Digital taxation remains the most contentious issue as the EU Council presidency shifts from Romania to Finland, which favors an OECD-led approach.
“The ongoing discussions in the OECD on digital taxation will continue. We need to work harder to prevent harmful tax competition and tax evasion,” Finland said in a program outlining its goals for the presidency, which it assumes July 1.
“On digital taxation, Finland has a strong preference for a global solution, rather than an EU-only approach,” said Johan Barros, tax policy manager at Accountancy Europe. “They will likely aim to keep the EU focused on work done at the OECD level — including coordinating on a common EU position.”
Although it favors EU coordination on digital taxation, Finland has long held that an OECD-led approach is best. It was among several member states to oppose an EU digital advertising tax, a compromise proposal from the Romanian presidency that evolved from the European Commission’s digital services tax proposal, which Finland also opposed. EU tax directives require unanimous approval from member states.
Finland’s presidency program, released June 26, also notes the importance of EU cooperation in addressing tax evasion and money laundering.
“Close cooperation within the EU should make it possible to take effective action in tackling aggressive tax planning and tax evasion and reducing harmful tax competition. These policy measures will make for a fairer and more predictable business environment. Finally, we must make sure that supervisors have sufficient powers and capacities to combat money laundering and terrorist financing,” the program states.
The sustainability and climate change policies in the Finnish presidency’s plan may open the door to further conversation about an EU-wide tax on aviation fuel. The Dutch and French governments have announced their intent to pursue aviation taxes, and they have implored the rest of the EU to get on board.
“On aviation and other green taxes, we will have to wait for the next [European] Commission to be confirmed for any new proposals,” Barros said. “But we see the Dutch already building alliances with other member states and initiating the debate, which I believe the Finnish government will be happy to facilitate, given its own horizontal focus on sustainability,” he said.
Although Finland is not one of the member states participating in enhanced cooperation to introduce a financial transaction tax, if the issue gains momentum during the next six months, it would be part of the presidency’s responsibility as the “honest broker” between EU member states to facilitate the process, Barros noted.