Spain Wants EU Virus Response to Combat Unfair Tax Policy

Spain is planning to tell EU leaders this week that the bloc’s response to coronavirus should include tax harmonization between members and the eradication of unfair tax practices.

Base erosion is “proving to be one of the weaknesses of economic integration in the EU,” according to a draft outlining Spain’s position.

• The statements are the latest in a contentious debate between southern European countries—such as Spain and Italy—that have been hit hard by the coronavirus pandemic, and northern European countries—such as the Netherlands—that have refused to agree to new shared debt instruments to fund the coronavirus fight and recovery.
• EU leaders are set to meet Thursday via video conference.

• Spain’s draft position paper calls for a recovery plan of 1 to 1.5 trillion euros ($1 trillion to $1.6 trillion). The plan should consist of credit-based instruments and grants to member states that wouldn’t raise public debt levels, according to the document.
• The plan would be financed through perpetual EU debt, with a new set of EU taxes—such as a border carbon tax, carbon emissions tax, and single market tax—used to repay the debt interest.

Check out Bloomberg Tax’s country-by-country roadmaps covering direct and indirect tax developments.