Commission launches debate on a gradual transition to more efficient and democratic decision-making in EU tax policy

Source: European Commission (EC) i, published on Tuesday, January 15 2019.

The Commission has today kick-started the debate on reforming decision-making for areas of EU taxation policy, which currently requires unanimity among Member States. This unanimity often cannot be achieved on crucial tax initiatives, and can lead to costly delays and sub-optimal policies.

The Communication published today suggests a roadmap for a progressive and targeted transition to qualified majority voting (QMV) under the ordinary legislative procedure in certain areas of shared EU taxation policy, as is already the case with most other EU policy areas. This possibility is envisaged by the EU Treaties.

Under QMV, Member States would be able to reach quicker, more effective and more democratic compromises on taxation matters, unleashing the full potential of this policy area. Also, under the ordinary legislative procedure, taxation decisions would benefit from concrete input from the European Parliament, better representing citizens' views and increasing accountability.

The Commission is not proposing any change in EU competences in the field of taxation, or to the rights of Member States to set personal or corporate tax rates as they see fit. Instead, the aim is to allow Member States to exercise more efficiently their already pooled sovereignty so that shared challenges can be addressed more swiftly.

Commission President Jean-Claude Juncker, who had called for a move to qualified majority voting in taxation in his recent State of the Union addresses, said: Our increasingly globalised economies need modern and ambitious tax systems. I remain strongly in favour of moving to qualified majority voting and a stronger voice for the European Parliament on the common future of taxation in our Union.”

Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici said:“The EU has had a role in taxation policy since the origins of the Community six decades ago. Yet if unanimity in this area made sense in the 1950s, with six Member States, it no longer makes sense today. The unanimity rule in taxation increasingly appears as politically anachronistic, legally problematic and economically counterproductive. I am fully aware of how sensitive an issue this is, but that cannot mean that the discussion is off limits. So let's begin this debate today.”

The unanimity rule has meant that some key proposals for growth, competitiveness and tax fairness in the Single Market have been blocked for years. At the same time, the democratically elected European Parliament has only a consultative role in the decision-making process so far.

The approach outlined today would usher in a new dynamic and revitalise decision-making in this area at a time when the future of taxation has become a burning issue for the international community. Addressing the difficulties inherent in the current framework would cement the EU's reputation as a global leader in developing realistic solutions to the taxation policy challenges of the 21st century.

In today's Communication, the Commission asks that EU leaders, the European Parliament and other stakeholders assess the possibility of a gradual, four-step progression towards decision-making based on QMV as set out below (see factsheet for full details):

  • In Step 1, Member States would agree to move to QMV decision-making when it comes to measures that improve cooperation and mutual assistance between Member States in fighting tax fraud, tax evasion, as well as for administrative initiatives for EU businesses, e.g. harmonised reporting obligations. These measures are usually welcomed by all Member States but are prone to being blocked for reasons unrelated to the issues at hand.
  • In the same vein, Step 2 would introduce QMV as a useful tool to progress measures in which taxation supports other policy goals, e.g. fighting climate change, protecting the environment or improving public health.

Today's Communication suggests that Member States decide swiftly to converge on a decision to develop Steps 1 and 2.

  • The use of QMV under Step 3 would help to modernise already harmonised EU rules such as VAT and excise duty rules. Faster decision-making in these areas would allow Member States to keep up with the latest technological developments and market changes to the advantage of EU countries and businesses alike.

Today's Communication suggests that Member States consider developing Steps 3 and 4 by the end of 2025.

Action in the areas outlined would be possible under the so-called ‘passerelle clause' (Article 48(7) TEU) in the EU Treaties which allows for a shift to qualified majority voting and the ordinary legislative procedure under certain circumstances. No EU Treaty change is necessary.

Next steps

The Commission now calls on EU Member States, the European Parliament and all stakeholders to engage constructively in a debate on QMV in EU tax policy, and to define a timely and pragmatic approach for its implementation.

In particular, EU leaders are invited to endorse today's roadmap and to make timely decisions on the use of the relevant legal provisions set out in the Treaties.

For more Information

Communication: Towards a more efficient and democratic decision making in EU tax policy

Q & A: A gradual renewed approach to decision-making in EU tax policy - Questions and Answers


European Political Strategy Centre paper on the ‘passerelle clauses'



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