What’s the right tax mix for the EU over the next 20-30 years? The European Commission held a high-level Tax Symposium in Brussels to answer this question.

Europe’s tax debate is underway! On 28 November, the European Commission launched the Tax Symposium in Brussels to explore how to re-design our tax systems in the face of challenges such as Europe’s ageing population, climate change, globalisation and digitalisation. 

Participants at the EU Tax Symposium comprised a mix of academics, policymakers and civil society representatives.

Among the key topics discussed were the multiple changes and challenges societies and economies are facing today, and the ways taxation must adjust to reflect them. From the energy crisis to the war in Ukraine and the various inequalities as they manifest around the world, the issues at stake indicate that taxation has to broaden its scope and purpose. In his keynote speech, Paolo Gentiloni, European Commissioner for Economy, said taxation is more than generating revenues for governments. 

Taxation should be tailored to each country’s particular economy and needs. One of the challenges identified by Zbyněk Stanjura, Minister of Finance of the Czech Republic, is the difficulty in finding “a tax mix that suits all countries. Each EU Member State needs a new tax system adapted to its own economy, especially in the area of direct taxes. One size does not fit all.”

Exploring cycles and shocks

The Symposium focused on the following taxation priorities: adjusting to economic cycles and responding to shocks.

For instance, a new taxation system must be able to react to the shocks (such as the pandemic, the war in Ukraine, climate change) promptly and ensure these are part of the way forward, informing the steps to be taken not only in Europe but globally. 

The role of taxation in supporting EU energy autonomy and sustainable growth was also discussed. Participants explored how taxation can help Europe meet its climate goals and how taxation systems could be reformed to incentivise the climate transition. A key point raised was the shift of the tax burden away from labour and towards the use of natural resources. 

Overall, the Tax Symposium highlighted both strengths and weaknesses of the European taxation system. It was widely agreed that Europe has done well in terms of making progress during the most difficult of times by presenting a united front. However, there is still a need for better external representation of European tax issues. 
Looking to the future, the EU is committed to shaping a greener, fairer and more transparent tax experience for the next 30 years. 

For more information on the Tax Symposium, visit the conference website. 

Checkout TAXEDU’s Resources online section. Find out about the different types of taxes and take a quiz about the impact of taxes.

Tax policy is a Member State competence with EU-level influences, which means that each Member State can introduce its own tax rates. As a result, taxation rates vary across the EU. What do you know about the situation in your country? 

What are we talking about when we talk about value added tax (VAT)? Simply put, it is an amount we pay whenever we purchase goods or services. VAT exists in all EU countries. 

The VAT is included in the price we see when we make a purchase, and it is usually determined in proportion to the price of the product or service offered.

In most cases, VAT is paid along every stage of the supply chain. When the sold good is a product, for example, VAT is applied at the beginning of the production process (e.g., the purchase of materials), then to its transport and packaging, and finally to the end result that reaches the consumer.

The EU Directive on the common system of value added tax has laid down some rules that determine how Member States should apply a general tax on consumption within their borders. According to this framework, the standard VAT rate cannot go below 15%, and in special cases of reduced rates, it cannot go below 5%.

Apart from these rules, though, each EU Member State is responsible for setting its own VAT rate. Currently, the EU average standard VAT rate is 21%, six percentage points higher than the minimum standard as defined by EU regulation. 

Rates range across countries – from a low 17% (Luxembourg) to a high 27% (Hungary). Some examples: Sweden 25%, Finland 24%, Portugal 23%, Slovenia 22%, Netherlands 21%, Austria 20%, Germany 19% and Malta 18%.

Super-reduced, zero and parking rates

In addition to the standard rate, each country may introduce special VAT rates. These can be classified as super-reduced rates, zero rates and parking rates. 
Super-reduced or zero rates are those that fall below 5% or are set at 0% respectively, and they apply to limited services and goods in certain EU countries. Parking rates are again applicable to some goods/services in certain EU countries that already had reduced VAT rates in place and have been allowed to continue applying them, provided they do not fall below 12%. 
These goods/services include various food products, water supply, certain pharmaceutical products and medical equipment, as well as transport of passengers.

VAT in the age of COVID 

The coronavirus pandemic gave rise to unprecedented emergencies that required urgent attention/action. Apart from healthcare systems straining to accommodate the millions affected, economies went into a nosedive all over the world. 

In response to the new reality, the European Commission made the decision to suspend customs duties and VAT on tools related to combatting the coronavirus. More specifically, EU Member States agreed to temporarily exempt COVID-19 vaccines and testing kits from VAT when sold to hospitals, medical practitioners and related services as well as individuals. 

While previously only reduced (and not zero) VAT rates could be applied to vaccines, the agreement allowed Member States to apply either reduced or zero rates to both vaccines and testing kits if they wished to do so.

VAT was also temporarily suspended on protective equipment imported from non-EU countries, for example masks (and for healthcare providers also gloves, goggles and coveralls) and medical equipment such as ventilators, oximeters and monitors. 

The measure has been implemented in various EU Member States and for various periods of time, according to individual agreements. It has worked exceptionally well towards alleviating the financial pressures connected with the huge amounts of equipment needed, making it easily accessible.

Find out more about tax. Check out TAXEDU’s video clips.  
Test your knowledge about taxes. Take the TAXEDU quiz.

For more information about VAT rates and taxation in the COVID-19 context, visit: https://taxation-customs.ec.europa.eu/covid-19-taxud-response_en

Further reading:

- VAT rules and rates

- Commission Decision of 22.12.2021 on relief from import duties and VAT exemption on importation granted for goods needed to combat the effects of the COVID-19 outbreak during 2022 
 

In Italy, every year in October, the Minister of Economy and Finance organizes the month of Financial Education. The topic of this edition was "Build today what matters for your future" ("Build today what is important for your future") and many organizations have scheduled meetings and conferences, online and in presence, on finance, insurance and social security throughout Italy.

The opening event was the World Investor Week, organized by the National Commission for Enterprises and the Stock Exchange (Consob). Other topics organized concerned the insurance training day (October 19) and the retirement training week (October 24-30).

Italian Revenue Agency carried out many of these initiatives in collaboration with other administrations, and stakeholders.

Our Regional Directorates of Sicily, Abruzzo, Campania, Emilia Romagna, Sardinia, Tuscany and Veneto have been involved in these events.

The meetings were for families, children, young people and teachers.

Creativity has prompted our colleagues in new activities. Some colleagues have delved into the taxation for the new jobs, such as blogger, YouTuber, influencer, etc. Others colleagues have invited boys and girls to paint a "mural" supported by a street artist; other still others talked about financial instruments and tax law, or tax breaks for the purchase or for the renovation of a house, and much more.
 

Have you heard of the EU Tax Observatory? It is an independent research laboratory which conducts research on taxation. On 13 June 2022, the Observatory held its first annual conference in Brussels to discuss the future policies on tax avoidance and offshore wealth. Find out what happened. 

Created on the initiative of the European Parliament, the EU Tax Observatory is an independent research centre with a focus on addressing the societal challenges of tax avoidance, tax evasion and aggressive tax planning and potential solutions to these problems. 

The Observatory aims to disseminate its cutting-edge research to citizens and policymakers alike, propose concrete solutions to tax evasion and fraud, and make EU tax data available for all.

On 13 June, at the first annual conference organised by the Observatory it was highlighted that a tax system appropriate for the 21st century is still to be invented, given the inequalities and ecological challenges we face.

Introducing a global minimum corporate tax rate set at 15 %

Pillar 2 of the Organisation for Economic Co-operation and Development (OECD) global minimum corporate tax agreement was in the spotlight at the event. Signed by 137 countries in October 2021, it aims to address the tax challenges arising from digitalisation and globalisation of the economy by introducing a global minimum corporate tax rate set at 15 %.

Even though the implementation of Pillar 2 could represent a historical step in taxation, some participants of the event pointed out that it must not be seen as an imposition on low-income countries but as a new tax system based on cooperation and fairness for all those concerned.

A global assets registry

Some participants at the conference outlined that the financial sanctions against Russian oligarchs highlighted how many countries do not know who owns assets in their respective territories. 

It is worth noting that the equivalent of 10 to 13 % of global Gross Domestic Product (GDP) is held as offshore wealth (which includes real estate, bank accounts, bonds and stocks, business assets, luxury goods like yachts, planes, artwork and jewellery). It is therefore important to monitor international financial flows and offshore wealth.

Speakers agreed that a Global Asset Registry would be a solution to tackle this phenomenon. This registry would be based on the Automatic Exchange of Information (AEoI) under the Common Reporting Standard and on beneficial ownership registries.

It is expected that this registry, once in place, would improve financial transparency. 

Beware of the dark side

Promoting transparency in tax is essential, especially among young learners who will grow up to be responsible future citizens. TAXEDU has a treasure trove of useful resources in the teacher’s corner with modules like Beware of the dark side or True Players are Taxpayers that will help pupils to understand the importance of being a fair tax player. 

What’s more, our sections dedicated to children, teenagers and young adults all mention tax fraud and tax evasion, and the consequences of this practice. 

More information

EU Tax Observatory
Summary – Tax Avoidance and Offshore Wealth: Policies for Tomorrow
OECD releases Pillar Two model rules for domestic implementation of 15 % global minimum tax

The PECT in the Cádiz Delegation continues to improve year after year. This 2021-22 academic year we have brought Civic-Tax Education to 350 University students, 2,250 ESO-BACHILLERATO-TRAINING CYCLES students and 1,100 Primary students.  A PECT seminar has been given at the Teacher Training Center (CEP) which has included this session as a teacher training activity and was attended by representatives of 25 centers throughout the province and educational levels.

The EU and Ukraine are reinforcing their collaboration. Beginning in September 2022, the Commission has signed an agreement allowing Ukraine to participate in the EU’s Customs and Fiscalis programmes. In addition, from 1 October 2022, Ukraine will join the EU-Common Transit Countries’ Convention.

Cooperation between the EU and Ukraine will be enhanced in fighting tax fraud and evasion.

The Fiscalis programme is at the core of this new bond as it allows tax administrations to work together to facilitate information exchange and administrative cooperation between authorities.

The Fiscalis programme

With a budget of EUR 269 million covering the 2021-2027 period, 70 % of the Fiscalis programme aims to establish an electronic taxation system that allows tax administrations to better fight tax fraud and evasion, and to use data through the development and operation of the of the European electronic systems for taxation. To improve collaboration between participating countries, the programme also provides space where administrations can share knowledge, experience, good practices and set guidelines together.

The Customs’ programme

Information technology is cornerstone to the Custom’s programme because it promotes e-commerce and technologies like Blockchain.

With a budget of EUR 950 million covering the 2021-2027 period, the programme aims to tackle security threats and to increase digitalisation in customs. By 2025, the programme is expected to provide a modern, interconnected and fully paperless environment.

Going deeper with TAXEDU

What is customs duty? Who collects taxes and why? You can browse numerous informative clips to discover the answers with your pupils in the teachers’ corner.

Want to start a discussion about the collaboration with Ukraine in taxation? The TAXEDU forum is the perfect space to spark the discussion or take a look at the on-going national fora. 

How is tax education going in other countries? Get a sneak preview thanks to the TAXEDU news section.

More information

• Ukraine: New agreements on closer cooperation between the EU and Ukraine on customs and taxation
• Customs: Ukraine to join the Common Transit Convention and the Convention on the Simplification of Formalities in Trade in Goods on 1 October 2022
• Fiscalis programme
• Customs programme