The Luxembourg Presidency of the Council of the European Union 2005

The Luxembourg Presidency of the Council of the European Union 2005

URL (Internet address) : http://www.eu2005.lu/en/savoir_ue/glossaire/glossaire_t/

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Taxation

Within the European Union, the national governments retain exclusive powers with regard to direct taxation, i.e. the revenue they receive from personal income tax and corporation tax. Community fiscal policy relates to the rates of indirect taxation (e.g. Value Added Tax and excise duties) which are liable to have an immediate impact on the single market. It also aims to ensure that tax regulations do not impair the free movement of capital throughout the EU and that the free movement of capital, in turn, does not result in tax fraud. Community policy also takes a keen interest in the taxation regulations that could limit the right of European citizens to work in any EU country.

National governments must have sound public finances and respect the main objectives of EU economic policy. Provided they meet these conditions, they set the priorities for their own spending and taxes that they apply to generate the necessary revenue. They are also free to set the rates of corporation tax and personal income tax, as well as the taxes applied to savings and capital gains. They can set the rates of value added tax and excise duties according to their needs.

Common regulations have been adopted within the EU, particularly the limits agreed for certain indirect taxes, to ensure that the single market for goods and financial services functions smoothly and that each Member State receives a fair share of the tax revenue. However, the rights of the Member States are protected as any major change made to Community tax rules requires a unanimous vote.Taxation

Within the European Union, the national governments retain exclusive powers with regard to direct taxation, i.e. the revenue they receive from personal income tax and corporation tax. Community fiscal policy relates to the rates of indirect taxation (e.g. Value Added Tax and excise duties) which are liable to have an immediate impact on the single market. It also aims to ensure that tax regulations do not impair the free movement of capital throughout the EU and that the free movement of capital, in turn, does not result in tax fraud. Community policy also takes a keen interest in the taxation regulations that could limit the right of European citizens to work in any EU country.

National governments must have sound public finances and respect the main objectives of EU economic policy. Provided they meet these conditions, they set the priorities for their own spending and taxes that they apply to generate the necessary revenue. They are also free to set the rates of corporation tax and personal income tax, as well as the taxes applied to savings and capital gains. They can set the rates of value added tax and excise duties according to their needs.

Common regulations have been adopted within the EU, particularly the limits agreed for certain indirect taxes, to ensure that the single market for goods and financial services functions smoothly and that each Member State receives a fair share of the tax revenue. However, the rights of the Member States are protected as any major change made to Community tax rules requires a unanimous vote.

Treaty of Amsterdam

The Treaty of Amsterdam was a product of the intergovernmental conference launched at the Turin European Council on 29 March 1996. The treaty was adopted at the Amsterdam European Council on 16 and 17 June 1997, then signed by the foreign ministers of the 15 Member States on 2 October 1997. It came into effect on 1 May 1999 after ratification by the Member States. From the legal viewpoint, the treaty amended certain provisions of the EU Treaty, the treaties establishing the European Communities and a number of related legal texts. It did not replace the other treaties but complemented them. The four major objectives of the Treaty of Amsterdam are to:

  • put employment and citizens’ rights at the heart of the Union;
  • eliminate the final barriers to free movement and heighten security;
  • enable Europe’s voice to be heard more effectively in world affairs;
  • streamline the Union’s institutional architecture with a view to the forthcoming enlargement.

The treaty also consolidated each of the three main “pillars" on which the Union has based its action since the Maastricht Treaty came into effect in November 1993: the European Communities (first pillar), the Common Foreign and Security Policy (second pillar) and cooperation in the field of justice and home affairs (third pillar).

Treaties of Rome

On 25 March 1957, Belgium, France, Germany, Italy, Luxembourg and the Netherlands signed two treaties in Rome, the first established the European Economic Community (EEC), the second created the European Atomic Energy Community (Euratom).

The preamble of the treaty establishing the European Economic Community points out that the prime objective of the EEC is to “create an ever closer union among the peoples of Europe" and to “ensure the economic and social progress of their countries by common action to eliminate the barriers which divide Europe"?. To achieve this they provided for:

  • a customs Union with a common customs tariff;
  • common policies on agriculture, transport and foreign trade;
  • possibilities for other European States to accede to the European Economic Community.

The treaty establishes institutions and decision-making mechanisms enabling expression of both national interests and Community vision. An independent executive was created at Community level, the European Commission, which has an exclusive right of initiative. However, most decision-making powers are held by the Council of the European Union, consisting of representatives of governments. In 1965, the Council and the Commission became common institutions for the three Communities (ECSC, EEC and Euratom).

Initially, the European Parliament only had the power to issue opinions. In 1976, it was decided that it should be elected by direct universal suffrage and the first elections were held in 1979. The Court of Justice ensures observance of Community law in the application and interpretation of the treaties.

The treaty also provides for the creation of two institutions: a) the ESF (European Social Fund) with a view to improving workers’ employment prospects and contributing to raising their standard of living and b) the EIB (European Investment Bank) intended to facilitate the Community’s economic expansion by creating new resources.

Troïka

The Troïka comprises the Presidency of the European Union, the next Presidency, the European Commission and the Secretary General of the European Council, who is also the High Representative for the CFSP. It represents the Union in external relations which come within the scope of the CFSP. Prior to the Treaty of Amsterdam, the Troïka consisted of the Member State which held the Presidency of the Union, the state that preceded it and the one that followed it.

The treaty establishing a Constitution for Europe provides that the new Minister for Foreign Affairs of the Union will replace the current Troïka in external relations.


Last update of this page on : 29-12-2004