EU budget: Tax cooperation between EU Member States receives welcome boost following funding agreement

The European Commission has welcomed today’s (March, 21) provisional agreement to provide funding for the EU’s tax cooperation programme (‘Fiscalis’) during the next EU budget period of 2021-2027.

This agreement paves the way for Fiscalis to continue its key contribution in supporting and ensuring close tax collaboration between Member States. In turn, it helps to establish fairer and more efficient tax systems and lower administrative burdens for citizens and businesses in the EU’s Single Market.

About this agreement, the Commissioner for Economic and Financial Affairs, Taxation and Customs, Pierre Moscovici has said: “Today’s agreement will allow the Fiscalis programme to continue supporting Member States to work together to find innovative solutions to the problems facing our tax administrations. When coupled with new technology, this work can have a hugely positive effect in our overall fight against tax avoidance and tax evasion, thereby protecting our Single Market. The Fiscalis programme may have a small budget, but it has a big added value.”

The programme will support cooperation between Member States’ tax administrations and better contribute to the fight against tax fraud, tax evasion and tax avoidance, by:

– Putting in place better and more connected IT systems, which each Member State would otherwise have to develop individually. This includes developing and maintaining interoperable and cost effective IT solutions to support tax authorities in implementing EU legislation;

– Sharing good practices and training to boost efficiency: this includes helping prevent unnecessary administrative burdens for citizens and businesses (including SMEs) in cross-border transactions and significantly adding to the 423,000 tax professionals trained since 2014;

– Continued and enhanced support for deep cooperation between tax authorities, in particular joint actions in risk management and audits – 1,000 of which have been organised between Member States since 2014;

– Fostering Union competitiveness and fair competition, boosting innovation and facilitating the implementation of new economic models.

Next steps

This provisional agreement now has to be formally approved by both the European Parliament and the Council, while the budgetary aspects are subject to the overall agreement on the EU’s next long-term budget, proposed by the Commission in May 2018.

Background

The EU’s Fiscalis Programme has proven itself indispensable in helping tax administrations to cooperate better across the EU to improve tax collection and fight tax fraud. First designed in 1993 purely as a training and exchange programme for tax officials, Fiscalis has become a game-changer for the EU’s taxation landscape over the last 20 years. It offers a flexible and simple environment for tax cooperation, with substantial benefits and impact despite its relatively limited size. In one year alone (2015), it helped Member States to assess over €590 million in taxes for possible recovery through joint EU controls.

Today’s agreement comes at a time where public sentiment against tax avoidance runs high, with 74% of EU citizens calling for EU action against tax avoidance and tax evasion, and with EU governments needing to recoup more than €50 billion a year lost to Value Added Tax (VAT) fraud alone. A strengthened programme will help address this issue. The Fiscalis programme will also offer support in the upcoming challenges of the next decade, such as the digitalisation of taxation activities, new economic models or the internationalisation of financial instruments, which go well beyond the Union borders.