You will recall from Section 1.33 of the January edition of tax.point, the Commission had issued three Communications which would involve an EU coordinated approach to national direct tax systems. The Council met on Tuesday 27 March to debate those Communications on direct tax systems, exit taxation and cross-border losses.

The Communications are what is termed “soft law”, which means that Member States are not required to implement the Communications, instead the Commission would like to see the Member States doing so.

The Council issued a press release on the debate which is available at http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ecofin/93323.pdf.

In summary,

• The Council recognise that Member States are free to design their direct tax systems to meet their domestic policy objectives and requirements, provided that the systems are consist with Community law.
• The Council underlined that the functioning of the internal market may be improved through cooperation on taxation among Member States and where appropriate at the European level, while respecting national competencies.
• The Council acknowledged the need for an effective use of the mechanisms of administrative cooperation such as those provided for in the Mutual Assistance and Recovery Directives.

Against this background the Council took note of the Commission proposals towards improved coordination of national tax systems.