WRITTEN QUESTION P-2250/00

by Daniel Hannan (PPE-DE) to the Commission

(29 June 2000)

Subject: Tax rates

What are the (a) present and (b) mooted preferential tax rates set for the:

- Commission officials,

- ECJ staff,

- Commissioners,

- MEPs,

- Delegates to the Committee of the Regions?

In what circumstances can these rates, rather than the national ones, be claimed? What salary bands are covered? What sums are involved, both individually and taken as a whole? What is the Commission's opinion of this practice?

Answer given by Mr Kinnock on behalf of the Commission

(15 September 2000)

Under the provisions of Article 13 of the Protocol on Privileges and Immunities(1), and Council Regulation (EEC, Euratom, ECSC) No 260/68 of 29 February 1968 laying down the conditions and procedure for applying the tax for the benefit of the Communities(2), officials and other servants of the Communities employed under the staff regulations are liable to Community tax on salaries, wages and emoluments paid by the Communities. They are exempt from national taxes on these amounts. The Community tax on salaries, wages and emoluments is deducted at source and the proceeds are paid into the Community budget. There are 14 tax rates applied to consecutive salary bands and they are adjusted in line with the annual adaptation of salaries.

The tax rates since 1 July 1999 have been:

- 8 % for the portion of income between 85,18 and 1 503,50 euros,

- 10 % for the portion of income between 1 503,51 and 2 070,88 euros,

- 13 % for the portion of income between 2 070,89 and 2 373,32 euros,

- 15 % for the portion of income between 2 373,33 and 2 694,93 euros,

- 18 % for the portion of income between 2 694,94 and 2 997,38 euros,

- 20 % for the portion of income between 2 997,39 and 3 290,59 euros,

- 23 % for the portion of income between 3 290,60 and 3 593,16 euros,

- 25 % for the portion of income between 3 593,17 and 3 886,37 euros,

- 28 % for the portion of income between 3 886,38 and 4 188,81 euros,

- 30 % for the portion of income between 4 188,82 and 4 482,02 euros,

- 33 % for the portion of income between 4 482,03 and 4 784,59 euros,

- 35 % for the portion of income between 4 784,60 and 5 077,80 euros,

- 40 % for the portion of income between 5 077,81 and 5 380,24 euros,

- 45 % for the portion of income above 5 380,25 euros.

The rules and rates set out above also apply to the Members of the Commission (Article 20 of the Protocol) as well as to the judges, the advocates general, the registrar and the assistant rapporteurs of the Court of Justice (Article 21 of the Protocol).

Apart from the Community tax, Council Regulation (ECSC, EEC, Euratom) No 3831/91, which was adopted on 19 December 1991(3), introduced an additional temporary contribution of 5,8 % levied for a period running from 1st January 1992 to 1st July 2001 on the remuneration paid by the Communities to staff in active employment and to Commissioners.

Other income (e.g. income from savings and capital gains) gained by the above categories of personnel is, according to Article 14 of the Protocol(4), subject to the tax rules of the Member State where they resided before taking up duty with the Communities (including any relevant double taxation agreement concluded by that Member State).

The above Articles of the Protocol are not applicable to members of the Parliament and delegates at the Committee of the regions, who are taxed according to the tax rules of their Member State of residence.

The revenue provided to the Community budget from these sources for the financial year 2000 is 333 million from the Community tax (Article 400) and 44 million from the temporary contribution (Article 403).

The present Community tax system is considered to be part of the overall system for remuneration. In its Communication on pay and pensions adopted in July 2000 the Commission has proposed prolonging the existing system for up to two more years, i.e. up to 30 June 2003(5). The Commission has not proposed a change in the present system of taxation.

(1) Protocol on the Privileges and Immunities of the European Communities, annexed to the Treaty signed on 8 April 1965 establishing a Single Council and a Single Commission of the European Communities.

(2) OJ L 56, 4.3.1968.

(3) OJ L 361, 31.12.1991.

(4) Article 14 of the Protocol provides that, in the application of income tax, wealth tax and death duties and in the application of conventions on the avoidance of double taxation concluded between Member States, officials and other servants of the Communities who, solely by reason of the performance of their duties in the service of the Communities, establish their residence in the territory of a Member State other than their country of domicile for tax purposes at the time of entering the service of the Communities, shall be considered, both in the country of their actual residence and in the country of domicile for tax purposes, as having maintained their domicile in the latter country provided that it is a member of the Communities.

(5) COM(2000) 569 final.