Subcommittee on Tax Matters Ordinary meeting FISC Interparliamentary Committee Meeting (ICM)
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FISC European Parliament
Follow its sittingsPasquale Tridico
This study concludes that the effectiveness of these instruments largely depends on their design, administration, and the interaction with the broader tax system. However, ultimately, wealth taxes can indeed effectively reduce inequality in the EU while shifting the financial burden away from workers. We know that actually our workers, our small and medium enterprises are burdening a huge, an important tax weight.
And we all in our government would like firms and workers, at least where they pay less, to reduce taxation. However, we know that in particular in the recent years, and in particular with the explosion of the digital economy, most of the wealth is basically created by firms and individuals who do not pay a fair share in comparison with the rest of the economy, and in particular in comparison to small medium enterprise from one side and to workers from another side. In the European Parliament, the FISC subcommittee is currently addressing this topic with an initiative, which is a tax framework for ultra-high-net-worth individual report, which is prepared by Mr. Bruno Gonçalves, who is a member of our Parliament. FISC has also commissioned a study in the same title, which will be published at the beginning of 2027. We know that inequality may be as well detrimental for economic growth.
So that's why the Parliament is trying to address this issue. We know that countries need to grow more. Europe is not growing much in the last years. And probably this has to do with this stagnation, has to do with inequality of income. Meaning that, and several economists are stating this, the inequality is obstacle in the process of growth.
The more the inequality, the less the growth. This is because income distribution has an impact on consumption and demand. When inequality is increasing and consumption is concentrated in the hand of few, then the dynamic on consumption and inequality, and the dynamic of consumption and demand is constrained as well. Now, I would like, going towards my conclusion, I would like to address this issue and to leave the space to discussion to our speaker here, to our experts. And I would like to add to them some question which I hope they will consider.
First, do you consider that current national tax framework fit for purpose to ensure fair taxation of ultra-high-net-worth individuals?
And second, what is the best suited wealth tax to increase public revenue while avoiding less investment and growth? Third, should we find a coordinated approach to tackle taxation of ultra-high-net-worth individuals? And last, if yes, at which level: EU, OECD, United Nations? Because we know that capital in particular is mobile, in particular in advanced economies. And this is one of the concerns which are raised by several economists as well.
Just let me say a few rules to procedure. Each speaker will have five minutes and then each member will have the possibility to pose Q and A in the session Q and A question. Each member will have up to two minutes for the question and then depending on the amount of the question received, the speaking time can be altered further. Should a question be addressed to only one speaker, you may indicate to which one you address and the speaker may reply to you with a ping-pong system. There are speaking cards available in the meeting room for members who wish to request the floor, so please use them.
And now I will give the floor to Giulio Varaskin for his introduction. Thank you, Giulio. Please, the floor is yours.
Can you hear me? Okay, yeah, it works. Thank you, thank you very much, Pasquale, for the introduction and thank you very much to the FISC Secretariat and for all of you for having me here.
Giulio Varaskin
I am very happy to talk about this issue, which is something we at the International Tax Observatory have been working a lot on. So, taxation of high-net-worth individuals within the EU is a big topic, and as has been very well said during the introduction, it's a very... oh, sorry, let me... okay. It's a very important topic, and it's a topic that is growing in relevance, I think, both as an issue in itself and also in all of our debate, in national debates. We have seen the debate emerge in many countries. We have seen a lot of different measures being put forward as bills in Belgium, in the Netherlands, in France, and it's been also an important debate for a lot of, like, recent elections.
So, it has been growing in policy relevance, of course, because of the issues of wealth concentration, because of the demand of more fairness, but also crucially because we finally do have hard data that shows that high-net-worth individuals pay less tax than the rest of the population.
And we do have that evidence for a number of countries, and for every country we look into, that evidence shows this thing. So, we are, there is clearly an issue, and there is also at the same time a demand for funds, a demand for investment. For the EU competitiveness report, I think the Draghi report estimated around 750 or 800 billion euros needed just for competitiveness for the EU. And national budgets at the same time are under constraints. I think in many countries, like, the budget debates are becoming very heated, and we have seen a lot of social unrest also as a consequence.
So, it's becoming a crucial debate. And this fact that people pay, the high-net-worth individuals pay less tax is becoming more and more visible and also more and more undeniably clear. So, what is actually driving though these issues, like, why do high-net-worth individuals pay less tax than the rest of the population? The key fact is that at very high level of wealth, it's very easy for these people to structure their wealth in a way that it doesn't generate any taxable income basically, or very little taxable income. And so it's basically a failure of the current system of progressive income taxation, of the personal income taxation system.
So, when we are thinking about policy responses, it's actually something that is good to keep in mind. And due to this fact, a lot of people have been thinking about, when thinking about policy responses, they have been thinking about responding through increasing personal income taxes on high-net-worth individuals.
Giulio Varaskin
So for example, the increase in the taxation of capital income, which constitutes the majority of the income that these people usually have. However, when we look at just like increasing capital income taxes, we do see a potential effect in most countries. So it could improve a bit the taxation of the top of the population, but at the same time, the key issue remains. So the ability of these people to structure their wealth in the form of retained earnings, so basically of not receiving the capital income that they are accumulating, would stay there. So like the income that they would be receiving would be taxed more, but it would still, like a large part of it would still be missed.
And I think this is visible in this graph that shows very well the distribution of how much capital income is retained and how much is actually then received by these people. Then another policy response that is very, very commonly discussed is the taxation of holding companies. We have a great example actually for that because, well actually, high net worth individuals usually structure their wealth in very intransparent ways, and one of the most common ways to do that in Europe is through holding companies. So basically the income that these people receive is then retained within a holding company, it's not received directly by the person, and by doing that it escapes personal income taxation. We have an example of a policy trying to tackle holding companies.
In the United States for example there is a tax on holding companies in place that basically yeah taxes holding companies. And in fact we do see that this policy measure has some effect. So in fact in the United States despite yeah which is a funny statistic the high net worth individuals actually have slightly higher personal income taxation due to this tax because it disincentivizes retaining her earnings within a holding company. But we do still see in the United States where this policy is in place that high net worth individuals do still pay significantly less tax than everyone else. So it improves a bit the situation but it does not equalize completely with the rest of the population.
And finally another solution that is often debated then is the idea of net wealth taxes. And we have been recently also doing a bit of an analysis of all of the evidence that we have on net wealth taxes and I think in general one of the conclusions that we have when we look at the history of wealth taxes is that they have not worked so well.
In general, they tend to have low revenues and they were not very good at taxing the richest. They were somewhat good at taxing millionaires, but then when we look at the very, very richest, so centimillionaires and billionaires, net wealth taxes of the past were failing at taxing them from the evidence that we have. And why was that though? Like, why weren't they working? And so when we look at how they were designed, we see that they usually were designed with low thresholds.
So they started applying at relatively low levels of wealth, like one or two million of euros. And this often created some liquidity constraints for maybe companies or people who have their money in housing. And due to these problems, what governments often responded with were exemptions. So for example, professional assets very famously were excluded from the tax base in many countries for net wealth taxes. And the category of assets that were excluded, such as professional assets, were exactly the assets where the richest tend to hold most of their wealth.
So basically there was a situation in which the type of assets that are held by the very top were excluded so most of the money was being missed and at the same time the richest were also less taxed than slightly less rich people. So how can we basically learn from this and build a policy that could actually effectively tax high net worth individuals and sort of bridges all of the difficulties of the previous of all of the other policy reforms. So we do think at the observatory we have been looking at this and we came up with a proposal. We do think there is value in using net worth as a measurement because it's way less manipulable than income. So net worth is still a good measure to start from.
However when thinking of net worth taxes there should be basically no exceptions because that's what allowed the rich to basically avoid taxation in the past and it should also be structured as sorry and it should also have a higher threshold. So due to the fact that there are no exceptions to avoid liquidity constraints one of the key things would be to also target it towards the people that don't pay already tax.
So we're for example looking at a 2% tax on centimillionaires and billionaires. The idea is to structure it as a minimum tax. So every tax, like all of the taxes that are already paid would be subtracted from it, which basically makes it work as sort of like a fill in the gap from the current existing income taxation system. And one very important other thing would be to be to complement it with anti-exile mechanisms, so like to avoid people potentially moving due to this taxation. And I don't want to take too much time.
So but yes, this is how we came up with the idea of having a 2% minimum tax on centimillionaires and billionaires. And let me move. There is a lot of, in terms of addressing also the coordination issue, that's something that comes up a lot when we when we talk about these things. Like it is possible to design this policy as something that can work at the member state level. Countries can move forward and tax high net worth individuals also on their own, particularly through having very, very strong anti-exile measures.
But there is of course a role that like coordination, coordination would make the enforcement and the the passing of these policies easier.
I have highlighted a few things, but I'm going to go through them maybe relatively quickly. For example, within the EU, what I think about is one of the many things that could be done would be having a taxation of holding companies, and that is something that could happen within the EU, that could be done and achieved within the EU, that wouldn't completely fix the situation, but would improve it. Europe could also work towards improving exchange of information and work towards some sort of European asset registry and integrated with beneficial ownership information, which would improve enforcement. And then finally, the EU would also be able to have a very big role, for example, in harmonizing exit taxation rules and making sure that within member states there is some sort of level playing field when it comes to exit taxation. And I'm happy to discuss it further if you have any questions, and with that I leave my time to Andre.
Andrzej Robaczewski
Thank you, Chair, thank you, honorable members of the FISC Committee for the invitation. I'm very pleased to be participating in today's meeting.
In this brief introductory statement, I will provide several key messages from our report on wealth taxation that was published this spring and explain a little bit how it translates into our today's discussion. Just as a disclaimer, please note that the report itself presents the authors' findings, so us as researchers, and does not reflect the position of the European Commission. It's something we always are asked to emphasize. I hope our meeting will be another building block in designing a credible framework for ultra-high-net-worth individuals. Now, the report shows you how wealth is highly concentrated, but this is something we all know.
However, we must emphasize that the disproportions are growing. In 2023, the top 10%, as Pascal mentioned, held around 60% of the EU household wealth, while the top 1% roughly a quarter, and the bottom half approximately 3%. These figures alone do not identify the right tax. They raise a crucial question: how consistently does the tax system actually capture wealth as it accumulates, generates returns, and passes between generations?
Now, at the extreme top, the picture is even more striking, and that's something where I'd like you to pay a little bit more attention. The EU's top 0.01% increased its wealth share from 4.5% in 1995 to 5.7% in 2023. Globally, the increase was a little bit different, 7.4% to 10.7%. So Europe's trajectory is a little bit different, but the underlying challenge remains: that exceptionally large fortunes often comprise business equity and assets that appreciate without an immediate taxable sale. For the ultra-high-net-worth individuals, economic gains and currently taxable personal income can be very different.
If you look at the country comparison, it reminds us that Europe is far from uniform. Wealth concentration differs across Member States, reflecting housing, pension arrangements, ownership structures, and institutions. A tax instrument outcome in one jurisdiction cannot simply be extrapolated to another, particularly when estimating revenues, investment effects, or mobility. This takes us to our central findings, that wealth taxation is rarely a single instrument.
It is a system of interacting taxes. Our study assessed also net wealth taxes, the taxes on realized and unrealized gains, inheritance and gift taxes as well as the exit taxes. Each reaches wealth at a different stage. Realization-based capital gains taxation allows deferral. Taxing unrealized gain can address the weakness but also presents valuation and liquidity challenges, especially for the privately held businesses.
Then inheritance and gift taxes address intergenerational transfers, although exceptions may erode their bases. And then lastly, exit taxes can safeguard taxing rights over gains accrued before relocation. A recurrent wealth tax may complement these instruments, but narrow bases, extensive reliefs and inconsistent valuations can undermine its effectiveness. Nor can we disregard possible effects on investment and entrepreneurship. So the critical choice is not solely a specific tax rate or a particular instrument.
Andrzej Robaczewski
Now, there are several challenges that we bring up in the latter part of the study. We have technical challenges, so the tracing ownership, valuing private companies, and managing liquidity. We have the behavioral aspects, something that is growing strongly as a research part of taxation as well. Here we have the restructuring, avoidance, and potential relocation, while distinguishing reporting responses from changes in productive investment. We have legal, so the equal treatment, proportionality, and the EU free movement.
And finally, we have the political aspects, so whether the taxpayers and the public regard the system as understandable and consistently applied. This is where the credible enforcement is not a supporting detail. It is a condition for a framework to work as a whole. And lastly, I just want to bring up that, I mean, the forthcoming study for the European Parliament, which will be, as Pascal mentioned, published early January, it will attempt to take the next step in our discussion. So from understanding the past experience to evaluating possible frameworks, specifically for the ultra-high-net-worth individuals.
We are currently working on this. The study will examine tax bases, rates, thresholds, valuation, and exemptions, and their interaction with existing taxes. It will assess evidence on revenue, capital mobility, investment, and entrepreneurship. But equally important is enforceability. Can actually administrations identify beneficial owners and value assets held through companies, trusts, or foundations?
Can cross-border reporting systems exchange usable information? The paper will also examine tax treaties, residence, exit taxation, and possible tail provisions, and the contribution of cooperation at the EU, OECD, and the UN level, something I'm sure you also want to discuss. Now, the purpose is not to prejudge a preferred model, but to establish which options could be economically sound, legally proportionate, and workable in practice. Now, to conclude, I would just like to emphasize one final point. Our study from this spring has examined how wealth taxation has worked in practice, what has succeeded, what has fallen short, and importantly, what lessons we can draw from these experiences.
Yet the economic and fiscal challenges facing Europe are constantly evolving at a pace much more rapid than a decade ago. Recent crises, mounting fiscal pressures, and long-term investment needs make it increasingly important for researchers and policymakers to translate this evidence into sound policy choices. In other words, we need to get it right this time. There's little room for error. If a new tax framework for ultra-high-net-worth individuals is to be introduced, we must get its design right from the outset, ensuring that it is progressive, economically efficient, enforceable, and sustainable over the long term.
Ultimately, the success of such framework should be measured not by its ambition, but by its effectiveness in practice and its credibility over time. If also on the report itself, the one published from spring, if you'll have any technical questions, whether related to particular member state data or a particular tax that we analyzed, you can also reach me directly by email. I'm happy to discuss the nuances. Thank you.
Tero Tuovinen
Okay, thank you.
And thank you, Chair, and thank you for the invitation. And hello and good afternoon, everyone. And let me just say first that it has been interesting to hear the previous speakers. Yeah, so my name is Tero Toivonen and I work as a tax audit manager in the Finnish Tax Administration. In my presentation, I will explain how wealthy individuals are currently taxed in Finland and describe related compliance activities of the Finnish Tax Administration.
The audit team that I lead examines whether wealthy individuals liable to tax in Finland have correctly reported and paid taxes on their international investment activities and more generally on their worldwide income and assets. In some cases, we also investigate the actual residence and Finnish tax liability status of individuals who spend time in several countries and who has claimed to be tax resident in another country. The individuals subject to our audits often have significant foreign income, but there's no specific wealth threshold for selecting individuals for tax audit.
Generally speaking, the taxation of wealthy individuals or high-net-worth individuals in Finland is relatively comprehensive. Earned income is taxed progressively and the effective tax rate of high earned income is approximately 50%. Capital income is taxed at the rate of 30 or 34% depending on the amount of income. Capital gains and other forms of capital income are broadly subject to tax. High-net-worth individuals often hold and manage most of their investment assets through domestic or foreign investment companies or holding companies or through domestic or foreign unit-linked insurance policies.
This provides a tax deferral benefit, meaning that as a general rule, investment income is taxed as the individual's personal income only when they withdraw funds from the investment company or investment-linked insurance policy. In practice, overall tax burden of wealthy individuals is therefore also affected by the rules governing corporate taxation and the taxation of unit-linked insurance policies. Finland's corporate income tax rate is currently 20% and will decrease to 18% next year, but on the other hand, capital gains received by investment companies and holding companies are broadly taxable in Finland.
In Finland, dividends distributed by an unlisted company are partially tax-exempt for its shareholders. Finland levies inheritance and gift taxes, which generates approximately 1 billion euro tax revenue annually, but there is a significant tax relief for business assets transferred to the next generation. Finland does not have a general exit tax on unrealized capital gains for individuals. However, Finnish tax legislation includes an exit tax provision governing situations where an individual has acquired shares in a tax-neutral share exchange and moves outside the European Economic Area or disposes the shares while resident in the EEA country within five years of the exchange. This exit tax applies, however, to only a small fraction of the situations in Finland in which tax on unrealized capital gains may be avoided by moving abroad.
In 2020, the Finnish Ministry of Finance conducted a study on the introduction of a general exit tax applicable to individuals.
Tero Tuovinen
According to the study, such an exit tax could generate approximately 50 million euros tax revenue annually. However, the study also identified several challenges, including the administrative burden, particularly in relation to asset valuation and monitoring of taxpayers after they have moved abroad. The exit tax has not been introduced in Finland. Finland abolished its wealth tax in 2005. An exit tax, wealth tax, and more generally the taxation of unrealized capital gains are not included in the program of Finland's current government.
Parliamentary elections will be held in Finland in six months and these issues may may arise during the election debate. The Finnish tax administration has identified some cases in which a high net worth individual has moved from Finland to a country that does not levy capital gains tax or inheritance and gift taxes. After moving abroad, the individual has sold assets or transferred assets to their children as gifts.
However, such cases are relatively rare. From a tax compliance perspective, a comprehensive international exchange of tax information, both automatic exchange and exchange of information on request, is essential for effectively monitoring and taxing foreign assets and income. Automatic exchange of information under the DAC, CRS, and FATCA provides a comprehensive information base for monitoring foreign source income and selecting cases for tax audits. Through the international exchange of information on request, tax auditors can obtain detailed case-specific information on the foreign assets and income of taxpayers in Finland. Based on this information, adjustment can be made to their taxation.
Finland currently receives fairly comprehensive information even from well-known tax havens under international tax treaties and tax information exchange agreements. And from a tax compliance perspective, Finland's controlled foreign company, CFC, legislation has proved to be an effective tool. In certain circumstances, it has enabled Finland to tax the income of the Finnish-owned investment companies, holding companies, trusts, or foundations established in a jurisdiction with low corporate tax rates as income of the foreign entity's Finnish resident owner.
In Finland, CFC rules apply to both individuals and companies, including small and medium-sized companies. In its response of 3rd September 2026 to the European Commission Tax Omnibus Directive proposal of 24th June, the Finnish government stated that the CFC rules continue to play an important preventive role in combating tax avoidance. The government considers it important that the legislation can continue to be used to prevent holding company arrangements involving individuals. And in addition, since 2021, a foreign company may be treated as Finnish tax resident if its place of effective management is in Finland. This rule also applies to investment companies and Finnish tax auditors have applied it in practice.
So, this was a brief overview of Finland's current tax legislation and tax compliance work concerning high-net-worth individuals. Thank you.
Jean-Paul Olinger
Good afternoon.
Thank you very much honorable members of this EU Parliament and also President for this invitation. I would like to acknowledge also the important work that has been done by the EU Commission in that report on wealth taxation including net wealth capital and exit taxes and also the think tanks on the work that they have done. Myself, Jean-Paul Olinger, I'm director of tax administration in Luxembourg. As such, I'm rather executing tax policy than doing tax policy. So my reflections might be complementary to those of some of the panel colleagues.
Important debate, this is an important debate in the context of current uncertainties deriving from transitions in demographics, in AI, in climate and in reglobalization. And these uncertainties create huge challenges for our societies. I believe that this institution as well as our governments and administrations have responsibility to manage this ambiguity and uncertainty for our society. Myself, I was last week in Dublin at the TADEUS meeting and we brainstormed with DG TAXUD and my fellow tax commissioners of other EU member states on these topics such as the tax gaps, digital transformation and also resilience. And next month we're going to have this same debate at the level of OECD.
The report that was mentioned before mentions the timeframe from 1985 to 2023 and of course focuses on wealth distribution. And it shows that the wealth distribution difference within the EU compared to non-EU is largely different. Non-EU regions are much higher in that concentration. I would like just to take a step back to put that in a context before coming to how we deal with this in Luxembourg. Because I believe between 1985 and 2023 many things have changed also within the EU.
And the EU has undergone major progress over these past decades. The EU has ensured peace within its borders. Economic and standard of living has increased largely. Life expectancy has increased. Living standards, as I said, the European integration.
Although on the other side indeed we have increasing pressure on housing costs. Okay. On housing costs and then also regional disparities. And also the aging population is partly important to the discussion that we have here.
Our EU economy, although the wealth distribution has increased, and if we say from 85 to 2023, the 1% has increased by 2%. The increase over almost 30 years is not, is important, but it's 2% compared to the big percentages of non-EU countries. But we have to see that also the EU economy grew as well, expanding by roughly 72% of the economy in constant prices between 1990 and 2024, though it severely lagged behind the growth trajectories of the US and emerging markets. And the EU has lost in global GDP share from 30% to 17%, although it has grown in total numbers. And I believe this is also important to this topic, and the Letta and Draghi reports, they try to give answers to that question.
But the questions are linked. And therefore, for doing this, what we need definitely is private capital. We need more private capital.
And in order to have private capital, we are in competition with other economic regions. And this private capital that we would like to attract is also a reason why in the past some of the net wealth taxes haven't worked and have been abolished in many countries, amongst others Luxembourg, following Germany, Austria and others after debates on the constitutionality of these taxes. In the meantime, if we say that we need this capital and that overall share of our GDP is reducing, another figure that I thought is interesting to look at is the tax-to-GDP ratio. The tax-to-GDP ratio shows how much tax pressure, fiscal pressure there is on the GDP. Of course, we have a different way of living in Europe and we are very proud of that.
But the tax-to-GDP ratio in the EU is very high compared to other regions. The EU has a tax-to-GDP ratio of 40%. So 40% roughly of GDP goes into taxation. If we compare that to the US that is at 25%, China that is roughly at 20% or South America at 23%, we see the difference of the GDP that is used for taxes. And so another figure that I wanted to quickly look at was the total amount of tax that we have in the EU.
The total amount of tax that is levied in the EU locally and nationally is about 7.2 trillion or 7,200 billion. The tax proposal that was made that in Luxembourg was welcomed when it was done at the level of the G20 and also discussed afterwards, came up for the EU of an additional tax of 67 billion. Additional tax, so roughly less than 1% that we would raise compared to the total tax contribution that we have in the EU. This is a gross amount and talking to it from the perspective of a tax administration, of course there would be a lot of administrative burden to levy that tax because we would need to create these registers in order to be able also to measure the wealth that we would like that we would like to tax. So and therefore I believe in political and economic terms the answer to the question must also be looked against the concrete impact of this tax and in terms of global competition for capital but also of course in administrative burden.
Coming to your questions that you mentioned before, I believe also it's important to understand what we want to achieve with it. So saying that we would raise an additional percent of tax in gross amounts versus the administrative burden that we would that we would create with it, of course it's also a question of for this the fair taxation. There are different ways of presenting it. If we say that today the the percentage of wealth is concentrated, it would be interesting to see in the 0.01% on where is it concentrated? Is it concentrated in a certain sectors?
Is it these the digital sectors that increase very much and is that just a very limited percentage of people that own this or is it broader? Because if it is broader it might have a different a different solution. Because we also know that this percentage this 1% or 10% of people they pay also a large they have a concentration also on income tax that they pay today and so the two are also linked. Therefore depending on what we want to achieve, do we want to close financing gaps? Do we want to reestablish a perception of equality?
The answer might be, might be different. A point that came up was the unrealized capital gains, and I believe taxing unrealized capital gains is an interesting point. And I tried to find figures on how much wealth of this overall wealth comes from corporate shareholdings. And I saw that, at least that's what the AI told me, that roughly 70% of the total wealth is in corporate shareholdings. So if it is about 70% of the wealth that is in corporate shareholdings, and that these are not sold, so unrealized, taxing them would then of course come, we would come up with the liquidity discussion that was mentioned before.
And that would probably go back to what is the dividend rate on these shareholdings, because the owners would need to have the cash to pay, to pay the tax. So you were mentioning then also inheritance and gift taxation. So when we come to inheritance and gift taxation, especially to the life cycle taxation of wealth, if it is coherent, I would like just to show one example that I found very interesting. And I just take three countries, my own and two neighbor countries.
In Luxembourg, inheritance tax is limited when it is in the first degree, but we have an immovable property capital gains tax that is indefinite. You have other countries like France or Belgium, just to name the two, that have an inheritance tax, but that have limitations in the immovable property capital gains tax. And I believe if we are talking about the current life cycle taxation of wealth, it's interesting to combine the two, because immovable property is generally sold over a few generations, it's going to be sold. So once it is sold, it is going to be taxed in the situation of immovable property capital gains tax. On the other side, those countries that do not have that, they tax it in inheritance tax.
So it's interesting to see it in a broader perspective in the context of also what the colleagues said before.
The last point, Mr. President, that you mentioned before and that was not addressed, so is the cross-border mobility of capital, but also of the of taxpayers. And I believe also an interesting point there to see is if we are talking of mobility within the EU or mobility from outside from Europe to outside Europe. Because it's going to make it the it's going to be a different question on on on the fundamental freedoms maybe within the EU and then also otherwise on the on the competition within the EU, knowing that today, from my perspective, the competition is rather a rather given. And in Luxembourg, we have an exit taxation when it comes to major shareholdings that are held in Luxembourg companies. Thank you.
Pasquale Tridico
Thank you very much. Thank you. Thank you to our speaker. As you know, probably, and as you may see as well, the the the work of the Parliament here is has been always very plural in the sense that it tries to incorporate all the views, in particular in this very sensitive issue, which is tax. Nobody wants to speak about tax, in fact, at least governmental government, some government.
But we know there is a most of the evidence, however, that inequality has been increasing very much. So this is a fact, beside the pluralism and the inclusivity that we want to express. And polarization has become one issue which has to do as well with politics and not only with economy, as we all know. And most of our economy here, and you as well in your national parliaments, are aware of that.
We want to know as well your expression, your view. It's important as well what to that that you tell us what what you think in and what's the level of the debate in your own country. What I always say is that tax policy, it is true, is a national policy, however, we are overwhelmed by multinationals from one side, by capital mobility, which is all but not national. So from one side, we know that this is a tax national competence, but from another side, we know that we can tackle this issue better at European level rather than at national level. Now I would like to know the view of the European Commission, who is here in the person of Mr. Reinhard Biebel, for two minutes, three minutes.
Reinhard Biebel
Thank you, Chair, and welcome to the honorable members, to the panelists, to experts and colleagues in the room. This is a good opportunity for the European Commission to express their views on on this topic. The issue came up and gained high momentum in the year 2024, when the G20 presidency put the topic on the agenda very high. It even resulted in a G20 leaders' declaration at the time.
The following presidencies did not follow up to that level and the issue went a bit down in terms of priority list of the G20 at international level. Looking at the issue more on more substance, I can refer to the study that has just been presented by the colleague from the Center for Social and Economic Research. That's an important one. It does not direct into a concrete action, policy action, but it helps and supports the better understanding of the issue behind all that. It's important to stress that the European Commission clearly follows and is committed to the basic principles of taxation also on this file.
And they are fair taxation, everyone should pay a fair share and should be taxed effectively. More work needs to be done before common actions are taken and to ensure a much better understanding of the issue. One way of doing this is to increase and ensure a better exchange of information.
It was mentioned by panelists before, in particular on the asset of real estate and immovable property, in order to provide tax administrations more information about beneficial ownership in this respect. And this is a prerequisite for any effective action on taxation on wealth to be taken at the global level. The Commission is taking steps in this regard. I would like to refer to our proposal on the DAC recast, DAC standing for the Directive on Administrative Cooperation, which is currently under negotiation in Council, where one of the measures proposed aims at ensuring reporting and access to beneficial ownership information on immovable property based on recent obligations stemming from anti-money laundering frameworks, but also recent discussions at the level of the OECD. It is intended to provide a single access point for any real estate and immovable property information in a timely manner for tax administrations via electronic means.
This way they should get access to information on the property itself, to information on the owner and any other encumbrances.
This is the objective of this proposal. The discussions are ongoing at the moment and it is not excluded that an agreement could be found between 27 member states based also on a report from the European Parliament before the end of this year and first exchanges could take place then around the year 2029. The information exchanged and received there should help to better understand and decide whether further action should be needed in this regard. Thank you very much.
Pasquale Tridico
Thank you to the Commission for this statement. And now I will alternate the floor from the national members to the European Parliament members. Here we do have some of the European colleagues who will ask, who asked already the floor. I will start with Madame Maria Meli from Malta, Member of Parliament, S&D. Please, Maria, the floor is yours.
Speaker 12
Chair, colleagues, tax policy must ultimately serve people. For Malta, a small and open economy, fairness in taxation must go hand in hand with competitiveness, investment and sustainable public finances. On the taxation of ultra-high net worth individuals, our position is clear.
Everyone should contribute fairly and tax obligations must be effectively enforced. However, introducing new taxes does not automatically guarantee greater fairness. Wealth taxation presents practical challenges concerning asset valuation, liquidity, and administration, particularly where wealth is held in family businesses, productive assets, or long-term investments. Before creating new instruments, we should prioritize strengthening existing systems through greater transparency, exchange of information, beneficial ownership reporting, and effective tax enforcement. International cooperation is essential.
Given the mobility of capital, we should build on established OECD frameworks rather than introduce overlapping measures that increase administrative complexity. Above all, we must respect subsidiarity and national fiscal sovereignty. Member states have different economic structures and social priorities, and direct taxation remains primarily a national competence. Malta supports fair and effective taxation, but any new initiative must demonstrate clear added value, remain proportionate, and respect the diversity of our national tax systems. Thank you.
Pasquale Tridico
Thank you, Maria. Now I will ask to Mr. Xenofon Baraliakos from Greece, National Parliament, EPP. The floor is yours, Xenofon.
Xenofon Baraliakos
Ευχαριστώ πολύ, κύριε Πρόεδρε. Κυρίες και κύριοι, όταν συζητούμε για την φορολόγηση του πολύ μεγάλου πλούτου, συζητούμε και για την εμπιστοσύνη των πολιτών στο φορολογικό σύστημα. Ο πολίτης που πληρώνει με συνέπεια τους φόρους του, περιμένει κανόνες να εφαρμόζονται και σε εκείνους που διαθέτουν τη μεγαλύτερη οικονομική ισχύ. Η Ελλάδα υποστηρίζει την ενίσχυση της φορολογικής διαφάνειας, της διοικητικής συνεργασίας και της αποτελεσματικής ανταλλαγής πληροφοριών με σεβασμό στην φορολογική κυριαρχία των κρατών. Αυτή είναι η βάση της προσέγγισής μας στον διάλογο που εξελίσσεται τόσο στην Ευρωπαϊκή Ένωση όσο και στον ΟΟΣΑ και τον ΟΗΕ.
Οι μεγάλες περιουσίες μπορούν να κατανέμονται σε πολλές χώρες και να συνδέονται με σύνθετες εταιρικές και χρηματοοικονομικές δομές. Γι' αυτό οι φορολογικές αρχές χρειάζονται αξιόπιστα στοιχεία για τα περιουσιακά στοιχεία και τους πραγματικούς δικαιούχους.
Χρειάζονται επίσης έγκαιρη πρόσβαση σε αυτά και δυνατότητα να τα αξιοποιούν στους ελέγχους τους. Εκεί πρέπει να αποδώσει και η διεθνής συνεργασία, δηλαδή στον εντοπισμό της απόκρυψης πλούτου, στην αντιμετώπιση της φοροδιαφυγής και της φοροαποφυγής και στη βελτίωση της φορολογικής συμμόρφωσης. Έτσι ενισχύονται τα δημόσια έσοδα και κατανέμονται δικαιότερα τα φορολογικά βάρη. Οι προτάσεις που συζητούνται διεθνώς χρειάζονται προσεκτική αξιολόγηση. Πρέπει να εξετάζουμε την εφαρμοσιμότητά τους, την αποτελεσματικότητά τους και τις οικονομικές επιπτώσεις τους.
Η ποιότητα του σχεδιασμού και η δυνατότητα ουσιαστικού ελέγχου καθορίζουν τελικά το αποτέλεσμα. Παράλληλα, κάθε κράτος πρέπει να διατηρεί το δικαίωμα να καθορίζει το ύψος και τη δομή του φορολογικού συστήματος σύμφωνα με τις ευρωπαϊκές και διεθνείς υποχρεώσεις του. Για εμάς το ζητούμενο είναι συγκεκριμένο: η συνεργασία να οδηγήσει σε έμπρακτα αποτελέσματα και σε δίκαιη συνεισφορά στα δημόσια έσοδα.
Ο συνεπής φορολογούμενος πρέπει να βλέπει ότι η οικονομική ισχύς συνδέεται και από την αναλογούσα φορολογική ευθύνη. Σας ευχαριστώ.
Pasquale Tridico
Thank you. And now we give the floor to Pascal Canfin from Renew, Member of European Parliament.
Speaker 16
Yes, thank you very much, Chair. I will be one of the negotiators of the initiative report that you mentioned on this exact specific issue that is starting to be negotiated. And I have maybe one or two questions very focused, maybe for Julia and for you, I forgot your your first name. André. André.
Pascal Canfin
The first is on the exit tax. Both of you referred to that. And if, so you said, Julia, if if at that stage as today as we speak today, you can't see that much mobility effect, but of course if we are getting serious with a broad tax base and so on and so on, then of course we might anticipate a change here.
So what would be the exact measures that we should take at the European level in the, well, in complying with the treaties? So is it a EU exit tax at the border of the EU, or is it within the EU moving from France to Luxembourg or Belgium or Germany or Austria and so on? And at the end of the day, it's not the point of Dubai or whatever, it's within the EU. So what's your plan on this? The second question is the legal element.
You mentioned many times that we need to, to make sure that it is proportionate and it is constitutional. But the fact that we have a significant share of very rich people, ultra-rich people that do not pay taxes as, let's say, middle class, is, is does not comply with the proportionality principle neither. So if you think about the proportionality principle as a legal constraint in order to put something in place, maybe we should also think about this very same principle to challenge the situation we are in. So both of you, have you worked with this angle in mind?
Speaker 18
Thank you. Now, the floor to our speakers. I will start with Julia, please.
Great, thank you very much. Thank you for the questions. They're very important questions, I think.
Giulio Varaskin
It is true that generally when we look at the research on tax exile and like tax flight following the increase of taxation, what we see is that there isn't so much a response. And just to clarify a point, it is true that it's also because of course they're not very effective, these taxes, but also what we see is that this happens at each level of increased taxation. So actually, like what we can see is that the response is low per amount of tax raised. So even like in a way, it's more than just they're ineffective and that's why they move very little. So even when you control for that in a way, you still see that there isn't much of a response and also that it doesn't have much of an effect on the economy because the impact on the economy has always been very limited in basically every study that looks at this.
And it's true that we live in a very globalized world that allows people to to move and it's a it's something that must be taken seriously. When we talk about exit taxation or anti-exile measures, of course there's different approaches that one could take. What we at the observatory generally think is that the what the current system allows people to do is to basically build a business in a country, become rich in a country, benefit from all of the public investment that those countries have and allow them to and that allow people to also build their wealth and then to move away once they have become rich. And rather than a single exit taxation, what we think would be probably best as an enforcement mechanism to would be to have some sort of what we call exit trailing taxation system. So a like the to equalize basically the incentives, so right not just a one-off tax, but basically the idea that if you have become rich in a country, you've lived in a country for a very long time and then you move away, you are still owed you still need to pay a minimum amount of tax wherever you go, whether you pay it in the country you moved to or you pay like or you pay it in the country where you came from.
And also the impact on tax revenue, for example, is not very high.
Giulio Varaskin
So this is nothing new. It's something that the US does, for example, with their citizenship-based taxation and that's actually a rather extreme case, so like that's tax that is due for lifetime for every citizen. So what I think would be like a the good direction to move towards would be to sort of have maybe an in-between between these two system, one in which you basically leave and then you you don't owe no tax at all and one in which you owe it for life.
What in terms of the European Union, so I think right now there is different things that could be done. And of course, ideally there could be one exit taxation measure at the European Union level, but what could already be enforced would be, for example, to have a sort of like harmonization between all of the different exit taxation schemes that exist at the European level and to have sort of like a minimum exit tax because certain countries don't have one, and and this also allows then capital to escape through the European Union because then it's possible to move it through a European country that doesn't have very high exit taxes and then to move away. So I think closing these loopholes would be crucial at the European level. And yeah, and then of course to move towards also then more proactive policy measures that like establish more ambitious regimes such as trailing taxation and or like a very strong exit taxation. But I do think, yeah, it's really important and it's one of the key issues also of one of the key criticisms when it comes to taxing wealth, taxing high-net-worth individuals.
Andrzej Robaczewski
Thank you. I mean, I fully agree with what Julia said. And it's a very interesting topic because also so much more research has been done on the exit tax when it comes to the US. And now in Europe, I mean, we see a lot of it has been performed on the example of UK, something Gabriel, Gabriel Zucman is often speaking on. But when it comes to the European Union, the situation is much more complicated.
I mean, our report, I mean, shows, we also highlight this, that the EU law requires that the exit taxes do not unduly restrict mobility, which has led to deferral on installment mechanism, often with guarantees or interest charges to ensure proportionality. But this coordination with double taxation agreements and administrative cooperation, something Julia mentioned, is essentially essential to avoid double or non-taxation. Here is also the behavioral aspects that we must, we must consider the behavioral aspects to be growing in the sense of what to consider moving forward when we do the research. The behavioral responses to exit taxes are, I mean, I mean, it's rather limited at this point.
The broader research on mobility, however, suggests that the high wealth relocations are still rather rare and that movements are more influenced by preferential regimes in destination countries rather than by the taxation itself. Now the country experience, and that differs across the Europe, indicates that exit taxes then can safeguard revenue even if the number of affected taxpayers is small, provided that valuation rules are enforceable and international cooperation is robust. So we do also conclude in the section of the exit tax in in our report that the exit taxes work best as part of a coherent capital gains tax system, ensuring that gains accrued domestically are taxed on a fiscally fair basis, and their effectiveness depends on these clear rules, administratively workable and coherent deferral arrangements, and as one of the colleagues before mentioned, strong information exchange rather than on high rates or broad scope. So to put it to conclude, there are mechanisms that already are in place and exist, and we we could improve them, improve what is already in place rather than changing it completely just just to avoid any any chaos on the administrative basis. Thank you.
Pasquale Tridico
Thank you, Andre. And now we go for a second round of members of national parliament questions, starting with Madame Patricia Almeida, Portugal, National Parliament, from Patriots, please.
Patricia Almeida
Thank you, Mr. President. A experiência europeia demonstra que os impostos sobre o património líquido levantam dificuldades significativas de avaliação, fiscalização e cobrança. Vários países, como ouvimos hoje, a Alemanha, a Suécia, abandonaram estes modelos. E os estudos mostram que mesmo nos países onde existem, a sua contribuição para a receita fiscal total tem sido relativamente reduzida. Neste contexto, não podemos ignorar os riscos de deslocalização de capitais, como foi referido pelo colega da Finlândia, de alteração da residência fiscal e da tributação de património que não gera liquidez suficiente para pagar o imposto.
Speaker 21
Por outro lado, não podemos ignorar outra realidade, a da evasão fiscal, o planeamento fiscal abusivo e a utilização de estruturas jurídicas complexas para reduzir artificialmente as obrigações tributárias. E é aqui que considero que devemos concentrar os nossos esforços.
A justiça fiscal não se mede pelo número de impostos que criamos, mas pela capacidade de garantir que os impostos existentes ou aqueles que pretendemos criar são efetivamente e justamente pagos. No caso de Portugal, tal como outros Estados-Membros, precisa de investimento, capital e de crescimento económico e precisa de um sistema fiscal que seja essencialmente justo, previsível e competitivo. Deixava só algumas questões para reflexão. Quando afirmamos que os ultra-ricos pagam proporcionalmente menos impostos, estamos a comparar os impostos pessoais com o património acumulado, com o rendimento fiscal declarado ou com o rendimento económico total, incluindo mais-valias não realizadas? E nessa comparação estão incluídos os impostos pagos pelas empresas detidas por esses contribuintes?
Como última nota, a Europa precisa de justiça fiscal, mas também precisa de crescimento e investimento, sempre com respeito pela autonomia fiscal dos Estados-Membros. Obrigada.
Pasquale Tridico
Thank you. And now we move to Carlos Martín Urriza from Spain, National Parliament.
Carlos Martín Urriza
Yes, thank you, Pascal. I will address my speech in Spanish.
Bueno, como seguramente ustedes saben, España es el único país de la Unión Europea que tiene un impuesto sobre el patrimonio y yo quería compartirles nuestra experiencia. Este impuesto no ha tenido efectos negativos sobre el ahorro, ni sobre la inversión, ni sobre el emprendimiento. De hecho, España crece vigorosamente en términos de producto interior bruto y en términos de empleo. Tampoco ha provocado ninguna deslocalización de los ultrarricos. El señor Amancio Ortega, el dueño de Zara, con una fortuna estimada de 147.000 millones de euros, se puede permitir seguir viviendo en España a pesar de este impuesto.
De hecho, mi grupo parlamentario lo que ha planteado es incluso ampliarlo para aquel patrimonio que se sitúa por encima de 50 millones de euros, eliminando una serie de exenciones que no tienen sentido para la parte alta de la distribución patrimonial. En concreto, una de ellas es la exención de la empresa familiar.
Aunque parezca sorprendente, Zara es considerada una empresa familiar porque el señor Amancio Ortega participa en la gestión de la empresa. Obviamente esto no tiene ningún sentido de que dejemos exento a Zara por considerarlo una empresa familiar, definición que sí puede tener sentido para pues para una pequeña o mediana empresa, pero no para una empresa de estas dimensiones y para el patrimonio que está detrás. Desde mi punto de vista, esta discusión que estamos teniendo hoy aquí es una discusión muy importante porque volvemos a estar dentro de la Unión Europea en un momento hamiltoniano, en un momento de salto necesario, como en su día lo tuvimos con el mercado único o con el euro, y ahora lo necesitamos en términos de tener un tesoro europeo que debe ser financiado con un músculo fiscal propio. Y este músculo fiscal debería basarse en impuestos directos que son más justos como el que estamos discutiendo hoy aquí. Ese músculo fiscal precisamente debería llevarnos a unos eurobonos que nos sirvan para financiar bienes públicos europeos en defensa, en transición verde, en revolución digital y en vivienda, si no queremos que nuestra unión, que no lo queremos de hecho ninguno, quede descolgada del progreso.
Pasquale Tridico
Thank you. Thank you, Carlos. And now we move to Marc Botenga from Left. Thank you.
Marc is a member of European Parliament.
Marc Botenga
Merci, merci aux orateurs de leur présentation et je voudrais, bon tout d'abord évidemment c'est important qu'on en discute ici parce qu'on sait le soutien populaire qu'il y a en Europe parmi les citoyens pour une telle proposition. En parlant de la Belgique on parle de 80%, je pense qu'au niveau européen on est aussi facilement deux tiers de la population qui est en faveur de cette forme de taxation des plus riches. Évidemment on parle avec des standards et des étalons légèrement différents. On parle ici au-dessus des 100 millions, on sait qu'au niveau national que ça soit en Belgique, en France il y a des discussions à partir des 5 millions pour aller plus loin ou dans d'autres comment dire de toucher d'autres d'autres groupes de personnes. Je suis particulièrement content parce que c'est un argument qui revient quand même beaucoup par rapport à la fuite des capitaux que vous relativisiez la question.
Je pense que c'est aussi le résultat d'un nombre d'études et c'est important pour nous non pas pour négliger la question mais pour ne pas que la question soit invoquée comme un alibi pour dégager en fait la mesure de la table.
Je suis un peu un peu déçu quand j'entends les premiers échanges que la Commission prévoit en 2029. Je pense qu'on doit accélérer surtout dans le moment dont nous sommes aujourd'hui en Europe. Mais j'aurais des questions un peu un peu précises peut-être et non pas pour vous jouer les uns contre les autres par rapport à Julia et Andrej. Mais quand on voit les analyses qui sont faites sur que ça soit l'impôt sur la fortune qu'on a pu connaître en France, les études qui sont présentées aussi en Belgique sur ça. Il y a quand même une série de de leçons ou de propositions qui viennent comme une déclaration directe par les intermédiaires justement de ce de ce patrimoine aussi pour faire pour éviter de devoir avoir un cadastre.
Une assiette calculée sur comment dire un patrimoine global. Une taxe de sortie oui ou non et alors à voir parce que comme vous le voyez ça me semble peut-être pas la première des priorités.
La question des exonérations et un seuil quand même et un taux relativement élevé. Et là sur ce dernier point, mais peut-être que j'ai mal compris dans la dernière intervention, vous sembliez dire que la question du taux est peut-être moins importante tandis qu'à la présentation de l'observatoire j'avais cette impression exactement contraire et c'est aussi ce qui ressort des auditions que nous avons pu avoir en Belgique que la question du taux fait un énorme fait une énorme différence. Donc je voudrais peut-être vous entendre tous les deux là-dessus. Merci beaucoup.
Giulio Varaskin
So I will reply first, sorry, to the question of the Portuguese I believe. Belgium. No, the first one, there was another one, yeah, Portugal. And yeah, so I wanted to address very quickly the matter of comparing different types of taxation and when we talk about the high-net-worth individuals paying less taxes than everyone else. The reason, well first of all, what when we look at those graphs, those graphs are put together all types of income, so it's the same types of income for everyone.
But of course when it comes to the super-rich, to high-net-worth individuals, what usually happens is that the majority of their income comes from capital income.
Giulio Varaskin
So hence why the difference, it's not really a difference in measurement, it's just a difference on the type of the income composition across the income distribution. And yes, indeed, when it comes to capital flight, as we were saying before, we know from studies and there is new studies coming out all the time, and we know that the response is limited and that it doesn't have such a big effect on the economy. And we also know that it is not a law of nature and that these responses change depending on the policies in place. So moving maybe to Marc's question then on all of these different things. And maybe I start with the exit tax because it's the most connected one.
I do think exit taxation and having a proper regime is important. It's important because, because even though these responses are limited, it's like having a sound structure also is important in a moment of heavy politicization of these issues. It's, it's like it really would make the framework more sound and it would also ease the implementation and also avoid all of these loopholes that there can exist within the European Union.
When it comes to the, when it comes to the rate that we were talking about before, when we talk, well, the proposal of the International Tax Observatory of having a 2% minimum tax, the 2% is really designed to be a sort of minimum floor. Like, it's designed as like the amount that needs to be had to make sure that these people pay as much as everyone else. It's not really a rate that is built to increase tax progressivity, it's a rate that is there to restore the bare minimum of tax progressivity. Then of course it's a political conversation whether there can be higher rates, etcetera, etcetera. When it comes to the tax base, so where do we start taxing, and that brings me also to then the exceptions.
What we have seen with the past experiences with wealth taxation, as also Andreas has presented, is that they often didn't raise a lot of revenues and a lot of revenue and they were not very good at taxing high net worth individuals. And that is largely also because of exceptions. So when it comes to exempting family businesses, when it comes to exempting professional or productive assets. And that is also why when we thought about a measure, we emphasized the importance of having a measure that has no exceptions. And having no exception then also means that you really need to target the people that maybe don't have liquidity issues and so targeting the very top, so the people that don't pay tax much yet.
So that's a bit the rationale behind our thinking. But also, I want to stress our proposal is a minimum proposal. It's a proposal designed to basically fill a gap that is there, and it's not intended to to sort of be a ceiling, but rather a floor to other proposals or to even higher rates. So, yeah.
Andrzej Robaczewski
Thank you, thank you to everyone for the comments, and also to answer Marc's question. I mean, let me start by saying that I don't really think that what Julia said and myself is in the opposition. I view it more that the studies, the proposals, and the conclusions, they complement each other. Because your question essentially could be tied down to, you know, what is the right tax framework going forward?
And simply also the scope of our study prepared for the European Commission suggest that this question on the framework, it's a bit related to Pascal's question at the beginning on what we should reflect on. We could distinguish it, we could split it in two: whether the existing tax systems actually provide the necessary instruments to tax the very wealthy individuals, and whether these instruments operate effectively in practice. Now, most Member States, and that has been brought up by many of you, already have relevant instruments, including the personal income taxes, capital gain taxes, inheritance and gift taxes, and in some cases the net wealth taxes, not all of them, as we know. But the interactions between these instruments does not always ensure consistent or effective taxation of individuals at the very top of the wealth distribution. So for the ultra-high-net-worth individuals, the challenge often arise from the concentration of wealth in business ownership, financial assets, we know this, but these forms of wealth may also in the same time generate substantial increases in economic value without necessarily producing taxable income in the same period.
Now, consequently, the effective taxation of the ultra-high-net-worth individuals may and will differ significantly from what the statutory tax rates would suggest. The experience of the net wealth taxes has been mixed in the past, and I think this is why, you know, when discussing this topic, both the study and how is it best to move forward, I think we just need to be cautious and careful because from the economic perspective and the taxation, the framework taxation perspective, it's good to favor a comprehensive assessment of the already existing tax system before introducing new taxes that we are sure they will be efficient and work as planned. There are, I mean, priorities that would seem to be very relevant to point out in this. First, the improving the taxation of capital income and capital gains, including reducing opportunities for indefinite tax deferral. There's also the reviewing exemptions and preferential treatments that may significantly narrow the tax base while retaining well-targeted safeguards for genuine illiquid business assets.
And lastly, strengthening the reporting that many of you have mentioned, the information exchange and administrative capacity, because even a theoretically well-designed tax cannot perform effectively without credible enforcement. So just to conclude, the objective should not be solely focused on introducing new taxes, but also to first maximize the number of wealth-related taxes, the ones that already exist. We need to improve the coherence, effectiveness, and the economic efficiency of the overall tax system. I think that's also something the Commission has highlighted in their attempts. So a broad and enforceable tax base, proportionate rates, predictable rules, and limited opportunities for tax avoidance are likely to matter even more at this very stage of this discussion than a simple introduction of a new tax or focusing too much on one particular instrument.
Thank you.
Jean-Paul Olinger
Yes, thank you. I would like just to add also, the question was not addressed to me directly, from a technical perspective maybe also to give an additional understanding to why maybe tax rates go down when the wealth increases.
In most countries we have a progressivity in the income tax rates. In Luxembourg for instance goes up to 45% on higher on higher incomes. But this is generally for more for some income types than others. For instance salary or income on professional incomes that are taxed at that level. When it comes to other income types very often this progressivity is softened by applying a reduced rate.
For instance this applies to to capital gains. Capital gains taxation very often is a lower rate just because the progressivity would hit it completely if it is earned in one year although it accumulates over years. The same for dividend taxes. Dividend taxes are very often lower because dividend income has already been taxed as income at the level of the corporate company that distributed the dividend. And therefore the higher the income very often the mix of income changes therefore the average rate goes down and therefore also in the graph I believe the average goes down to to 20% or a little bit below.
So from a technical perspective, that is maybe an additional element. And in all of this, maybe also the exchange of information framework has developed very well, as has been presented by the EU Commission before. And this gives the opportunity, we exchange roughly 4 million documents every year with 111 countries. And this gives the opportunity of the other countries to tax that income correctly. And the same way for us, we get information from other countries, this enables us to tax that income.
Pasquale Tridico
Thank you. And now we move back to the members, starting with Jacek Włosowicz from Poland, Senate, non-inscrit. Please.
Jacek Włosowicz
Dziękuję bardzo, panie przewodniczący. Koleżanki, koledzy, chcę wam powiedzieć, jak wygląda sprawa opodatkowania osób o wysokich dochodach w moim kraju, w Polsce. Od 2019 roku obowiązuje w Polsce tak zwana danina solidarnościowa. Jest to dodatkowe świadczenie, niezależne od podatku dochodowego oraz podatku od spadków i darowizn, które opłaca osoba fizyczna. Osoba fizyczna, której dochody sięgają ponad 1 milion złotych, czyli około 250 tysięcy euro.
Ta danina solidarnościowa wynosi 4% od nadwyżki ponad kwotę 1 miliona.
I osoba fizyczna, która ją osiągnie, wpłaca ją na rachunek urzędu skarbowego, a organ podatkowy przekazuje ją następnie na rachunek Funduszu Solidarnościowego. I te środki zgromadzone na tym funduszu przeznacza się w szczególności na wsparcie finansowe dla osób niepełnosprawnych oraz emerytów i rencistów. W ciągu siedmiu lat pobierania tej kwoty ona się zmieniała, najwyższa była koło 700 milionów euro, a za zeszły rok wynosiła ona 500 milionów euro. Obecnie rząd prowadzi prace legislacyjne, mają one na celu podwyższenie tej stawki z 4 do 5% i zamierzeniem rządu jest, aby zmiana ta miała zastosowanie od przyszłego roku, czyli żeby była płacona do 30 kwietnia kolejnego roku. W ten sposób mamy nadzieję, że to nasze wyobrażenie o sprawiedliwości będzie bardziej przez nas osiągnięte.
Jacek Włosowicz
No, thank you, I don't have a question. I just would like to inform you how is it in Poland.
Pasquale Tridico
Thank you. Dziękuję. And now we move to Evika Siliņa, Latvia, from the National Parliament, EPP.
Evika SILIŅA
Yes, dear chair, dear colleagues, as a former Prime Minister of Latvia, I believe fair taxation is important, but we must always consider its impact on investment and economic growth and European competitiveness. Actually, when we started to discuss BEFIT regime, it was very important that we will understand that we will compete with such countries as US and there should not be more bureaucratic burden imposed on our companies as it is already. So, first on taxing the wealthiest individuals. During our government, Latvia introduced an additional 3% income tax on annual income exceeding 200,000 euros, but by introducing new wealth taxes, I think it should not be our priority.
And when we discuss those issues, I don't think it should be as a main question here today, because we should think more about our competitiveness, not about how even more we will be imposing taxes on our people. Therefore, unfortunately, we know that big companies tend to go away from European market, and 28 regime was exactly, like, drafted to not let those companies go away, but on opposite way, for let them to stay. And ultra-rich people tax is very questionable, will it really succeed the target what we actually try to implement. Second, on international coordination, I support stronger European cooperation and information exchange alongside OECD level for sure, but this should not mean identical tax rates across all member states. For example, Latvia as a smaller member state should, should remain its flexibility on taxes.
Third, on unrealized capital gains, we must be careful about taxing gains that exist on only on paper, and it should not be that case. People should not be forced to sell businesses or assets just to simply pay taxes, so we should be very, very cautious about those issues.
About inheritance and gift taxes, I know that Finland already has imposed such a taxes, we don't have such a taxes. And again, will it be will it be the option that will challenge our companies to stay in Europe if we will impose more and more taxes? I don't think so. It's going on the opposite way. Fifth, on exit taxes.
Evika SILIŅA
I believe this is one of the taxes which should be actually agreed on all the member states more or less, but we should understand what kind of tax you are really thinking about. And thank you for colleague, all of you, what made an explanation that this should not be an tax when country move from one member state to another one. It should be probably imposed when company leaves European market. And then we can really discuss is it one tax or is this something like in United States that it remains as a lower percentage of something which for certain time the company should pay. I believe it really is something we can think about and it can give more resources for our companies and what we need to do in European member states.
So because fundamental principle of our single market should be taken into account. And finally, in Latvia we have also developed digital tax administration to reduce paperwork and save time.
And I think it's very important to do it in European level as well because you mentioned 4 million or 8 million papers. It's quite a, it's quite expensive. And if we will impose something even more, it will be more money, will go more money and financial resources to administrative burden, not to actually what we want to reach. So one more time, I think we should really remember less bureaucracy, not more, as this should be our main like headline above all the discussions that we are having here. Thank you.
Pasquale Tridico
Thank you. Now we have Alice-Mary Higgins from Ireland Senate, S&D. Please.
Alice-Mary Higgins
Thank you. And I want to again thank the chair for this important discussion and colleagues. I wanted to really come with a perspective that I think, I think there's been very good discussion on the logistics of how this can work and there's the question of what does it actually deliver and it seems that it does deliver. I think the important thing though is I think we should be considering this as a Pigouvian tax. Because this is not solely, I would say, and I'd appreciate the panel's thoughts, where it's not simply a matter of this is a potential source of revenue.
It is also the fact that there are negative externalities which are created by the excessive pooling of wealth to a very small number at the top when we look at kind of the billionaire category. There's negative externalities in terms of money taken out of the effective active economy and into individual wealth. There's negative externalities in terms of social cohesion and we all know the figures in terms of perceived inequality and what that does to social cohesion. From a climate perspective, there's very robust research looking to an excessive negative climate impact from a very small category of those who are at the top in terms of wealth. And also there's a negative externality in terms of political influence.
And when we look at that, that's why I would agree with those who said it's one we should move swiftly on. We see right now the debate happening in California where I think one of our own billionaires in Ireland, Collison, has put seven million into the campaign against that wealth tax. And I think this is a moment where coordinated global movement and action would be very, very timely.
And, you know, these are people who, that same billionaire, for example, spoke to all the EU finance ministers in Dublin a few weeks ago and has of course with Draghi now formed the Rhine Group. So if we are seeing an interventionist billionaire class who are taking an active political interest, I think it's extremely valuable that we reassert and remind all of us and show the public that there is a commitment to accountability and contribution. And I had a specific one just on dividends, which I think I'd be interested in that Pigouvian principle if people had commented on that. And I know that Mr. Ollinger, for example, mentioned dividends as an area, you know, where often wealth transfers out of companies and to individuals, and is that an area where we need to watch for loopholes in bringing in this kind of tax on the ultra-wealthy. Thank you.
Pasquale Tridico
Thank you very much. And now I will give you the very last question from the floor, because we are already late, we will have time in the second session. The floor to Madame Enrica Alifano, Italy, come from the National Parliament, The Left, please.
Enrica Alifano
Grazie, Presidente.
Il dibattito che si sta svolgendo è sicuramente di enorme interesse e vede credo posizioni alquanto differenti, anche se penso che si stia sfatando un timore, cioè che una patrimoniale possa far fuggire capitali. Il collega greco che ha parlato prima di me ha dato una prova concreta, ha fatto un esempio concreto di come ciò non necessariamente può comportare, dico proprio lo stabilire una patrimoniale possa comportare la fuga dei capitali verso altri paesi. Ora però io volevo chiedere a Madame Varaskin se sono stati fatti dei modelli economici predittivi su come potrebbe impattare sulle scelte del contribuente una patrimoniale stabilita a livello europeo. Se dunque ci sono comunque dei modelli, al di là del caso pratico che è stato portato in questa sede alla luce, al di là delle opinioni, ecco, io vorrei sapere se effettivamente ci sono degli studi predittivi su come si muoveranno per l'appunto i super ricchi nell'ipotesi in cui venga stabilita una patrimoniale a livello europeo. E poi c'è anche un'altra domanda che vorrei fare a Madame Varaskin o anche a Monsieur Hollinger, se mi vorrà rispondere, penso di sì, e che cosa pensa sul fatto di agire sulla tassazione delle rendite finanziarie derivanti da manovre speculative e come agire a livello europeo, se è una misura possibile e se dunque si può percorrere anche quest'altra strada.
Pasquale Tridico
Grazie mille per questa sua domanda. I will give the floor to the speaker for one minute. We are already consuming our time for the break, actually. We will start the second session of the 28th regime, which was actually mentioned as well by Madame Silina before. And one minute each, and then we will close.
Please, Julia.
Giulio Varaskin
Yes, very quickly. So, maybe just very quickly on the idea of a tax that takes into account externalities. I think absolutely. I think we are seeing this emerging as a problem more and more, and I think there is a fundamental tension between a functioning democratic society and the accumulation of wealth. So, tackling the issue of wealth concentration isn't just a theoretical issue, but it is a very, very pressing democratic and political challenge.
So, yeah, I agree with that.
Giulio Varaskin
When it comes to maybe addressing very quickly the the fear of competitiveness, well, I don't want to get too long, the debate is is is very complicated, but there like when we talk about taxing top wealth, what we can see from the literature is that the effects on like on the economy aren't big in terms of the in terms of economic losses. Actually, and maybe Andre actually also has worked on this, but in general in general public resources can promote competitiveness, as we have seen from the very mentioned Draghi report, what is needed is resources to invest to be competitive, and those resources can come from the private sector, but a lot of those resources will need to come from public finances and we need to raise them. And we are in a moment in which national budgets are under strain, in which we struggle to find those resources and in which we have a number of people that are the ones that have the most that pay less than everyone else. Hence, I see why I think this is a top priority. Moving very quickly to Mrs. Alifano questions.
So we don't have economic models that like test behavioral responses, we can assume at least not that I know of. What we can assume is that from from previous studies that we know from like economic responses, as I said, usually the behavioral responses aren't very big of people to these kinds of wealth taxation. You have a marginal a marginal amount of people that move, but actually they often don't.
And the European coordination would surely help. And on the taxation of finance, so we haven't done a lot of work on the taxation of finance per se as the observatory. And in general, of course, it could be a tax that would go towards taxing certain rents and certain excess profits, so it could surely help accounting towards all of this. But yes, in general, I think what is still important would be to sort of have this kind of measure that, a type of measure that establishes a level playing field and ensures that whatever the instrument that supplements that, you do have a minimum taxation that ensures that the super-rich pay as much as everyone else. Thank you very much.
Andrzej Robaczewski
Thank you. Just to maybe add without repeating what Julie said, I think it's that the question of the studies on the predictability and how would one react once this tax would be introduced is one of those valid questions that simply shows how much more work still needs to be done before introducing certain levels of new instruments of taxation.
Now, what I would like to maybe bringing all together the different points of view and questions that were mentioned by several of you in this latest round is that those differences among the member states will not disappear and the approaches between the tax administrations, they will also continue. But what could be agreed upon very easily is this cooperation among the tax authorities on implementing certain measures that would simply improve the current situation before moving step forward. What Julie has said should not be disregarded as making a move that is too extraordinary. It's just the next move that builds on top of what already exists. But what already exists has some loopholes that we haven't fixed yet.
And it's really visible, for example, to the question of representative from Italy that such studies need to be performed. The studies that we have seen is that the ultra-rich have not left Europe too much, but they might if some new taxes will be introduced.
But it doesn't change the fact that the conditions under which taxation would be introduced will be effectively the main determinant. So such studies will need to be introduced in the near future, and I would simply advise everyone to pay attention to make sure that these studies happen before taking action and decisions. Thank you.
Jean-Paul Olinger
Thank you very much for your question. I give you 30 seconds back. So indeed, the idea of taxing income of speculation is something that we do in Luxembourg. So we have a tax on speculative gains of movable assets and of course also of immovable assets. It's the same capital gains tax that applies, otherwise just the rate is higher if it happens within a certain time period.
And that could be done by all the countries on an individual level if the countries would decide so.
Pasquale Tridico
Thank you. I have already, I have still few people who wanted to speak, but I will move these people in the second session, please. Unfortunately, we were not so good with timing. It was as well my fault, but it is as well your fault coming from national parliament, probably not being so much used to speak one minute. Because here in the European Parliament, we speak one minute, and you should remember this, unfortunately.
But anyway you have actually consumed your time for coffee break outside which is expired. What I would like to suggest is to take the family photo which was in the program. So we take the family photo and then we start back here with the 28th regime. I see already the colleague Ľudovít Ódor to be already here for the for speaking about the second session. Thank you very much.
So, colleagues, we are going to take this picture, family photo, with probably the central part is the best one. We will come back, we will come down with you so that we can be closer and take this photo here.
Good morning, everyone. I'm very happy to welcome you to this interparliamentary committee meeting on taxation. It's the first time that we have such a meeting in the FISC subcommittee. And I'm very happy to see that so many of you have joined us today. We have about 50 members of national parliaments from 21 national parliaments and 18 member states.
So, it's a very good start for this first meeting.
Pasquale Tridico
Okay, colleague, please come back. So, thank you very much. As I said, we have a time constraint for several reasons. First of all, because as well our interpreter will leave at half past six, because of the room, because of we actually usually respect timing. And so, in order to facilitate the time, I will not speak on the 28th regime.
So I will not do my introduction remark on that. I will let speak immediately the speakers, starting from Ludovít Ódor, who is a Member of Parliament from Renew.
He is the rapporteur of the INI report on the feasibility of the 28th tax regime and its potential to support EU competitiveness. Then we have Professor Filip Debelva, head of the Institute of Tax Law at the KU Leuven and author of the study on the feasibility of a 28th tax regime and its potential to support EU competitiveness, commissioned by the Policy Department for Economic Growth. And then we have from the trade union, Miloš Vlaisavljević from the ETUC, European Trade Unions. And then we have Robin Wauters, board member of the European Startup Network. Ludovít, I will give you immediately the floor.
And we have as well a very long list of MEP who want to speak, member of national parliament who want to speak. So I please all of you keep to one minute your your question, otherwise nobody will speak. Ludovít, please.
Ľudovít Ódor
Thank you, thank you very much, and I'm really glad to have this exchange with national parliaments on an interesting topic with an extremely bad name, 28th regime.
It doesn't mean anything to the citizen but I think the EU Inc is is a little bit better option. So I will try to focus first on the general context and then I will narrow down the topic into the report the parliament adopted on this issue. So first, Europe needs to face the new geopolitical reality that rules matter much less than before and power and scale matter more. And in terms of power and scale, Europe is not in a extremely good position. If we look at the top 50 firms in terms of market capitalization, we found we can find one company from Europe.
Also if we look at unicorns, we had like 330 in Europe and almost 2,000 in in the United States. So what can we do in order to have a Europe which is which is much more competitive? Actually we have one one very powerful tool but we are not using it very well and this is the single market. Because only the single market can create a truly global sized entity.
So what can we do in this regard? So we can ask companies why are there not more cross-border investments inside Europe, and they answer and they mention usually three things. The first one is that there are really different business environments across Europe, so it is hard to go to other countries, especially SMEs, startups, and scale-ups are saying this. Then the complexity of assessing information, and the third issue is taxation. So if we want somehow to create scale, then we need to tackle all three issues.
So fortunately, we now have at least a proposal mainly on the business environment side, which is the EU Inc proposal, which is a very good first step. But still, if we are not addressing the other aspects, it can fail. I can tell you one example, which is PEPP, which is a pan-European pension product. I guess even today there are two firms, two companies in Europe offering PEPP, which is which is an extreme failure.
And the failure was mainly because it is not enough to imagine a legal form. It is not imagine to have a European product. We need to tackle not only setting up the firm, but also the entire life cycle of the company, including taxation aspects, including social security contributions, including, you know, failure or the end life of those companies. On the taxation side, we had to tackle the fundamental problem, which is on the one hand we need international competitiveness, on the other hand there are national fiscal revenues. So how can we square the circle?
So we decided to go gradually, like a modular approach. So first starting with mainly small innovative companies, because they pay no income taxes at the beginning of their life cycle. So therefore this is not very sensitive to national finance ministers. And of course, if we narrow the scale, we can go broader with the topics. So what are in the report?
I mentioned that they are mainly simplification issues, radical ones, and targeted harmonization.
On the simplification, we proposed only digital solutions, one-stop shops, common templates, English as a first language in communication with offices. On the targeted harmonization, I think we need to look much more closely on the tax base. A lot of companies are having troubles when filling income taxes because of different definitions of tax base. Elimination of double taxation is very important. European employee stock options are very important for companies because startups are usually giving not only wages but also stakes in the companies.
And last thing I wanted to mention is that we also included the robust safeguards to have anti-tax avoidance measures and also respecting labor rights. Thank you very much and I'm looking forward to the discussion.
Filip Debelva
Thank you. Thank you also for the invitation, by the way. Hello everyone.
Some months ago, my team and myself at the KU Leuven in Belgium, we drafted a report on a potential 28th tax regime and the idea of my small presentation today is to see what has happened since then. The main findings of our report was that basically business activity in Europe has become increasingly cross-border while at the same time taxation largely remains a national question, a national issue. And this results in basically companies facing dual burdens, dual compliance costs and dual taxation in certain cases as well. I'm trying to press the next button. Ah, here we go.
So basically the idea, what has happened since then, the Commission proposes a regulation on the company form as such in March of this year. Our study closely followed afterwards.
And what has happened since then, basically the tax omnibus directive has been under discussion, introducing certain measures which are indeed beneficial for all companies, not just scale-ups or start-ups, but basically broadening the scope of existing measures as well for those companies that are targeted. In July, Mr. Otte's report got adopted as well. And meanwhile, the Council is basically divisive over the sole tax measure included in the regulation, being a tax measure aimed at these stock options. And this is a bit surprising because the stock option rule as included in the regulation is in fact very simple. Basically, it says that you only pay tax when the shares are sold, and each member state keeps their own sovereign rights to determine the tax rates.
And even despite this very easy, very sensible rule in my opinion, it seems to be hard to find a consensus. So in short, I think the company law regime can move fast or is moving forward, while the tax regime is staying a bit behind or even slowing things down. Looking at what has happened since our report, we notice that several measures or several building blocks that we have identified have moved forward, not specifically targeted at start-ups or scale-ups, but basically targeted at all types of companies. For example, the tax omnibus directive removes the minimum holding requirements for withholding tax exemptions under the existing parent-subsidiary directive and interest royalty directives.
That is of course welcome. There is also a rule on R&D tax allowances being discussed. Those are welcome measures, but please note two things. First of all, the R&D rule, it contains a deduction/exemption. They help profitable companies.
A loss-making startup on the other hand gains little from such deductions. And secondly, I think the core issue or the core complexity of cross-border activities being the tax base, loss relief, transfer pricing, that remains stalled. So there is still an issue here that touch upon the core of this very issue. What is the way forward? Very briefly, I have three recommendations.
First one is, I would actually propose to keep the rules in the EU regulation for the company form as its own and separate the tax provisions from that instrument.
I would also advise that the tax instrument contains what I would like to call differentiated integration, meaning that you leave certain options for member states in terms of temporal modulation, sunset and review clauses, opt-in, opt-out structures and the like. That will, I think, ease adoption of that measure. I also think that tax measures should start small and targeted: refundable R&D tax credits for startups, for example, stock options taxed upon disposal, and of course a one-stop shop mechanism that is already included in other European rules as well. And third, I would also, in order to reconcile this rule with, yeah, certain reflexes towards national sovereignty, I would also build in safeguards from day one and only allow these measures to work for companies with real economic activity in Europe. And I would like to emphasize also basically that the existing anti-abuse measures, think about the ATAD, the Anti-Tax Avoidance Directive, and the general principle of EU law regarding the prohibition of abuse, they remain applicable even if they're not explicitly stated in such a tax rule.
So I think this will also, making this clear will also make it easier to adopt new rules in this respect. Thank you.
Miloš Vlaisavljević
Yes, thank you. I want to greet you so on behalf of the European Trade Union Confederation and the European Federation of Public Service Unions. And let me start with what we agree on. We definitely agree from the trade unions and with the startups that we that the startups in Europe face big big challenges in the single market and we also agree that scaling startups, growing startups that can thrive in Europe are something that is in interest of the workers, of the employers, of the governments and of the broader European society. So that's that's what we agree on.
Speaker 42
What we don't agree on at the moment is on the on the way how we are going to do that. And and the current proposal at the table we see much more as a proposal for more deregulation rather than a proposal to really help and scale up the startup.
So that's that's our that's that's our issue with this problem with this with this proposal and the problem there one of the big issues that we see is the possibility for tax evasion and tax fraud using the EU-Inc as a company form. The the proposal for the EU-Inc is proposed as as a neutral just the company different company form on the European level but a company form cannot be considered without the tax regime without the social benefits regime. So all of this play play a let's say an ecosystem on a national level which which defines that company form. If we just say that that's one company form which will not affect the other sectors that's that's not true. That's exactly the problem.
And what we see under this proposal how we read it is that basically the companies any European company at the moment can choose to register its office in any of the member states. It can do that quite quickly in less than 48 hours with minimal with minimal investments. And and what we see there what's the question there is basically why a mid-sized European company let's say in Germany or Belgium or wherever wouldn't choose to to establish an EU-Inc and change its registered office to a member state with lower tax thresholds and pay simply pay less taxes and in that way we we simply legally allow tax evasion and and establishing shell companies.
And this is something that's not the first time that we see it. There has been a form called Societas Europaea, which has shown that 68% of the ever companies registered under that were shell companies. And that was far more restrictive form than what we see in the EU Inc proposal. So that's our issue, the tax evasion there. And why does a nurse in public services take care of this?
Because then the national budgets are not filled and then we hear that there is no money to deal with shortages in the healthcare sector, for example. And this is also not happening in the vacuum. So the directive against the shell companies has been postponed. There is a tax omnibus which will make it easier for the corporations not to report on some of the tax aggressive behaviors. And this all we see as part of a bigger tax break actually that could happen for the bigger companies and for the corporations.
So, and, and we are not sure that more tax breaks are going to make Europe more competitive in this, in this context exactly. Secondly, the stock options, the, the idea for stock options that's presented under the proposal is also something that, that shouldn't replace the salaries of the workers because the, the question is there, what happens with the pensions of those people? What happens with the social, social benefits of, of those people? So they simply would pay less into the social service, into the social benefit system under the current proposal and hence, hence make it, make those systems poorer with the promise of one day startup becoming a successful startup that they can sell the, the stocks. But we also know that many startups don't make it.
90% of the startups doesn't, doesn't succeed. So what happens with those, with those as well?
Speaker 42
So we think that the stock ownership stock stock options should more go in the direction of the worker participation, worker ownership, rather than just a pure pure reward that would reduce the existing the existing salaries. Also the harmonized R&D incentives are are on the table, but our counter question is what we see the behavior of the of the of the corporate of the corporations is that that there is there is lack of investment. We see profit hoarding, we see the the increasing payouts to shareholders, but the the investment is lacking. The money is there, but the investment is lacking in European company and I don't see how more incentives for R&D would really really motivate that. So maybe for me to conclude, we are asking under 28th regime proper safeguards to be in place.
First of all, a genuine link between the registered office and the real economic activity, with of course effective checks and registrations and the active involvement of the tax and social security authorities. So that has go to go hand in hand. Also a clear scope, so if we want to help startups, we need to define what are the startups that we want to support and structurally support startups to thrive and prosper in in Europe. Stock options that top up wages, not to replace them, with full social contributions.
Also tax incentives have to be tied to binding conditions and evaluated. And lastly, we think that the regulation is not the proper proper way to go, but rather this should go through the national governments and through the national parliaments. That's from me, thank you.
Robin Wauters
Thank you, last and hopefully not least indeed. Thank you, Chair, and thank you for the invitation. I'm here to represent the European Startup Network, but also the grassroots campaign behind EU Inc, more broadly the founders and investors working to build globally competitive tech companies right here in Europe. I'm not a tax lawyer or a policy expert, but I'm here to share the perspective of the people who are building and financing the businesses of tomorrow in Europe. And from that perspective, the problem is actually quite straightforward.
Europe has a single market on paper. But for many founders, it still doesn't feel like one in practice. You can build a software product right here in Belgium and sell it across Europe from day one. But try hiring people in five countries, offering stock options to those people, setting up subsidiaries in those countries, and navigating all the different tax obligations that come with it. Suddenly Europe looks a lot less like one market and a lot more like 27.
It's a complexity that costs money, time, and more importantly, opportunity and growth. Smaller companies feel it disproportionately. They are hit the hardest. I would encourage you to think of startups, by the way, this is on a side note, not as small companies, but as Europe's future big companies. That helps set a frame of reference.
That's why the discussion today matters indeed, because creating an EU Inc or European company form without addressing the tax complexities would leave an important part of the problem unresolved. So I would suggest four priorities, and now I wish I also made slides, but I didn't. Bear with me. First, let's try to make sure that EU Inc companies benefit from the existing European tax rules. That means directives covering cross-border dividends, interest, royalties, and mergers today won't automatically cover a new European legal entity.
So that needs to be fixed. Number two, give companies a single tax contact point. One tax number, one filing channel, one lead tax authority across Europe. We're not asking for a single European corporate tax rate. It would be nice, but it seems very unattainable, especially at the moment.
Let's start with better coordination between the national authorities for starters.
Third, and this has already been addressed, but make employee stock options work across borders. Startups compete for talent with much larger companies and much deeper pockets, also from across the Atlantic. So stock options help to attract great people while giving employees a share in the wealth that they create. It's a complement to wages and salary, not a replacement. And it's not the whole story because successful employees in turn become founders, become angel investors, become VCs, reinvesting their money but also their experience into the next generation of companies.
And that's what we in the industry call a flywheel, and we desperately need more of those across Europe. Taxing options when shares are actually sold, as my colleagues already alluded to, is essential in this story. And so are predictable valuation rules and clarity for employees moving between countries. Number four, and that's the last one, so bear with me: be ambitious but pragmatic. Start indeed with simpler measures and let the willing member states, the ones who are more ambitious than sometimes the rest of Europe, test the more complex reforms and then assess the results.
And please let's not introduce new bureaucracy to determine which companies qualify for less bureaucracy, because we cannot predict tomorrow's innovation with the definitions that we have today. I invite you all to define what an innovative company or a startup is today and then check back that definition in a year, two years, maybe five years from now. We'll all be wrong. Allow me to finish with this. Europe does not lack ambitious founders, talented engineers, researchers or promising companies, and we all know this.
What we do lack is the ability to let those companies grow across our borders without unnecessary friction. So let's build a tax framework that genuinely makes their lives easier. Entrepreneurs deserve nothing less. Adding a 28th set of rules only makes sense if it reduces the complexity of dealing with the other 27. Thank you for your attention, especially this late afternoon.
Pasquale Tridico
Thank you. Thank you very much, Robbe. Now we give the floor to the Commission for a statement of for three minutes. We do have here Mr. Reinhard Biebel.
Reinhard Biebel
Thank you, Chair. The 28th regime is a very, a topic very high on the agenda of the Commission and the member states.
It's currently under negotiation in Council. And we should not lose sight of the very important objective of this proposal, which is to foster cross-border investment and to foster cross-border activities of startup and scale-up companies foremost. It is not a proposal to enable arrangements, new arrangements for for tax evasion and for tax avoidance. That is not the wrong focus and not how we should look at that. It's there to increase competitiveness of the European business and to strengthen the internal market as such.
In March this year, the Commission adopted the proposal for the 28th regime, which is a corporate legal framework. It's a harmonized corporate legal framework and therefore the instrument of a regulation has been chosen, leading to the concept of an EU Inc. It builds on five pillars in particular: digital by default, procedures including simplified insolvency procedures for innovative startups, the once-only principle for reporting obligations, facilitating investment, and last but not least, supporting talent.
The message coming from stakeholders was extremely clear. We need EU-wide rules for companies that are harmonized and simple. Companies also pointed out that there is a need for more digitalized processes in the EU. The EU Inc proposal responds to these needs. It provides for an ambitious harmonized corporate legal framework which will be available in each member state for both founders and existing companies.
That's our intention. From a tax perspective, and tax is an important element of this new concept, the proposal includes two concrete measures: first, the application of the once-only principle, as mentioned, to reduce the admin burden on EU Inc companies. This means that in the registration process of the EU Inc, information submitted to the business register will be automatically shared with tax authorities. Second, a tax deferral for employee stock options to support the ability of the EU Inc to attract and retain talent.
This means that employees investing in the EU Inc through an EU employee stock option plan will benefit from a simple scheme with a harmonized set of characteristics. The current situation at Council is still very optimistic. Discussions are progressing and the Irish presidency is also trying to reach agreement based on compromise solutions, ideally before the end of this year. We also express our gratitude for the own-initiative report that Ódor adopted, published, because it supports the Commission proposal. It supports the direction of the proposal.
It goes slightly further, as we just heard. It asks for more simplification, for more harmonization. And one of the ideas could be something like a common tax base, something that is not new as a topic in the European tax discussion.
And there we would refer to the still alive proposal of the Commission called BEFIT, which is a common tax base with an allocation of profits. It is part of the mission letter of the current Commissioner in charge of taxation. It's just the fact that in Council there was no time so far to put it on the agenda and discuss in more detail. But more discussion could take place. At the same time, new developments of course would need to be taken into account, like recent developments on Pillar Two, the directive that is now in force, which interacts to some extent with the concept of BEFIT.
Overall, we stand ready to further support and work on this subject in the interest of European startup and scale-up companies and make sure that they can stay and grow in the European internal market.
Pasquale Tridico
Thank you. Thank you very much. And now I will give the floor to the members of the national parliament, starting with Milan Trifonov, Bulgaria, National Parliament, non-inscript.
Speaker 45
First of all, congratulation for the first topic and for the second topic of course, but the first topic for me is more exciting and interesting because actually I'm a newcomer in Bulgarian parliament, but in my past 20 years I was working in a revenue agency and actually the problem with the incomes is very close to me. Unfortunately, Bulgaria now we have only 10% tax and it's will be very difficult to explain to all the citizen that we try to change the system and of course I will thinking with I think with resistance in this 10% of the people who own actually 60% of the incomes and that's my that's actually my big problem that it's will be very difficult to to find a balance between the interest of the citizen and that 10%. My my experience show that it's very difficult to find a right law and actually our government now plan to have a similar situation but only with the traders and just for one year.
And I will follow the this topic very carefully and hope that we'll try to develop that idea and not be only a topic for this meeting because really maybe we are very late with that topic and the proof of that it's the statistic which you introduce us.
Pasquale Tridico
Thank you also for being in time. Now I will give the floor to Ville Vähämäki from Finland, Member of Parliament, ECR.
Ville Vähämäki
Kiitos puheenjohtaja. Puhun suomeksi. Oikeastaan halusin osallistua tähän ensimmäiseen sessioon, mutta koska aiheeni käsittelee lähinnä kasvua ja kilpailukykyä, niin totean sen, että Suomessa nopeimmat kasvavat yhtiöt ovat listaamattomia yhtiöitä. Ne ovat puolustusteknologian yhtiöitä, satelliittiyhtiöitä tai kvanttiteknologian yhtiöitä. On selvää, että näiden yhtiöiden omistajilla on huomattava omaisuus, mutta se on epälikvidi ja sitä ei tietenkään kannata myydä.
Oikeastaan meidän täytyisi aika laajasti pohtia sitä, että miten me saamme EU-alueelle enemmän tämän kaltaisia nopeasti kasvavia yhtiöitä.
Yksityinen pääoma täytyy saada tukemaan tuottavuutta ja työllisyyden kasvua. Tämä oikeastaan tiivistyy kysymykseen, miten omistajat pystyvät käyttämään tuloksensa investointeihin, tutkimukseen ja kasvuun. Ja sitten kun edetään tähän kysymykseen, mitä nyt käsitellään, niin totean sen, että tämä EU-inc, niin tämähän on yksi keskeinen tapa, jolla pystytään hallinnollista taakkaa keventää ja kasvattamaan digitalisaation hyödyntämistä ja ennen kaikkea nostamaan kilpailukykyä suhteessa muuhun maailmaan. Mutta luonnollisesti täytyy käsittää, että nämä seikat ovat monesti jäsenvaltioiden toimivaltaan yksinomaisesti kuuluvia asioita ja vaativat yksimielisyyden.
Pasquale Tridico
Thank you. Now we move to Mr. Paris Koukoulopoulos, Greece, National Parliament.
Paris Koukoulopoulos
Ευχαριστώ κύριε πρόεδρε. Συζητήσαμε σήμερα δύο πολύ ενδιαφέροντα θέματα, τη φορολόγηση των υπερπλούσιων και το BEFIT καθεστώς. Πριν ένα χρόνο σε αυτή την αίθουσα είχαμε συζητήσει με πρωτοβουλία σας πάλι για την φορολόγηση των κερδών, των υπερκερδών των τεχνολογικών κολοσσών εκεί όπου παράγονται αυτά τα κέρδη. Θυμάστε πέρσι τέτοια εποχή ήταν τον Οκτώβριο. Θέλω λοιπόν να συγχαρώ εσάς κύριε πρόεδρε και την υποεπιτροπή των φορολογικών θεμάτων για τις εξαιρετικές πρωτοβουλίες να ερχόμαστε όλα μαζί τα εθνικά κοινοβούλια και να συζητάμε για μεγάλα θέματα που απασχολούν την Ευρώπη και τα οποία πρέπει να πάρουμε αποφάσεις.
Αγγίζουν ευθέως την ανταγωνιστικότητα, την κοινωνική συνοχή, το μέλλον της ίδιας της Ευρώπης αυτές οι πρωτοβουλίες και πρέπει να συνεχιστούν. Τρεις προτάσεις. Η πρώτη πρότασή μου είναι να προχωρήσουμε γρήγορα και αποφασιστικά εκεί που υπάρχει ωριμότητα σε αυτές τις πρωτοβουλίες. Δεν μπορεί όλα να περιμένουν. Κάποια είναι πιο ώριμα από τα άλλα, πρέπει να προχωρήσουν.
Ξέρετε καλύτερα εσείς, η Κομισιόν και τα κράτη μέλη φυσικά, γιατί υπάρχουν και ευαίσθητα θέματα εθνικής κυριαρχίας στη φορολογία. Κάποιες όμως πρέπει να προχωρήσουν άμεσα.
Χρειαζόμαστε πόρους, γιατί βλέπουμε πως το άνοιγμα που κάναμε για την άμυνα, την ευρωπαϊκή άμυνα, κινδυνεύει να στερήσει πόρους από την κοινωνική συνοχή και την αγροτική πολιτική. Άρα λοιπόν πρέπει να αναζητήσουμε πόρους και αυτά πρέπει να επιταχυνθούν. Η δεύτερη πρότασή μου είναι ότι υπάρχουν τομείς και κυρίως οι νέες τεχνολογίες, η ψηφιοποίηση, όπου δεν μπορεί να περιορίζουμε τη συζήτηση μόνο στη φορολογία. Δεν είναι βέβαια αρμοδιότητα της επιτροπής σας. Πρέπει να μιλήσουμε για ψηφιακή κυριαρχία.
Το ζήτημα δεν είναι μόνο να φορολογήσουμε τους ψηφιακούς κολοσσούς, αλλά να αναπτύξουμε και τη δική μας δυναμική ως Ευρώπη σε αυτόν τον τόσο κρίσιμο για το μέλλον τομέα. Το τρίτο, να επανέλθω στη φορολογία. Υπάρχουν περιπτώσεις όπου μεγάλες, όχι υποπεριπτώσεις, όπου μπορούμε να σταματήσουμε τα υπερκέρδη εκεί που παράγονται. Τα ουρανοκατέβατα κέρδη, windfall profits συγγνώμη, που έχουν παρατηρηθεί τα τελευταία χρόνια με τις ενεργειακές κρίσεις που αλλεπάλληλα αντιμετωπίζει η Ευρώπη, υπάρχουν περιπτώσεις που μπορούμε να τα σταματήσουμε στην πηγή. Κλασική περίπτωση είναι το ζήτημα των εταιρειών ηλεκτρικής ενέργειας, για τις οποίες έχει θέσει ζήτημα ο ίδιος ο Πρόεδρος Ντράγκι στην έκθεσή του, θέτοντας ευθέως ζήτημα αναθεώρησης του target model.
Δεν είναι δυνατόν να το βλέπουμε και να περιμένουμε τι θα γίνει.
Πρέπει να παρέμβουμε σοβαρά. Τι θα πει να πάμε να φορολογήσουμε εκ των υστέρων έκτακτα τις εταιρείες; Πρέπει να δούμε τι γίνεται. Η Ευρώπη πρέπει να χτίσει την ψηφιακή της κυριαρχία βασισμένη στην ενεργειακή της κυριαρχία και πρέπει να κρατήσει την κοινωνική συνοχή που είναι υπέρτατη αξία και πολιτικές όπως η κοινή αγροτική πολιτική πολύ υψηλά για να έχει μαζί της όλους τους πολίτες για ένα καλύτερο μέλλον. Ευχαριστώ.
Pasquale Tridico
Thank you. Thank you, I forgot to say that Mr. Kokolopoulos is S&D. Now Mr. Adriani Delia, sorry, from Malta, National Parliament, EPP.
Adrian Delia
Thank you, Mr. Chairman, colleagues. For Malta, a small and open economy, European competitiveness is essential to creating quality jobs, attracting investment, and sustaining our public services. We therefore welcome efforts to simplify the business environment and help European companies grow across borders.
The proposed 28th regime offers an opportunity to address the fragmentation of the single market, particularly for startups and scale-ups that face significant administrative costs when operating across different national systems. Malta supports a voluntary framework that simplifies digital procedures, reduces compliance burdens, and improves access to investment, talent, and capital. Greater consistency in areas such as employee stock options, mentioned before, withholding tax procedures, and cross-border administration could deliver practical benefits for businesses. However, simplification must be genuine. We should not replace existing barriers with an additional layer of bureaucracy.
Equally and importantly, the regime must complement, not replace, national systems. Corporate and personal income taxation, insolvency, and employment must remain outside its scope. Malta continues to have reservations regarding qualified majority voting on direct taxation matters. National fiscal sovereignty and subsidiarity must be respected. Our objective should be a more competitive single market that empowers businesses while preserving member states' flexibility to respond to their economic realities.
Thank you.
So you want to skip?
Pasquale Tridico
Thank you. And now we move to Madame Jana Murová, Czech Republic, National Parliament, Pirates, Budget for Europe.
Jana Murová
Dobrý podvečer všem, vyjádřím se v krátkosti k postoji České republiky k oběma dvěma tématům. Nejprve tedy daň pro nejbohatší, Česká republika zavedení daně z čistého jmění ani minimální daně z majetku nepodporuje. Nejde o žádnou ideologii, ale jde o zkušenost, osm zemí z EU, mezi nimi Francie, Švédsko nebo Německo, Rakousko, tuto daň zavedlo a zase zrušilo. Dnes tato daň zůstává prakticky jen ve Španělsku. Důvody se opakují, zaprvé ocenění, majetek nejbohatších tvoří hlavně podíly v nekotovaných firmách bez tržní ceny.
Každoroční ocenění je finančně drahé, nepřesné a zejména napadnutelné. Zadruhé nerovnost, likvidní majetek oceníme přesně, nelikvidní jen odhadem, právě proto ji zrušilo například Německo.
Třetím důvodem je mobilita. Daň dopadá na velmi úzký okruh lidí, a když odejdou, výnos zmizí. Norsko například zvýšením této daně v roce 2022 ztratilo za jediný rok více bohatých rezidentů než za předchozích 13 let. V České republice v rámci daně z příjmů fyzických osob funguje solidární navýšení daně. Před dvěma lety došlo k navýšení daně z příjmů právnických osob z 19 na 21 %.
Neznamenalo to ovšem navýšení příjmů do státního rozpočtu. Toto navýšení se nejevilo jako v podstatě efektivní. Co se týká 28. režimu, tak tento cíl podporujeme. Chceme, aby inovativní a rychle rostoucí firmy zůstaly v Evropě. Podporujeme i zaměstnanecké opční plány, pro startupy jsou klíčové.
Máme ale jednu zásadní výhradu. Návrh upravuje přímé daně a chce o nich rozhodovat kvalifikovanou většinou. To vnímáme, že je v rozporu se smlouvami a je to nebezpečný precedent. O přímých daních se rozhoduje jednomyslně podle článku 115.
Daňovou část proto navrhujeme oddělit a projednat v daňových formacích Rady. Je to, řekla bych, v zájmu firem. Kdyby Soudní dvůr za pár let zpochybnil právní základ, doplatí na to právě uživatelé opčních plánů. A zároveň EU ESO nesmí mít výhodnější daňový režim než srovnatelné národní plány. Co se týká dříve zmiňovaného daňového obnemesu, tak Česká republika tomuto návrhu vystavila žlutou kartu.
A to z důvodu, že v rámci implementace Draghiho zprávy byly zahrnuty podpora startupů bez ohledu na to, jak jsou startupy podporovány v jednotlivých členských státech. Například v České republice by došlo ke snížení podpory startupů, což je zcela nepřijatelné. Znamenalo by to snížení konkurenceschopnosti. Stejně tak přesun daně z dividend korporátů ne v místě ekonomické činnosti, ale v místě sídla bez jakési analýzy dopadů do fiskálních rozpočtů je naprosto nepřijatelný. Takže já nemám žádnou otázku, pouze stanovisko za Českou republiku.
Pasquale Tridico
Thank you. And now we move to Mr. Marco Claudino from Portugal National Parliament, EPP.
Marco Claudino
Muito, muito boa tarde. Cumprimentar todos os colegas. Queria só partilhar que, naturalmente, para o meu partido, para o PSD em Portugal, o 28º regime é um regime que nós muito saudamos e que queremos que se desenvolva, porque é importante aprofundar o mercado único e incentivar o investimento transfronteiriço. Queremos que, naturalmente, as palavras desburocratizar, simplificar e digitalizar não sejam apenas chavões e que possam mesmo realizar-se. Mas o meu pedido para intervir aqui hoje era para também partilhar convosco uma realidade que existe em Portugal e que existe no artigo 28º deste regime novo que se pretende criar.
Speaker 54
Tem a ver precisamente com o princípio "only once" que já foi aqui referido.
É para nós fundamental desburocratizar também ao nível dos documentos, ao nível daquilo que os Estados podem pedir e neste incentivo transfronteiriço que se possa partilhar informação entre todos os Estados relativamente às empresas. E também em Portugal quero partilhar convosco que é uma medida do governo da AD, do PSD-CDS, também muito incentivado pela Iniciativa Liberal, do meu colega Carlos Guimarães Pinto aqui presente, que vamos também ao nível não só das empresas mas dos cidadãos implementar um regime que faz com que todos os cidadãos e empresas deixem de ter de entregar quaisquer documentos ao Estado que o Estado já tenha. Com isto estima-se poder aproveitar e aumentar e poupar cerca de 2% do PIB, o que é absolutamente crítico para que nós possamos ter o que nós todos queremos, os Estados-membros da União Europeia mais competitiva. E obrigado, senhor presidente.
Pasquale Tridico
Thank you. Now I give the floor back to the speakers, starting from Ludovit. Two minutes each, please.
Ľudovít Ódor
Yes, thank you. Thank you for the discussion. I think that if we are talking about this topic, we need to be also aware of the situation outside the European Union. And this is sometimes lacking these discussions, that we are trying to somehow solve the problem of member states without taking into account that we need to be globally competitive. So for us, the global benchmarks are very important.
How are startups financed, for example, in the US? Because we know that there are a lot of startups also here in the European Union, but in the later phase, when they need to scale up their activities, they leave to the US. And why? Again, if we ask them, they are telling a lot of things which we can solve with the 28th regime, including the taxation aspects. But there is also one thing which is very important for them there, and that is the capital market, which is extremely deep in the US compared to Europe.
So basically, for that reason, if we are really, if we really want to change the situation, if we really want, we would like to really see a big companies, big startups, successful startups in Europe, we need to tackle not only the issue of the corporate form of taxation, but the savings and investment union where actually still we rely a lot on bank financing here in Europe, and banking are not the best institutions to finance risky projects. So for that reason, Europe badly needs venture capital, and we need also a lot more of risky investments. We have the money.
It is sitting in the banking sector, usually at term deposits. So what we, if we translate this need, is how to match productive investments with the money we already have on the saving accounts. And that is the task for the savings and investment union. Thank you.
Filip Debelva
Yes, thank you. I think I can be very brief in the sense that I don't think anyone doubts that we need to make things easier for startups, for scale-ups. And what I do notice that also outside of this session, when I talk to experts on this topic, people are very afraid to give away a part of their tax sovereignty to the European level. But I think what is currently proposed, what we have proposed, what is included in Mr. Ódor's report, is not at all a corporate tax rate harmonization of any kind. It's just measures to make things easier for companies to work across borders in Europe.
Miloš Vlaisavljević
Yes, thank you. I'll be also very short and I'll just repeat our main point is that what we see and also raise this to the national parliamentarians, what we see that possible outcome of the EU Inc or the 28th regime is the creation of shell companies and tax evasion, which will in the end mean less money for the national budgets. It will mean, yeah, less money for the national budgets, less money for investment in the public services, in the competitiveness, in fighting the climate change, which are all important parts of our competitiveness. So we need also public money to invest there and with this system, with the 28th regime, we think this will just reduce and this is not the way to go to fight for our competitiveness.
Robin Wauters
Thank you, Chair. Again, last, hopefully not least. I think this was a really good discussion, but it also means that we should not lose sight of why we're having this conversation in the first place. Europe needs to become a much easier place to start, build, and scale companies. And I would urge everyone here to judge whatever comes out of this process against that simple objective.
European startup community has already done its part. Through Allied for Startups, we've put together a concrete proposal that was eventually adopted by the Commission. But more importantly, we've brought founders, investors, operators, and the wider tech ecosystem together behind a shared vision. It's the first time ever that I've seen the European startup ecosystem as unified by any proposal this far. That's including the founders of companies like Loveable, Stripe, ElevenLabs, Wise, Revolut, Mistral, Synthesia, Spotify, the list goes on and on.
These founders are not asking that for themselves, they're asking it for the next generation of entrepreneurs that come behind them. They're not asking for special treatment. They're asking for a single market to actually work like a single market. That means a few things, right? It means simplifying cross-border operations rather than adding another layer of administration.
It means making employee ownership work so that successful employees can become tomorrow's founders and investors, creating a flywheel of entrepreneurship and wealth creation across Europe. It means resisting the temptation to define which companies deserve to benefit based on what we consider innovative today, because you cannot predict tomorrow's innovation using yesterday's definition. I'd love to emphasize that point. And of course, as Milo said, there are risks.
I think there always are, that's impossible to avoid, and we do need sensible safeguards. But we cannot design Europe's future around the assumption that everybody's trying to cheat. We need to become as good at enabling opportunities as we are at identifying the risks. I'll finish just with one thought. The real test of EU Inc will not be whether we manage to agree on a new set of European rules, it will be whether founders will actually use them.
If we end up with a 28th layer of bureaucracy on top of the existing 27, I think we will have missed the point. The ecosystem has done its homework, now it's up to the institutions to deliver. Thank you.
Pasquale Tridico
Thank you very much. Now I will let Member of European Parliament speak, Mr. Pampi, Pierre Pimpie from Patriots for Europe, please.
Pierre Pimpie
Alors, donc je précise que c'est en français, hein.
Alors en effet donc on peut craindre donc qu'avec ce nouveau régime et bien certes ce sera plus simple mais les impôts aussi je pense seront plus faibles, plus simples, les charges sociales seront plus faibles, bon. Mais en fait donc je ne sais pas donc si vous avez fait la mesure de l'impact et bien de ces impôts et de ces charges en moins pour chacun des États. Je voudrais enfin être sûr que l'on se rend bien compte de ce que cela va produire pour chacun des États, sachant que certains, on peut prendre le cas de la France, ne se portent pas très bien pour ce qui concerne les déficits. Donc est-ce qu'on a bien ces chiffres sur l'impact fiscal et social du régime ? Voilà, je vous remercie.
Pasquale Tridico
Thank you, Pierre. And now we go back to the member of national parliament with Mr. Hugo Costa, S&D, national parliament from Portugal Assembly.
Hugo Costa
Thank you, chair. A competitividade da economia europeia naturalmente depende da capacidade de criar condições para que as empresas possam nascer, crescer e ganhar escala.
No atual contexto geopolítico, esta prioridade é ainda mais urgente. Por isso, este modelo para as startups e para as scale-ups é fundamental para a inovação, para o crescimento económico e para atrair investimento. Por isso, esta harmonização fiscal, que obviamente até pode passar em algumas questões a matéria relacionada com o 28º, é também deve ser debatida com algum equilíbrio e alguma inteligência. Primeira questão que eu gostava de colocar como problemática é os setores abrangidos. Essas eventuais exclusões devem obedecer a critérios claros e proporcionais e serem claros.
E é essa também a pergunta que queria colocar. Segundo, o domicílio das empresas. Eu acho que este é um ponto chave, porque o Estado-Membro de registo não pode servir nunca para criar eventuais empresas de fachada ou estratégias que contornem obrigações fiscais nacionais ou questões de direitos também dos trabalhadores. Depois a matéria das stock options.
É uma matéria essencial na questão de quer das startups quer das scaleups para captar talento, mas como foi dito aqui já, não pode nunca ser a razão de não existir uma remuneração clara e justa em relação aos trabalhadores. Como é que a nível de uniformização e existindo regimes completamente diferentes em cada um dos 27 Estados se pode trabalhar esta matéria das stock options? E depois naturalmente a questão de um calendário realista para a implementação desta matéria. É estas as perguntas que queria colocar num contexto em que obviamente é necessário a Europa encontrar desafios, captar investimento, não perder investimento para outros locais, nomeadamente fora da União Europeia, mas esta captação de talento e de financiamento não pode ser feita sem a necessária transparência e os necessários cuidados. Muito obrigado.
Pasquale Tridico
Thank you very much. And now we move to Mr. Jacek Włosowicz from Poland, Senate, non-inscrit.
Jacek Włosowicz
Dziękuję bardzo, panie przewodniczący. Koleżanki, koledzy, w przyszłym roku będzie 70. rocznica Traktatów Rzymskich. 70 lat budujemy wspólną Europę, w tym czasie osiągnęliśmy bardzo wiele sukcesów, ale popełnialiśmy również błędy.
Sądzę, że przed nami kolejne wyzwania, ponieważ poszczególne kraje niestety w obecnym czasie nie dadzą sobie rady na świecie. Sądzę, że musimy zbudować wspólny rynek kapitałowy, również wspólny rynek długu, który w Europie jest bardzo płytki. To rozwiązanie, nad którym dzisiaj dyskutujemy, czyli wspólna spółka europejska, oczekujemy, że będzie to bardzo dobre rozwiązanie, ale dyskusje z ostatnich miesięcy pokazały, że niesie ona również i wyzwania, i zagrożenia. Te zagrożenia to między innymi przestrzeganie prawa pracy, branie pod uwagę głosów pracowników, ale również kwestia opodatkowania. Ważne, żebyśmy oparli to na dobrej podstawie prawnej.
Moja koleżanka z Czech o tym wspomniała i polska delegacja w grupie roboczej przez ostatnie miesiące o tym mówi, że podstawa prawna projektu rozporządzenia, którym jest 114. artykuł Traktatu o funkcjonowaniu Unii, pozwala przyjąć rozporządzenie w procedurze z głosowaniem większością kwalifikowaną, a jest to naruszeniem artykułu 114. punktu drugiego, który wprost wyłącza przepisy podatkowe z tej procedury i pomija zasadę jednomyślności.
A przecież kwestie podatkowe pozostają w jurysdykcji poszczególnych państw. Dlatego zwracamy na to uwagę, żeby przyszłe rozwiązanie, które jest tak ważne dla Europy, nie było obarczone problemem prawnym już na samym początku. Dziękuję bardzo.
Pasquale Tridico
Thank you. Now I'll give the floor to Mr. Carlos Martín Urriza from Spain, National Parliament, from the Left.
Carlos Martín Urriza
Gracias, presidente. Desde luego todos estamos de acuerdo a que es necesario ayudar a crecer a las startups tecnológicas, las necesitamos. Pero mi duda es que una de las claves para facilitar ese crecimiento es las dificultades que puedan tener la carga administrativa por enfrentarse a espacios fiscales fragmentados.
Si esta es la gran o es una de las barreras, igual es que las startups tecnológicas que estamos creando o que se están creando, pues no tienen muchas capacidades o no tienen suficientes capacidades. Desde mi punto de vista, yo creo que este no es un tema relevante. El tema relevante es otro. Se ha comentado por algún otro interviniente. El problema para el crecimiento de las startups tecnológicas en Europa es la falta de un mercado de capitales.
Cuando nos comparamos con los norteamericanos, nosotros no tenemos una bolsa única, no tenemos un Wall Street, no tenemos un mercado amplio y profundo de eurobonos, ¿no? Solo es de 750.000 millones frente a los 40 billones de treasuries que hay en Estados Unidos y que articulan un mercado de capitales porque son el activo seguro de referencia, ¿no? No tenemos autoridades que organicen el mercado de la bolsa de valores con la capacidad, autoridad y potencia que tiene la SEC. La ESMA europea no tiene esas mismas capacidades.
Y luego, como no se cansa de repetir la presidenta de la Comisión Europea, todos los años perdemos 300.000 millones de euros de ahorro que se nos van de Europa hacia los Estados Unidos. Bueno, pues aquí quizá la Comisión, en vez de distraernos con el régimen 28, lo que debería es proponer una tasa de salida a ese ahorro que impida que se nos escape el ahorro y se nos vaya a Estados Unidos, al igual que ellos nos ponen aranceles a nuestros bienes, ¿no? Y sobre todo porque esto serviría para equilibrar el terreno de juego, ya que ellos parten con ventaja, me refiero a los Estados Unidos, por tener el dólar, que es una moneda de reserva que articula todas las compras y ventas de commodities, ¿no? Porque si no es simplificar la carga administrativa, es algo más, ¿no? Es lo que nos ha dicho el representante de la Confederación Europea de Sindicatos.
Esto es lo que va a permitir es una carrera a la baja en la fiscalidad de las empresas, va a significar una caída de la recaudación, va a significar más evasión, va a significar más empresas pantalla. Yo creo que sí hace falta un régimen 28, pero no este. Es el de generar un músculo fiscal para el presupuesto europeo que nos permita financiar los bienes públicos europeos que necesitamos para no quedar descolgados del progreso. Gracias.
Pasquale Tridico
Thank you.
I will give the floor now to Madame Patrícia Almeida, Portugal, Member of Parliament, Padre for Europe.
Patricia Almeida
Thank you. Parece-me unânime de todos os intervenientes que ouvimos que reconhecemos que ao nível da Europa precisamos de empresas mais competitivas, com menos burocracia e com melhores condições para atrair investimento. Mas a questão que hoje se coloca e que importa esclarecer é se de facto o chamado 28º regime fiscal europeu é verdadeiramente uma resposta para atrair essa competitividade com menos burocracia. O projeto BEFIT pretende simplificar a atividade empresarial no mercado interno, contudo a possibilidade de lhe associar um regime fiscal próprio levanta questões. Desde logo, se não estaremos a criar dois regimes paralelos, possíveis diferenças e a criar diferenças entre empresas dentro do mercado europeu, a redução futura da autonomia fiscal nacional e benefícios concentrados em determinadas empresas em detrimento de outras.
Se o objetivo é reduzir a burocracia e tornar as empresas europeias mais competitivas, por que razão precisamos de criar um regime fiscal distinto? E percebam que aqui a questão não é em relação às startups, pelo contrário, a questão é mesmo de tornarmos o mercado competitivo para todas as empresas ao nível europeu e não apenas para algumas, sob pena de estarmos a criar um mercado interno a duas velocidades, em que algumas empresas beneficiam de regras simplificadas enquanto outras continuam sujeitas a sistemas complexos. E, neste caso, gostaria de deixar algumas perguntas para esclarecer este debate. Se conseguem assegurar que os parlamentos nacionais manterão plena capacidade de decisão sobre a fiscalidade das empresas nos respetivos territórios? O professor De Velba dizia que as soberanias nacionais devem estar salvaguardadas desde o primeiro dia.
A minha pergunta era se este regime que estamos agora a discutir lhe levanta dúvidas quanto à sua aplicação e se considera que pode pôr em causa a soberania fiscal dos Estados.
Depois, o representante das startups dizia também há pouco que estas alterações vão acabar por cair no orçamento europeu, uma vez que os orçamentos nacionais estão sobrecarregados. E eu perguntava-lhe em que medida isso consegue indicar uma perspectiva de valor. Obrigada.
Pasquale Tridico
Thank you. I do not have other member who are registered for taking the floor. So I will give then the final floor to the speaker, starting with Ludovit Ódor, who is the rapporteur of the 28th regime.
Ľudovít Ódor
Thank you very much. I think maybe I will just reflect on two questions. The first question is that there is an inherent, you know, conflict. On the one hand, we want a true single market. On the other hand, we do not want to harmonize things which can lead to a single market.
So, you know, we cannot have both.
And that is the reason why we are advocating for a really, really targeted harmonization and not taking away from member states, for example, the right to set the tax rates. But I think that for companies which are active in 20 member states, not to have one tax base is, is a problem, especially for startups. When you start your company, usually you have a loss, but maybe in another country you have a profit and it's not possible to, you know, shift losses against profits within the European Union. So we don't have a single market in that regard. So, and that is the reason that, you know, we need to find a compromise.
And the second point is again about compromise. It's about fiscal revenues. If we allow all the companies to have, you know, a kind of a 28th regime for everybody, then of course it can have a significant fiscal revenue impact for many countries, many finance ministers. If we try a modular approach and a pilot-based approach, then I don't think that there is a significant revenue loss for the companies because mainly in the startup and scale-up community at the beginning there are actually no profits at all. So from that perspective, we can try out to what extent this helps the companies to grow across our internal borders.
Filip, please.
Filip Debelva
Yes, so also two remarks from my side.
One regarding the concerns regarding sovereignty. Like I said, I think in the current proposals or in the papers no one is trying to harmonize domestic national tax rates. And secondly, I think that if you apply a differentiated integration and you adopt safeguards, I don't think there needs to be any fear regarding that sovereignty. Second point is, well, the question was raised, should we only focus on startups or scale-ups? Why not open it up for all types of companies?
Well, in principle I agree, but I think it might be good as a test case or a pilot case to focus on these startups or scale-ups for the reasons Mr. Ódor mentioned. And later on we can expand the regime if it proves to be successful.
Miloš.
Miloš Vlaisavljević
Yes, thank you. I will come back to the question on the numbers, how much would this affect us. So at the moment there are no studies exactly on that. But what is our indication and guiding lines, so we had a research, the European Federation of Public Services in 2015, which showed that tax evasion in the EU was between 160 and 190 billion in the year 2015. So when you adjust this for inflation, this would be a bigger number at the moment.
There is another research which showed 1.5% of GDP being tax evaded in 22. That's 1.5% which we have invested in defense with the escape clause. Those 1.5% have left Europe basically due to the tax evasion schemes. Let me give you another indication. We have done a research on Palantir, the US company.
We have shown that they are evading around 12 million in their in their taxes due to the tax shifting systems. And their reply was, well, we are not doing anything else that others are not doing. And Palantir is quite quite a small company, quite a small operation it has in Europe, and it's 12 million in that in that sense. So so that I think gives an indication of the possible scale that this could this could reach. And and then also there was a question remark on that we are assuming that everybody will cheat.
No, we are not assuming that, but we also know that if you open a space, that some will cheat and that affects the all other European companies which doesn't put them in the same position. So you really lower you lower the standards and allow allow for for tax evasion in this case.
So that's from me, thanks.
Robin Wauters
Thank you. I'm not going to address any specific questions, but I'm very pleased to see that the discussion today shows that we actually all agree on the problems that we have, which is fragmented markets, insufficient capital or capital markets that aren't deep enough and too much red tape. Now EU Inc is not going to solve all of Europe's competitiveness problems and it doesn't have to, right? We still need those deeper capital markets, better stock exchange, maybe a pan-European one someday, better access to funding, also access to market, etc, etc. But it shouldn't stop us from fixing what we can.
The concerns raised today about tax sovereignty, the legal certainty of the proposal, potential abuse, they're all absolutely legitimate, but we shouldn't let the pursuit of a perfect framework prevent us from making any meaningful progress. We need effective safeguards certainly, but we also need to optimize for opportunity and success, not just risk.
And whatever framework we end up creating should be designed to enable the next generation of entrepreneurs and European success stories, and not constrain them before they've even emerged. So once again, the biggest risk is that within these institutions, not that we fail to reach an agreement, but that we reach an agreement on EU Inc. that everybody can really live with, but ends up with a framework that nobody uses. Thank you.
Pasquale Tridico
Thank you very much. It was a long afternoon, but I think that we had the chance, all of us, to express, within the time constraint of the European Parliament, we expressed our view both on ultra-high-net-worth individual taxation and on the 28th tax regime. Two things which, as you have seen here with your views as well, are very much divided. And this topics for us, being at the European Parliament, is more than divided because we do have the national divisions, as you have showed today, and we do have as well the political groups divisions. So, which is adding difficulty to find compromise, to converge, and this exacerbating basically the divisions.
This is not only the case for the ultra-high-net-worth individual and for the 28 regime.
We are used to work in this way, meaning that we try to compromise political views and national positions and sometimes it's a nightmare in a way. Anyway, it was really a pleasure to host you here, to have your view and I wish to thank you all for coming to Brussels. I wish as well to thank the interpreters who interpreted this meeting in basically all the languages of the European Union. And I wish to thank especially the unit of the Parliament which worked for the relation with the national parliament who have helped in organizing this meeting and have done a great job. Thank you very much.
And as well my secretariat here at the FISC subcommittee who have worked in an excellent way to guarantee to all of you the best logistic but as well the best of the reports. Reports for which we are indebted to our experts here.
This is another way how we work here at the European Parliament, knowing as well the difficulties that we face when we have to approve some rules, some law. Basically, we rely very much on the view of the experts. View of the experts which as well differ very much sometime. Because I would say that despite the fact that all of our experts are experts, they have as well social sensitiveness, I would say, in this matter as well. I don't believe, I am an economist myself, and I don't believe in economists who are outside of the world.
Economists are within social relations as well. So they are as well impacted by their social preferences, and this is quite legitimate.
However, of course, we ask them to be scientifically robust and to be to explain their empirical evidences in the most robust and scientific way. And thank you to all of you here for being here. The the speaker of today, the they were eight speaker basically, not only Ludovit Odor, who is the reporter of the 28th regime, but we had Professor Philippe De Belva, who I would like to thank, Miloš Vlaisavljević from Trade Unions, European Trade Unions, ETUC, Robin Wauters from European Startup Network. And then in the previous meeting, we had Julia Valaskine from European Union Tax Observatory. And we had as well Andrzej Robaszewski from CASE.
And we had Tero Tuvien from Finland Tax Authority. And we had Jean-Paul Olinger from Luxembourg Tax Authority. So thank you to all of them in particular for their evidence, for their reports, which was very important for us. Now we go to the second floor, just here, to the second floor here, where we have a network cocktail where you can enjoy speaking among yourselves and continue the evening with us. Thank you very much.
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Moi, j'ai mal à la tête. Ouais, moi aussi j'ai mal à la tête. C'est ça. C'est ça.