ in Volume II of the report ‘Evidence’.
***
Sweden
The consultation paper ’Lissabonfördraget’ is still valuable as a description of the Lisbon Treaty amendments, and it is available at:
http://www.regeringen.se/content/1/c6/09/49/81/107aa077.pdf
The Swedish government’s draft ratification bill ‘Lagrådsremiss – Lissabonfördraget’, was published 29 May 2008 and sent to the Council on Legislation (Lagrådet) for an expert opinion. The draft deals with the EU’s internal policy areas in Chapter 23 ‘Unionens interna åtgärder’, and section 23.1 presents the internal market (Inre marknaden), on pages 175 to 181.
Tax provisions are dealt with on page 179 in a section called ‘Bestämmelser om skatter’. The government of Sweden remarks on the essentially unchanged nature of the tax provisions in general and it then explains the clarification of Article 93 TFEU (ToL):
”Bestämmelser om skatter
Bestämmelserna om skatter är i princip oförändrade. I artikel 93 i EUF-fördraget om harmonisering av lagstiftningen om omsättningsskatter, punktskatter och andra indirekta skatter eller avgifter på den inre marknaden görs ett förtydligande. Som nödvändig förutsättning för att harmonisera lagstiftning anges som tillägg “att undvika snedvridning av konkurrensen”. Rådet ska, i likhet med nu gällande EG-fördrag, fatta beslut med enhällighet i skattefrågor efter att ha hört Europaparlamentet. (Se artikel 2.79 i Lissabonfördraget.)”
The draft bill ‘Lagrådsremiss – Lissabonfördraget’ can be downloaded through:
http://www.regeringen.se/sb/d/5676/a/106277
***
Finland
The Finnish ratification bill, ‘Hallituksen esitys Eduskunnalle Euroopan unionista tehdyn sopimuksen ja Euroopan yhteisön perustamissopimuksen muuttamisesta tehdyn Lissabonin sopimuksen hyväksymisestä ja laiksi sen lainsäädännön alaan kuuluvien määräysten voimaansaattamisesta’ (HE 23/2008 vp), under the heading Provisions on taxes and charges (Veroja ja maksuja koskevat määräykset), offers a brief statement on the unchanged nature of Article 92 TFEU (ToL), renumbered Article 112 TFEU (page 208):
”92 artiklaa (uusi 112 artikla), jonka mukaan välillisistä veroista ei vapauteta tai niitä ei palauteta jäsenvaltiosta toiseen tapahtuvan maastaviennin yhteydessä ilman neuvoston määräaikaisia toimenpiteitä koskevaa päätöstä, ei muuteta.”
The Finnish ratification bill is available at:
http://www.finlex.fi/fi/esitykset/he/2008/20080023.pdf
The Swedish language version of the ratification bill ‘Regeringens proposition till Riksdagen med förslag om godkännande av Lissabonfördraget om ändring av fördraget om Europeiska unionen och fördraget om upprättandet av Europeiska gemenskapen och till lag om sättande i kraft av de bestämmelser i fördraget som hör till området för lagstiftningen’ (RP 23/2008 rd), makes the same remark under ’Bestämmelser om skatter och avgifter’ on the unchanged nature of Article 92 TFEU (ToL), the future Article 112 TFEU, on page 211:
”Artikel 92 (blivande artikel 112), enligt vilken befrielse och återbetalning i fråga om indirekta skatter vid export till andra medlemsstater inte får medges utan att rådet beslutar om åtgärder för en begränsad tid, ändras inte.”
The ratification bill in Swedish can be accessed at:
http://www.finlex.fi/sv/esitykset/he/2008/20080023.pdf
My comment: Here the drafters of the Finnish government bill seem to have made a mistake, missing the meaning of ‘other than’ the forms of indirect taxation mentioned, which translates into charges of a direct, not an indirect, nature.
Ralf Grahn
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