Opinion of the European Economic and Social Committee on the Proposal for a Council Directive concerning indirect taxes on the raising of capital (Recast version) COM(2006) 760 final — 2006/0253 (CNS)
Date: 2007-03-14
Institutions: European Economic and Social Committee
Subjects: ESC opinion, company with share capital, indirect tax, stamp duty, tax harmonisation, tax on capital

13.7.2007

EN

Official Journal of the European Union

C 161/23

Opinion of the European Economic and Social Committee on the Proposal for a Council Directive
concerning indirect taxes on the raising of capital (Recast version)

COM(2006) 760 final — 2006/0253 (CNS)

(2007/C 161/04)

On 16 January 2007 the Council decided to consult the European Economic and Social Committee, under
Article 262 of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible
for preparing the Committee's work on the subject, adopted its opinion on 23 February 2007. The rappor-
teur was Mr Burani.

At its 434th plenary session, held on 14 and 15 March 2007 (meeting of 14 March), the European
Economic and Social Committee adopted the following opinion by 159 votes to none, with six abstentions.

1. Background

1.1
The proposal relates to the recast version of Council
Directive 69/335/EEC on capital duty, which had been amended
times. The Directive — which was originally
a number of
intended to harmonise tax systems and to prevent Member
States from creating or levying other similar taxes — was
amended on a number of occasions, until
in 1985 it was
acknowledged by Directive 85/303/EEC that capital duty should
be completely abolished given its detrimental economic effects
on businesses.

1.2
However, the losses of revenue which would result from
such a change were unacceptable for certain Member States; the
1985 Directive therefore had to grant a derogation, giving
Member States the opportunity to either exempt transactions
from capital duty or charge a single rate of
tax, not
exceeding 1 %.

Of course, the principle still applies in the new proposal,
1.3
which is merely a recasting of the previous texts; the EESC notes
this and endorses it. However, the Commission's Explanatory
Memorandum gives rise to a number of comments, which the
Council may wish to take on board with a view to further initia-
tives.

2. Conclusions and recommendations

The majority of

2.1
the 25 Member States acted on the
Council's 1985 recommendation, abolishing the duty comple-

Brussels, 14 March 2007.

tely; at present, only seven Member States are still levying it:
Poland and Portugal, at a rate of 0.5 % or less; Cyprus, at a rate
of 0.6 %; and Greece, Spain, Luxembourg and Austria, at the
full rate of 1 %. This unequal treatment is a barrier to the
creation of a level playing field between European businesses,
which is one of the prerequisites for the single market to func-
tion properly. The fact that a good many other disparities and
barriers continue to exist in the field of taxation is no excuse
not to abolish this duty once and for all.

2.2
It would be useful for the Member States which continue
to take up the derogation to compare the benefits in terms of
tax revenue with the probable (and to some extent calculable)
loss of investment from other EU and third countries, put off by
a duty which is now extinct almost everywhere. The EESC
believes that forfeiting the derogation would benefit stakeholders
and be a step towards the proper functioning of the single
market as a whole.

2.3
The EESC would also like to draw attention to a practice
that has been adopted by a number of Member States, whereby
new charges are introduced to surreptitiously replace the duty
once it has been abolished. In some cases, the Commission has
intervened and opened an infringement procedure, but other,
unnoticed incidents cannot be ruled out. Vigilance on the part
of the social partners could help to eradicate them.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS