“Passion” or even ”good fanaticism” ultimately may sound good, but even higher effectiveness might be contributed by sound, well-supported arguments, particularly when you deal with 28-1 Member States also headed by politicians who may feel it is their duty to defend their national interest with passion / fanaticism after all. 

I think we can agree that it is not for her passion that Mrs. von der Leyen was formally elected into EU’s top job yesterday. This is precisely why we should carefully examine the pragmatism of her words. And, while we mentioned taxes, let’s stick to taxes for a bit longer. Reads ”My agenda for Europe” presented yesterday: ” A common consolidated corporate tax base would provide businesses with a single rulebook to compute their corporate tax base in the European Union. This is a longstanding project of the European Parliament and I will fight to make it a reality.”

It is a longstanding project indeed. In ”My Agenda” in July 2014, candidate Jean-Claude Juncker stood in front of the new Parliament with a revealing statement: ” I will notably press ahead with administrative cooperation between tax authorities and work for the adoption at EU level of a Common Consolidated Corporate Tax Base and a Financial Transaction Tax”. He jettisoned the latter tax (the echoes of the Great Crisis has died away since), even though the concept of a special tax would resurface, for the digital sector this time over. However, administrative cooperation has strengthened [1], and the common corporate tax base, and later on consolidated (CCCTB) would rise in full force. [2] 

As early as June 2015 one could have announced the impending CCCTB (here our very first comment: Something tougher than BEPS? Yes, it’s CCCTB – the new shockwave from Brussels!) At a different speed at that: mandatory for large businesses (in 2011 it ). And the speed kept going up. Since then I have been watching this train, passionately, so to speak, sneaking into all press releases regarding the European future, trundling out of the European Parliament, receiving a fresh momentum from the German and French engines in the Meseberg station and reaching the final compromise the last month during the Romanian Presidency of the EU Council (here the June comment). 

Now the train is revealed in its true size – we should expect a mandatory common tax base for (nearly) all the European companies. What is yet to be added? A small detail, as long as there still are Member States such as Ireland, which, out of passion, still ask the question: OK, what is then left for us if you also take the last lever of tax competitiveness? (here a recent article on the Irish state of mind, also relatable for the Northern states).[3]
And this is when the difference-making detail will turn up – an expansion of the possibility that even the momentous EU taxation-related decisions end up being taken by qualified majority (taxation is still the last domain to require unanimous vote at EU level). In other words, it will suffice for the great states to lure a handful of allies and turn their resolve into a EU tax law. (here a stance on the matter) Sure thing, Ms von der Leyen’s agenda has this covered as well – ”I will make use of the clauses in the Treaties that allow proposals on taxation to be adopted by co-decision and decided by qualified majority voting in the Council. This will make us more efficient and better able to act fast when needed.” 

A warm-up pitch for the great CCCTB is now the already famed digital tax mentioned above, which is a turnover tax on tech giants [4]. 

As a matter of fact this is rather a piece of fanaticism of the French which was nilly-willy embraced by others. However, in spring their failure to meet the requirement for unanimity (substantially, on the same grounds as those with the CCCTB) had to be conceded. For now, the French show defiance and were the first to introduce their own digital tax, and already elicited a… passionate response from the Americans (famous Resolution 301 which may end up in customs surcharges). 

Of course, the French and those who still think about this kind of moves on their own cannot be left unsupported. Mrs. von der Leyen again: ”I will ensure that taxation of big tech companies is a priority. I will work hard to ensure the proposals currently on the table are turned into law. Discussions to find an international solution are ongoing, notably at the Organization for Economic Cooperation and Development. However, if by the end of 2020 there is still no global solution for a fair digital tax, the EU should act alone.” 

For more than five years now, I have been ending my addresses with a question – How should the small European economies play more efficiently? It is not a question asked out of mere passion, but of pragmatism for that matter. I am aware of many players in the emerging area who share the same line of thought – we do want to stay in Europe, we don’t want to counter the European trains, but we want them to pass through our station as well. Instead, we need an answer to the (Irish) question above, related to competitiveness. As soon as possible in fact, as the new German traffic controller in Brussels is obviously less than keen to wait the following five years.

Notes: 
[1] see companies being placed under an obligation to report for each individual country where they are present, CbCR, now also super-transparency for intermediaries, DAC6
[2] The former EC headed by Manuel Barroso had also put all of their energy and passion in opening the long-standing file of common tax base. But these are the ways of the big files – they are on the Agenda, no matter who holds that agenda at the time. Or maybe it’s more fitting to speak of legislative trains (a comparison used at the very EU level, as it happens) which may adjust their route or even destroy one or two switch boxes in the process, but the intended destination remains, by and large, unchanged. 
[3] On the shiny side of the coin there is of course the advantage of doing away with the intra-EU barriers. However, the reverse of the coin is less attractive now. In brief, the small economies will be forced into sharing the same high speed railways with the big ones. This is virtually the inception of an even tougher competition for added value between heavy hitting investors. More details on this comment
[4] By way of comparison, such tax would be tantamount to excoriate politicians on account of every word they keep tossing about. In fact, they keep telling us – this is way too simplistic, judges us by our results rather than words! Which is pretty much what businesses want – Tax us based on our results (profit), rather than sales!

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