In a press release (IP/11/1337) dated 11 November 2011 the EU Commission states that double taxation, and double non-taxation, contradict the very spirit of the Single Market. Yet many citizens and businesses are still suffering heavier tax burdens just because they operate in more than one Member State. Meanwhile, others are using loopholes between national systems to escape paying taxes that they owe.

Determined to tackle this problem, the Commission today adopted a Communication on Double Taxation. This Communication highlights where the main double taxation problems lie within the EU, and outlines concrete measures that the Commission will take to address them. In doing so, the Commission seeks to remove real obstacles to a more competitive economy and make the EU easier to invest and do business in.

The press release points out a number of measures the Commission proposes to strengthen existing legislation against double taxation, the most important and direct of which is the proposal to improve the Interest and Royalties Directive. This aims to reduce the instances of one Member State levying a withholding tax on a payment, while another Member State taxes the same payment.

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Charilaos Hadjiioannou, BSc, ACA