# CE2004088EN.01017001.xml

| 8.4.2004 | EN | Official Journal of the European Union | CE 88/170 |
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8.4.2004

EN

Official Journal of the European Union

CE 88/170

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(2004/C 88 E/0178)

WRITTEN QUESTION E-0154/04

by Margrietus van den Berg (PSE) to the Commission

(29 January 2004)

Subject:   ‘Kleptocrat tax’

Subject:

The business world claims to be going through hard times. Restructuring is common, people are losing their jobs, and losses are being recorded. None of this is their fault, say company directors, because the economy is simply in a bad way and salaries are lower. Painful measures have to be taken. We are all feeling the pinch, so we should all tighten our belts and bear the burden together. If everyone pulls together, we shall win through. But anyone taking a good look at the salaries of CEOs in the Netherlands will come to the conclusion that they are still drawing huge salaries through share-option schemes, redundancy packages, bonuses and loans. This ‘belt-tightening’ obviously does not apply to them.

Given that the proposals made by the Balkanende Government and the Tabaksblat Commission cannot properly curtail these high sums, the Dutch Trade Union Confederation FNV came up with other measures. The confederation wants the Netherlands Government to ‘skim off top incomes through income tax. This means that, above a certain amount, for example EUR 500 000, a rate of tax higher than the current rate of 52 % would apply. The extra revenue that this would generate could be used to provide financial assistance to those duped by the restructuring carried out by the gentlemen concerned.

| 1. | Is the Commission of the opinion that European CEOs earn exorbitantly high salaries, given the poor performance of their businesses and the forced redundancies that this entails? |
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1.

Is the Commission of the opinion that European CEOs earn exorbitantly high salaries, given the poor performance of their businesses and the forced redundancies that this entails?

| 2. | Does the Commission view a “kleptocrat tax” as an effective means of stemming the current tide, and is it prepared to call for some coordination with a view to such an approach being taken in several EU Member States? |
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2.

Does the Commission view a “kleptocrat tax” as an effective means of stemming the current tide, and is it prepared to call for some coordination with a view to such an approach being taken in several EU Member States?

| 3. | Does the Commission also envisage a role for itself in this process? What measures could the Commission take? |
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3.

Does the Commission also envisage a role for itself in this process? What measures could the Commission take?

Answer given by Mr Bolkestein on behalf of the Commission

(12 March 2004)

(12 March 2004)

| 1. | The Commission considers that the structure and amount of directors’ remuneration is a matter that must primarily be left to the decision of each company and its shareholders. It considers, however, that shareholders should be able to appreciate fully the relation between the performance of the company and the level of remuneration of directors and that they should be able to make decisions on the remuneration items linked to the share price. An appropriate regime of disclosure and appropriate governance controls is necessary in this respect. |
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1.

The Commission considers that the structure and amount of directors’ remuneration is a matter that must primarily be left to the decision of each company and its shareholders. It considers, however, that shareholders should be able to appreciate fully the relation between the performance of the company and the level of remuneration of directors and that they should be able to make decisions on the remuneration items linked to the share price. An appropriate regime of disclosure and appropriate governance controls is necessary in this respect.

| 2. | As the Commission stated in its Communication of May 2001 on a comprehensive strategy for the EU's future tax policy (1), there are many tax fields for which harmonisation is neither necessary nor desirable in view of the widely differing characteristics of Member States' tax systems and different national preferences in areas such as public expenditure. Taxes on personal income are one area which, in the Commission's view, should be left to Member States even when the European Union achieves a higher level of integration than at present. Co-ordination of personal taxes at EU level is only appropriate to prevent cross-border discrimination or obstacles to the exercise of the four freedoms, as well as in some cases to avoid double taxation or unintentional non-taxation in cross-border situations and to tackle cross-border evasion. |
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2.

As the Commission stated in its Communication of May 2001 on a comprehensive strategy for the EU's future tax policy (1), there are many tax fields for which harmonisation is neither necessary nor desirable in view of the widely differing characteristics of Member States' tax systems and different national preferences in areas such as public expenditure. Taxes on personal income are one area which, in the Commission's view, should be left to Member States even when the European Union achieves a higher level of integration than at present. Co-ordination of personal taxes at EU level is only appropriate to prevent cross-border discrimination or obstacles to the exercise of the four freedoms, as well as in some cases to avoid double taxation or unintentional non-taxation in cross-border situations and to tackle cross-border evasion.

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| 3. | The Commission announced, in its Communication on modernising Company Law and Enhancing Corporate Governance in the EU of 21 May 2003 (2), its intention to adopt a Recommendation to foster an appropriate regime for the remuneration of directors. Such a regime should be composed of four key items: disclosure of the remuneration policy in the annual accounts, disclosure of details of remuneration of individual directors in the annual accounts, prior approval by the shareholder meeting of share and share option schemes in which directors participate and proper recognition in the annual accounts of the costs of such schemes for the company. The Commission intends to adopt the Recommendation in 2004. |
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3.

The Commission announced, in its Communication on modernising Company Law and Enhancing Corporate Governance in the EU of 21 May 2003 (2), its intention to adopt a Recommendation to foster an appropriate regime for the remuneration of directors. Such a regime should be composed of four key items: disclosure of the remuneration policy in the annual accounts, disclosure of details of remuneration of individual directors in the annual accounts, prior approval by the shareholder meeting of share and share option schemes in which directors participate and proper recognition in the annual accounts of the costs of such schemes for the company. The Commission intends to adopt the Recommendation in 2004.

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(1)  OJ C 284, 10.10.2001.

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(2)  COM(2003) 284 final.

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