Here's
another example of the classic move by the EU for "horizontal
harmonisation" beloved of the 'crats.
Your objective is an EU-wide corporate taxation system, so you attack the
smaller section of the target knowing that they are less likely to be able to
lobby and don't have any form of vote. Get the legislation installed in that
section and then move crab-like into the real target, which is the big
corporates using the familiar "level playing field argument".
Let your SME friends know of this and publicise it in letters to the
press.
John Kelly
EU cross-border tax plan for SMEs
By Chris Smyth and George Parker in Brussels
Published: January 10 2006 17:14
EUtax: Small and medium enterprise companies operating across national
borders would be able to operate under a simplified tax regime, under
plans to cut red tape announced on Tuesday by the European Commission.
The initiative is part of a drive to help small and medium sized
enterprises announced this week by the new EU Austrian presidency, which
believes too much European policy is driven by the demands of big
business.
Under the home state tax proposals, companies would be allowed to
calculate all profits using the tax rules of the country where they are
based.
A formula for dividing these revenues between member states according to
their shares of the total payroll and/or turnover would be agreed in
bilateral or multilateral treaties. States would tax these profits at
their own corporate tax rates.
However, the scheme is voluntary and would depend on member states
agreeing to respect each other’s tax systems; the Commission does not
intend to legislate in the area.
Commission officials were unable to say which countries might apply the
new scheme. Some member states – including Britain and Ireland – are
usually hostile to EU tax initiatives.
The Commission wants to reduce the costs of complying with 25 different
taxation systems, which are disproportionately high for SMEs – companies
with under 250 employees and €50m ($60.5m, £34.2m) annual turnover.
It estimates that these costs can be as high as 30 per cent of tax paid
for small businesses, compared with only 1.9 per cent for large
corporations. Only 3 per cent of SMEs operate across EU borders.
“The proposed scheme on home state taxation will greatly simplify the
process of operating cross-border for small firms in the EU,” said
Gerhard Huemer, of the UEAPME pan-European small business association.
“It would help to slash prohibitively high costs associated with the
different tax systems in the member states,” he said. The association
believes the scheme could be attractive to smaller central European
countries, where borders are an obstacle.
The proposal would also give relief for cross-border losses and the hope
is that it will encourage more small businesses to expand across borders.
The scheme will run for a five-year trial on the basis of voluntary mutual
recognition of tax rules.
The Commission likens the scheme to the arrangements between US states or
Canadian provinces, and has pointed to a trial for businesses on the
German-Dutch border as evidence the idea can work.
Wolfgang Schüssel, Austrian chancellor, said this week that an EU
economic summit in March would focus on the needs of SMEs. He wants to
find more money for research and innovation in small companies in the EU
budget round starting in 2007.
Additional reporting by Tobias Buck