European Council President Proposes Business Tax Changes
European Council President António Costa has suggested narrowing a controversial business tax. He wants it to apply only to large firms with a turnover over €750 million per year. This proposal aims to help reach an agreement on new EU-wide levies, known as own resources. These levies have been a major hurdle in ongoing budget talks, according to diplomats briefed on the discussions by POLITICO.
The EU is working to finalize a budget package for the next seven years. Costa is looking for new sources of funds to boost the budget by increasing tax resources under EU control. The focus is on corporate taxes, which could impact Ireland, the largest EU recipient of such revenues. The Irish government may face new diplomatic challenges to protect its corporate tax income. This comes amid talks about redistributing tax revenues from countries like Ireland into the central EU budget, as reported by the Irish Times.
The budget negotiations are complicated by demands from “frugal” northern countries, led by Germany. They are asking for lower national contributions. Meanwhile, southern and eastern states are pushing to protect the Common Agricultural Policy and cohesion funding. Costa's proposals will likely be discussed at next week’s informal summit of EU leaders in Dublin. This meeting comes ahead of a crucial summit in Brussels at the end of the month. Ireland had initially proposed an 8% cut to the original €1.76 trillion budget proposal. This suggestion faced criticism from various member states.
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The proposed changes could affect corporate tax revenues, especially for Ireland, which relies heavily on this income. A shift in tax policies could lead to reduced revenues for Ireland, impacting its fiscal position. Investors will closely watch the outcomes from the upcoming EU leaders' summit in Dublin. These results may significantly influence the budget negotiations.
Based on reporting by: politico.eu, irishtimes.com