Contracting in the EU: Is it about to get more complicated?

contracting in the eu

15th February 2019

As we have written about on previous occasions, authorities worldwide have been focusing more than ever on tax evasion and introducing stricter tax and compliance systems to prevent fraudulent behaviour. For those looking to contract abroad, the risks are now greater than ever and it is vital that you’re aware of the latest news in this movement towards a more complex and comprehensive tax system. One such example is the recently announced plans by the European Union to remove the ability of members to veto tax policy. This is just the latest in a string of tough measures the EU has introduced to tackle tax evasion and boost compliance. In particular, this new move could see increasingly strict compliance rules unilaterally imposed on nations in the union, which make up some of the most attractive contractor destinations in the world. Any individual contracting in the EU will need to be aware of these changes.

So, what do you need to know?

Contracting in the EU: Is it about to even get more complicated?

According to reports, contracting in the EU may be set to get a lot tougher after new proposals to scrap member states’ veto on tax policy. Brussels says the requirement of unanimity for tax policy is out-dated and that moving to a system of qualified majority voting would help speed up the legislative process. This could potentially see levies imposed on EU countries against their will. Under the new proposal, if 55 per cent of member states representing at least 65 per cent of the EU population were to vote in favour of a new tax policy, it would pass.

The EU has repeatedly struggled to reach agreements on implementation of stricter policies concerning the taxing of tech giants, due to repeated opposition from low-tax countries such as Luxembourg and Ireland.  European Commission president Jean-Claude Juncker has been quoted as saying that he is “strongly in favour of moving to qualified majority voting and a stronger voice for the European Parliament on the common future of taxation in our Union”.

EU budget commissioner Pierre Moscovici, the driving force behind the initiative, said:

“The EU has had a role in taxation policy since the origins of the Community six decades ago.  While unanimity in this area made sense in the 1950s, with six member states, it no longer makes sense today. The unanimity rule in taxation increasingly appears as politically anachronistic, legally problematic and economically counterproductive. I am fully aware of how sensitive an issue this is, but that cannot mean that the discussion is off limits.”

‘’As well as broader tax policies, the Commission wants to be able to react more quickly to scandals such as Luxleaks and the Panama papers, as well as ending the practice of member states giving sweetheart deals to multinationals. There can be no doubt that authorities worldwide have set their sights on tax fraud in order to regain lost funds.’’

What does it mean to contractors?

At 6CATS, we’ve been very vocal about the movement of countries towards a more complex and comprehensive tax system, and the fact that contractors need to be aware of the compliance obstacles they will encounter if they desire to work abroad. The EU has been strengthening its stance toward tax and compliance for a long time, in harmony with other international bodies such as the OECD. However, the Union holds huge opportunity for contractors, with countries such as Germany, Poland and Hungary all boasting booming economies with large skill shortages. For those seeking to capitalise on this and take up contracting in the EU, ensuring you’re compliant with local legislation is crucial. However, due to the complexity of international laws, the headache of tax compliance is best left to experts. We can remove this burden, reduce the risks of non-compliance, and free up your time to allow you to get on with the job at hand.

 

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