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Introduction of a European Taxpayer's Code

Introduction of a European Taxpayer's Code
17 May 2013
In February 2013, the EU Commission launched a public consultation seeking views on the potential introduction of a European Taxpayer's Code to address the need to enhance taxpayer compliance and transparency.

The EU Commission states that in order to enhance taxpayer compliance and transparency, most Member States have established taxpayer's codes which define the fundamental principles applying to tax matters and in particular the rights and obligations of taxpayers and tax administrations. Depending on the country such instruments may be called: taxpayer's code; bill of rights; or taxpayer's charter.

Taxand responds to the EU Commission's consulation paper providing an evaluation of the current procedural equivalents to a taxpayer's code across Europe and the positive and negative impacts that an EU wide taxpayer's code could have on Member States.

Taxand's key comments include:

  • It is clear that taxpayers codes can be useful, eg in Spain, for tax audit and tax refund procedures.
  • Across Europe, certain jurisdictions (eg Luxembourg) do not have a taxpayer's code but do provide for other procedural rules that might be considered similar instruments, depending on how a taxpayer's code is defined.
  • A cost-benefit analysis should be conducted in order to avoid unnecessary costs for businesses and authorities.
  • There should be a legal guidance embedded in the OECD Framework.
  • If an EU Taxpayer's Code was introduced, the rights of any taxpayer in the EU Member States should not be diminished.


Taxand's Take

The introduction of a European taxpayer's code seems premature given the lack of tax harmonisation in Europe and the diversity of tax systems that multinatiaonls are required to adhere to. Any code that would be wide enough to cover all member states' tax systems risks being so general it could be rendered meaningless. Furthermore, it should be taken into account that legislators of various Member States deliberately choose to embed vague terminology into their tax legislation which evokes tax planning. Thus, an attempt to tackle undesired tax planning by means of encouraging taxpayers to adhere to the European Taxpayer' Code in fact shifts responsibilities that belong with the legislator to the taxpayer. Instead of implementing this new measure (ie European Taxpayer's Code) we believe that the EU and its Member States should rather improve current instruments and use these more actively.

Taxand's Take Author