EU's Authority to Impose Taxes Independently
The proposed Corporate Resource for Europe (CORE) is effectively a levy (financial contribution) on companies based on turnover, which is administratively collected by Member States for the EU budget. Under EU law, this levy functions as a form of an EU own resource, akin to a tax, but specifically designed as a fixed contribution based on companies' net turnover exceeding €100 million[1][3].
Regarding whether CORE is legally considered a "tax" under EU law:
- CORE is structured as a compulsory financial contribution by companies liable to pay it to the EU, collected and enforced by Member States with penalties for non-compliance[3]. This resembles a tax in its mandatory nature and enforcement mechanisms.
- However, it differs from profit-based corporate taxes by being based on net turnover rather than profits, which makes it more a turnover-based levy than a traditional corporate income tax[5].
- Under the EU Treaties, EU own resources such as CORE require unanimous Council agreement and parliamentary consultation, affirming their quasi-tax status as EU revenues[3].
Legal Implications if CORE is deemed a tax:
- Application of EU tax principles: As a tax or levy, CORE must comply with key EU principles such as non-discrimination, proportionality, legal certainty, and avoidance of double taxation between Member States[3]. Companies could challenge CORE if it conflicts with these principles or existing EU tax rules.
- Compatibility with Internal Market rules: CORE must not distort competition within the EU single market. Because it is based on turnover, concerns arise regarding its efficiency and potential distortion of competition between sectors with varying profit margins[5].
- Anti-abuse and enforcement frameworks: The levy would be subject to anti-abuse rules as with other taxes, as EU countries (like the Netherlands) have demonstrated in handling abusive corporate structures to uphold tax laws. Hence, CORE would likely incorporate strong compliance and anti-avoidance provisions[2][3].
- Member States’ collection and enforcement duties: Member States will collect CORE contributions, and the Council is authorized to adopt implementing measures, including penalties for non-compliance, reinforcing the character of CORE as a tax-like compulsory financial charge[3].
- Potential legal challenges: Companies affected by CORE might challenge its characterization, claiming it unfairly taxes turnover rather than profits, leading to inefficiencies and legal disputes on grounds of EU fundamental freedoms and principles (e.g., freedom of establishment, free movement of capital)[5].
In summary, the Corporate Resource for Europe is functionally an EU-imposed tax-like levy based on corporate turnover and is considered an EU own resource under EU law. This status subjects it to EU legal principles governing taxation, enforcement, and internal market compatibility, with significant legal and compliance implications for liable companies and Member States[1][3][5].
- The constitutional court of each Member State may need to rule on the legal classification of CORE as either a tax or a levy, given its similarities in structure and enforcement mechanisms to traditional taxes.
- The notion of democracy comes into play in the formation of the CORE, as it requires unanimous Council agreement and parliamentary consultation, illustrating the democratic process in the establishment of EU own resources.
- Businesses in various sectors should closely monitor the implementation and enforcement of CORE, as its impact on their financial situation and competition in the EU single market may have far-reaching consequences for general-news and politics.
