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Coordination of Tax Policy

Member States have defined minimum standards, including in certain aspects of taxation policy. However, widely varying interests and the principle of unanimity in this area make harmonisation difficult. The reform strategy aims to attain a more modern, more simple application of current tax rules. By the same token, it is hoped that cooperation between the various tax administrations can be improved.

German EU presidency agenda in terms of taxation policy

Improving the tax framework and combating tax fraud within the European Internal Market

Progress towards a common consolidated corporate tax base

Less distortions and more transparency in taxation are needed if the Internal Market is to function correctly in an environment of fair and open competition.

Simplifying tax legislation in the European Union makes it easier to do business in the single market and lowers the administrative burden on companies. Given this, Germany will add further support to the work being carried out on a common consolidate corporate tax base. Member States currently use differing methods to determine this tax base.

By reducing compliance costs for European companies and facilitating cross-border activities, a common consolidated corporate tax base can enhance the benefits of the Internal Market and make the European Union more competitive compared to third countries. The German presidency will therefore try to ensure that progress is made in the technical work currently being undertaken in the working groups of the European Commission.

International tax conference

In order to advance work on the development of a simple and transparent tax base, the Federal Ministry of Finance, in collaboration with the ZEW Centre for European Economic Research GmbH and the Max Planck Institute for Intellectual Property, Competition Law and Tax Law, is holding an International Tax Conference in Berlin on 15 and 16 May 2007.

Representatives from politics, science, administration and business will come together at the Tax Conference to discuss the complex facets of a common tax base.

The Conference will be opened by the Federal Minister of Finance Peer Steinbrück and EU Commissioner László Kovács, who will present the second progress report of the EU Commission on the Common Consolidated Corporate Tax Base.

The Conference is directed at a fixed circle of participants. After the Conference, the results will be published. Link: Conference Programme

Modernising and simplifying value added taxes, combating VAT fraud

In the field of VAT harmonisation, the German Council presidency will continue the strategy agreed between the EU Member States and the European Commission on modernising, simplifying and harmo­nising application of the Sixth VAT Directive and on improved cooperation between the Member States.

Given that the fight against tax fraud is one of the core elements of its presidency, Germany will take particular care to ensure that the planned simplifications for business do not have a negative im­pact on this priority area. A balance must be struck between the interests of business and reliable taxation to the benefit of tax-compliant entrepreneurs. Again with a view to stepping up the fight against fraud, Germany will continue to support the initiatives towards implementing the reverse-charge model at the EU level.

Simplifying excise duties

The German presidency intends to simplify and modernise the regulations on the traffic of goods subject to excise duties within the Internal Market, thus contributing to the fight against fraud. This includes advancing the work on the planned amendment of the Directive on excise duty arrangements. The German presidency will also see the initiation of consultations on an announced draft directive dealing with the introduction of special regulations for commercially used diesel fuel in order to further harmonise energy taxes.

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Date: 14.02.2007