Taxation in the EU

Setting tax rates The EU does not have a direct role in raising taxes or setting tax rates. The amount of tax paid is decided by an individual government, not the EU. https://www.youtube.com/watch?v=SWwy7EfxlS0 Watch the vide and discuss: USA v EU „The happiest countries in the world”?

Responsibility for direct taxation Within the EU, governments retain sole responsibility for levels of direct taxation –i.e. tax on personal incomes and company profits. https://www.youtube.com/watch?v=KtnRz1EPsZ0 A tax haven is a country or place that has a low rate of tax so that people choose to live there or register companies there in order to avoid paying higher tax in their own countries. Tax havens in Europe

EU goals and tax rules EU goals: job creation, the EU’s competitiveness, the single market and free movement of capital.  Tax rules have to be consistent with these goals competitiveness - konkurentnost

EU decisions on tax matters EU decisions on tax matters require unanimous agreement by all member governments. This ensures that the interests of every single EU country are taken into account. unanimous agreement – jednoglasna suglasnost

The role of the Commission The European Commission promotes co-ordination and coherence, particularly where more than one member state is involved in taxation issues, to avoid double taxation, discrimination or excessive costs from having to comply with the rules of more than one tax system.

The role of ECJ Where the single market, free movement of capital or individuals’ rights are being undermined by tax rules, the European Court of Justice is the ultimate arbiter of what is right

VAT VAT rates are an exception as they are fundamental to a properly functioning single market. Nevertheless, there is considerable leeway for national differences in VAT rates. There is a minimum rate of 15% for VAT on most goods and services leeway – manevarski prostor, sloboda djelovanja

VAT in EU Given that EU law only requires that the standard VAT rate must be at least 15% and the reduced rate at least 5% (only for supplies of goods and services referred to in an exhaustive list), actual rates applied vary between Member States and between certain types of products. https://www.youtube.com/watch?v=k9HHdzXlCpo Single VAT area?

Excise taxes Changes and differences in excise tax on petrol, drinks or cigarettes can very easily distort competition, so these are also subject to some common rules. Cultural differences are respected, for example in the approach to taxing beer and wine.

EU legal framework The current legal framework regulating excise duties in the EU consists of two Council Directives. Council Directive 92/84/EEC provides a structure for the member states to classify alcoholic products into certain categories – these categories are used for taxation purposes. Council Directive 92/84/EEC determines the minimum level of excise duties in the categories. There is no maximum rate set in the directives.

Minimum rates of excise duties for the different categories of alcohol

Company tax In the area of company tax, the EU has two goals: preventing harmful tax competition between member states and supporting the principle of free movement of capital. harmful tax competition – štetno porezno nadmetanje

Pension rights The European Commission takes action to ensure that EU citizens are not deterred from working in other EU countries by problems with transfer and taxation of pension rights. to deter – spriječiti, odvratiti

Savings EU citizens can place their savings where they think they will get the best return. However, tax remains due in their country of residence

Read the introductory part and answer the following questions: Who retains sole responsibility for levels of direct taxation in the EU? Which are main EU goals? Which tax rates are set by EU member states? Which institutiuons has issued many landmark rulings on taxation in the EU?

Translate the following paragraph: All EU member states must have sound public finances. The choice of expenditure priorities and the types and levels of most taxes used to fund this spending are up to them, providing they are consistent with a single market and free movement of capital.

Find English terms for the following: konkurentnost prekogranična ulaganja sloboda kretanja kapitala zaštititi nacionalnu autonomiju utajiti porez oporezivi prihod u više od jedne zemlje članice EU

When is a higher VAT rate allowed? What are lower rates reserved for? Read the paragraph about the role of indirect taxes and answer the folowing questions: When is a higher VAT rate allowed? What are lower rates reserved for? What are excise taxes subject to? How can tax differences across the EU be exploited? Why is keeping up with advances in technology important?

What do following phrases mean? Necessities of daily life To disrupt the single market To distort competition To accommodate special national circumstances A system built up piecemeal Pay-per-view television from cyberspace

An equitable approach to savings and pension Read the paragraph and explain the meaning of the word ‘equitable’ in the title!

Translate the following: The EU's role is to oversee national tax rules – to ensure they are consistent with certain EU policies, such as: • promoting economic growth and job creation • ensuring the free flow of goods, services and capital around the EU (in the single market) • making sure businesses in one country don't have an unfair advantage over competitors in another • ensuring taxes don't discriminate against consumers, workers or businesses from other EU countries.

Translation EU ima zadaću nadzirati nacionalne porezne propise kako bi se osiguralo da budu u skladu s određenim politikama EU-a kao što je: • promicanje gospodarskog rasta i otvaranje radnih mjesta • osiguravanje slobodnog protoka robe, usluga i kapitala u EU-u (na jedinstvenom tržištu) • osiguravanje da poduzeća u jednoj zemlji nemaju nepoštenu prednost pred konkurentima u drugoj zemlji • osiguravanje da se porezima ne diskriminiraju potrošači, radnici ili poduzeća iz drugih država članica EU-a.

Complete the text with the words from the list below: businesses, rules, borders, distortions, services The single market allows goods and _________ to be traded freely across ________ within the EU. To make this easier for __________ – and avoid competitive __________ between them – EU countries have agreed to align their __________ for taxing goods and services.

Answer key The single market allows goods and services to be traded freely across borders within the EU. To make this easier for businesses – and avoid competitive distortions between them – EU countries have agreed to align their rules for taxing goods and services. Translate the paragraph!

Translation Jedinstveno tržište omogućuje slobodnu prekograničnu trgovinu robom i uslugama unutar EU-a. Kako bi se ona olakšala poduzećima i kako bi se spriječilo narušavanje tržišnog natjecanja među njima, države članice EU-a složile su se da trebaju uskladiti svoje propise o oporezivanju robe i usluga.

Match the words from the text (1-6) with their synonyms (a-f): 1. sole a. fair 2. hamper b. room 3. leeway c. exclusive 4. undermine d. gradually 5. piecemeal e. prevent 6. equitable f. weaken

Translate into English! Kod ostalih poreza, kao što su porez na dobit i dohodak, glavna je zadaća EU-a osigurati poštivanje načela poput nediskriminacije i slobodnog kretanja na jedinstvenom tržištu. Za to i za rješavanje zajedničkih izazova kao što je utaja poreza među državama članicama sve je potrebniji usklađeni pristup na razini EU-a.

Translation For other taxes, such as company and income tax, the EU's main role is to ensure that principles such as non-discrimination and free movement in the single market are followed. Increasingly, a coordinated EU approach is needed among all member countries to do this, as well as tackle common challenges such as tax evasion.

Thank you for your attention!