Opinion of the European Economic and Social Committee on the ‘Proposal for a Council Directive amending Directive 2003/49/EC as regards the possibility for certain Member States to apply transitional periods for the application of a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States’ (COM(2004) 243 final - 2004/0076 CNS)
Date: 2004-04-28
Institutions: European Economic and Social Committee
Subjects: Czechia, Latvia, Lithuania, Poland, Slovakia, derogation from EU law, tax harmonisation, tax on investment income, tax system, transitional period (EU)

30.4.2004

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Official Journal of the European Union

C 117/21

Opinion of the European Economic and Social Committee on the ‘Proposal for a Council Directive
amending Directive 2003/49/EC as regards the possibility for certain Member States to apply tran-
sitional periods for the application of a common system of taxation applicable to interest and
royalty payments made between associated companies of different Member States’

(COM(2004) 243 final - 2004/0076 CNS)

(2004/C 117/07)

On 14 April 2004 the Council of the European Union decided to consult the European Economic and
Social Committee, under Article 262 of the Treaty establishing the European Community, on the ‘Proposal
for a Council Directive amending Directive 2003/49/EC as regards the possibility for certain Member
States to apply transitional periods for the application of a common system of taxation applicable to
interest and royalty payments made between associated companies of different Member States’
(COM(2004) 243 final - 2004/0076 CNS).

The European Economic and Social Committee decided to entrust the Section for Economic and Monetary
Union and Economic and Social Cohesion with the preparatory work on this subject.

In view of the urgent nature of this work, the European Economic and Social Committee decided at its
408th plenary session held on 28 and 29 April 2004 (meeting of 28 April) to appoint Mr Burani as
rapporteur-general and adopted the following opinion unanimously.

1. The Commission proposal

The purpose of

1.1
is to amend Directive
this proposal
2003/49/EC so as to incorporate transitional periods, for the
application of the directive, following requests by the Czech
Republic, Latvia, Lithuania, Poland and Slovakia.

Taking into account their present economic situations,
1.5
the ongoing
status as capital
their
economic transition and their relatively low level of budget
revenues, the acceding States might face budgetary difficulties
were they required to abolish withholding taxes on interest and
royalties payments.

importing countries,

1.2
As the directive was adopted on 3 June 2003, after the
signing of the Act of Accession on 16 April 2003, it was not
included in Chapter 9 of Annexe II of the Act of Accession.
Nevertheless, the directive constitutes part of the Community
acquis and therefore applies from the date of accession – 1
May 2004.

1.3
In May and July 2003, the acceding States were invited
formally to submit their requests for transitional periods. The
Czech Republic and the Republics of Latvia, Lithuania and
Poland each submitted formal requests for transitional periods.

The Commission's assessment of the derogation requests

1.4
took account of:

— the current withholding taxes applicable in the requesting

countries under their domestic income legislation;

— the rate of withholding taxes on interest and royalty
payments provided for in the Tax Conventions on Income
and Capital of the requesting countries;

— the budgetary effect of abolishing the withholding taxes;

and

— the transitional periods granted to existing Member States

(Greece, Portugal and Spain).

The Commission assessed the

countries'
1.6
requests against
their
specific needs. Under these principles, any transitional periods
should be of short duration and proportionate to the problem
that they seek to address.

acceding
taking into account

this background,

The Commission proposes that, with the exception of
1.7
Slovakia, which only asked for two years, a transitional period
of six years should be granted to all requesting states for the
application of the directive regarding the taxation of payments
of royalties; and a transitional period of six years should be
granted to Latvia and Lithuania regarding the taxation of
payments of interest – it being considered that six years should
be sufficient to allow appropriate adjustments to be made. For
a period of four years, the rate of tax applied by Latvia and
Lithuania, to payments of interest, may not exceed 10 % and
for the remaining two years, that rate may not exceed 5 %.

2. The opinion of the European Economic and Social

Committee

2.1
The EESC welcomes the fact that the Commission has
studied the requests submitted by the accession countries in an
appropriate and coherent manner.

As the directive is part of the Community acquis, the
2.2
acceding States will be required to apply it as of 1 May. If the
transitional period is not approved, these countries may experi-
ence budgetary difficulties.

C 117/22

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Official Journal of the European Union

30.4.2004

2.3
Given that existing EU members have been granted
temporary exemptions in this area, it is only fair and reason-
able in terms of both principle and precedent that the accession
States should also be able to benefit from temporary exemp-
tions where this can be justified.

2.4
In conclusion, the EESC recommends the approval of
this directive, which will give a clear political signal to the
accession States that the EU is fully committed to their develop-
In order to ensure that the accession States are not
ment.
placed in a situation that could entail budgetary difficulties, the
EESC calls on the Council to adopt this directive as soon as
possible.

Brussels, 28 April 2004

The President

of the European Economic and Social Committee

Roger BRIESCH

Opinion of the European Economic and Social Committee on ‘Assessing the EU sustainable devel-
opment strategy - exploratory opinion’

(2004/C 117/08)

On 12 November 2003, in a letter from Ms Loyola de Palacio, the European Commission asked the Euro-
pean Economic and Social Committee, under Article 262 of the Treaty establishing the European Com-
munity, to draw up an exploratory opinion on ‘Assessing the EU sustainable development strategy.’

The Section for Agriculture, Rural Development and the Environment, which was responsible for preparing
the Committee's work on this subject, adopted its opinion on 5 April 2004. The rapporteur was Mr Ribbe,
and the co-rapporteur was Mr Ehnmark.

At its 408th plenary session on 28 and 29 April 2004 (meeting of 28 April), the European Economic and
Social Committee adopted the following opinion by 77 votes to 23, with 14 abstentions:

0. Summary

0.1
Efforts have been under way for many years to promote
sustainable development in the EU and curb non-sustainable
trends. In a bid to consolidate and step up these efforts, a
sustainable development strategy was adopted for the Union at
the EU summit
the most recent
in Gothenburg. However,
studies by European Commission indicate that efforts so far
remain inadequate and that, on this front, Europe continues to
face major challenges.

0.3
The Committee feels that one key task of the revised
sustainable development strategy is to make clear that, for the
most part, sustainable development involves changes, which if
the ways and means of achieving them are chosen correctly,
can be for the better and that society as a whole benefits as a
result. On that point for the better and that society as a whole
benefits as a result. On that point, however, there is nowhere
near a consensus, and indeed, doubts are being raised as to
whether it is possible to square Europe's economic competitive-
ness with sustainable development.

0.2
This exploratory opinion, drawn up by the Committee at
the Commission's request, examines the range of problems
facing the EU on the road towards sustainable development
and considers how the EU should strengthen its sustainable
development strategy. The reasons are manifold. One is that, in
politics and society, views vary widely as to what actually
constitutes sustainable development and the extent to which
our current production and consumption patterns are already
compatible with sustainability considerations or have to be
changed – in other words what specifically needs to be done
and by whom (cf. point 2.2 below).

sustainable development generates

0.4
The Committee has never doubted that a healthy
economy with flourishing businesses is the key condition for
employment and environment and the further development of
society, or conversely that it is also, to an increasing extent, the
direct result of the level and quality of the latter factors. So far,
it has proved impossible to get over the message that, in that
sense,
significant new
opportunities. One reason for that is that no adequate response
has yet been given to many of the issues raised in various
demands and publications (cf. point 2.2). People are unclear
about the consequences, and so scepticism gains ground. The
Committee therefore urges the Commission to discuss in detail
and clarify all the basic issues of understanding involved, as
part of a broad social debate with organised civil society (cf.
point 2.3). This also includes issues that have so far been
taboo.