Navigation path

Left navigation

Additional tools

Tag ‘tax’

Express’s “EU £2600 tax bombshell” story completely wrong

Monday, June 20th, 2016

Changes to EU VAT rules require a unanimous agreement by all Member States. That is written in black and white in the EU Treaties, which set out and limit the powers the EU has – and also make very clear that the final say on all big political decisions rests with elected ministers and MEPs, not “Brussels” or “faceless bureaucrats”.

The Treaties themselves are drawn up by – and can only be changed by – unanimous agreement of the Member States.

In other words the UK has a veto both on any changes to VAT rules AND on any changes to the way the EU takes decisions in that area.

So despite the various fulminations quoted in the article, the suggestion in the Daily Express on 20 June that “Brussels” could force the UK to raise VAT rates and cause “a £2600 tax bombshell” is completely factually wrong.

Where there IS agreement that the rules will change is that the possibility to zero rate sanitary products will be introduced- EU leaders made that clear at their summit on 17-18 March.

The rationale for having such VAT rules – agreed by all Member States – is that rates that differed too widely within the single market would increase red tape and costs for business and mean consumers paying more for goods and services.

EU migrants avoiding tax ? Or Sunday Telegraph avoiding full story?

Thursday, January 9th, 2014

EU migrants can avoid tax in UK“, according to a Sunday Telegraph headline on 5 January.

The piece goes on “Romanians and Bulgarians coming to work can avoid paying taxes in Britain because of a loophole.”

Large parts of the article are slanted, selective or simply incorrect, leading to a misleading impression overall.

The reality is as follows.

First, the vast majority of EU citizens working in the UK – well over  90% – are employed or self-employed in the UK, treated as resident and pay tax and social security in the UK.

Those referred to in the article are “posted workers”.  In other words people not resident in the UK long-term – so arguably not even migrants – but sent to the UK for limited periods by employers based elsewhere in the EU.

Given that posted workers in the UK come from many different EU Member States, it is difficult to see any good reason why the newspaper singles out Romanians and Bulgarians.

Second, there is no “loophole”, only reciprocal agreements made by the UK government. Where workers temporarily posted to the UK by employers in other countries pay tax is not governed by EU law – it depends on bilateral agreements between the UK and those countries.

As a general rule, however, those posted for less than six months continue to pay tax in their home country.

This, though the article neglects to mention it, obviously also usually applies to UK residents posted to work elsewhere in the EU – they generally continue to pay UK tax, rather than tax in the country where they are working.

So the headline could just as well be reversed to say: “UK migrants can avoid tax in other EU countries.”

The number of workers posted by UK employers to EU countries – about 35 000 a year – is roughly equivalent to the number of workers posted to the UK.  So the UK is unlikely to be down on the deal, especially as many workers posted from the UK are high earning professionals.

Social security contributions for temporarily posted workers are, unlike taxation, directly covered by EU law agreed by all Member States.  Posted workers –whether they are British residents working in say France or Germany, or for  example Spanish or Polish residents temporarily posted to the UK – do indeed pay their contributions in their home country rather than the country of work.

As is logical – though the Sunday Telegraph omits to mention this part – their home country is also reponsible for paying any social security benefits to which they might be entitled.

As a result, EU workers posted to the UK and paying social security contributions elsewhere are not eligible for UK social security benefits – whether in work or out of work benefits. They must claim any benefits from their own country.

The newspaper is therefore incorrect to say they can receive child benefit from the UK – to be eligible, they would need to be habitually resident, which, as a general rule, posted workers are not.

The same applies with respect to housing benefit.

Finally, the article is right that EU workers posted to the UK are entitled to free health care – but it fails to mention that the UK can claim reimbursement for this from their home country.

Sun calls us “Euro VAT prats” – but trims the facts

Sunday, June 9th, 2013

The Sun on Sunday likes to print an anti-EU story most weeks. This week it has picked up on the European Commission’s proposed economic policy recommendations for the UK, issued on 29 May – so not exactly breaking news and certainly not an “exclusive” as it was labelled, given that many other media have written about the recommendations.

Here is the story, headlined “Euro VAT prats”.

And here is the response we  sent to the Sun’s website at about 9h30 on Sunday. We received an automatic acknowledgment, though our response does not seem to have appeared.

“First, these are recommendations, not demands.

Second although this is deliberately omitted from the article with its childish headline, they include many things the Sun loudly supports, like increasing incentives to come off benefits and get into work.

As the piece does mention, improving the UK’s childcare and transport are also crucial to jobs and this has to be paid for somehow at a time of massive debt.

Thirdly, the recommendation does not say that ALL lower VAT rates should be removed.

Fourth, independent UK analysts have said broadening the base for VAT could raise £3bn even allowing for measures to help the poorest, which the EC also recommends – so this could move the burden of the debt from poor to rich, which the Sun also usually supports.

All in all this article does not paint a full or fair picture, which is no surprise in tabloid coverage of the EU.”

We should perhaps have added that these Commission recommendations will now be discussed, perhaps amended, and then agreed by all EU heads of state and government, including the UK Prime Minister. There will be a full debate on the recommendations for all countries at the next EU summit on 27-28 June. So far from being some kind of Brussels “demand”, these recommendations are input into a debate where the UK has a strong voice. And – as we told the Sun, but they did not tell readers – they are not binding on the UK even at that stage.

Holiday season bumper Euromyths special

Friday, December 21st, 2012

Seems it is the season to be jolly cavalier with the facts over EU stories, so we are posting this composite five-part myth-buster correcting misleading stories about films, cars, I-pods, insurance and pensions. There is perhaps merit in asking the question: how can there be a serious debate in the UK about EU issues amid this cacophony of misinformation?

First, the Sun claimed on Sunday 16 December that the EU was demanding £1.5 billion to subsidise “boring European films”. In fact, The King’s Speech, Tinker Tailor, Soldier Spy and The Woman in Black are just some of the non-boring and very British films supported with EU funding and – partly as a direct result of that – enjoyed by many film-goers around the world, thus bringing in cash to the UK.

The funding is mostly agreed before the film is released – when it’s far from clear that a particular film would have big box office potential. On the basis of the theme, no one could have predicted the global success of the Kings Speech, for instance. A very English film about a stuttering English king and his speech therapist – not an obvious hit on paper.

The idea that European audiovisual work is “boring” also may not be shared by Sun readers who are fans of The Killing, Untouchable and many more.

Second, the Telegraph claimed that only sterling work by Roads Minister Stephen Hammond had prevented “Brussels” introducing rules that would have “forced owners of classic cars to take them off the road if they had been modified in any way” and “forced more than a million caravans and trailers to undergo an MOT.”  But the Commission’s proposals on roadworthiness testing would not have forced any classic cars off the road, would not have made subject to testing any UK trailers or caravans not already subject to it….. and indeed would barely have affected the UK at all, as we already made clear here on this site in September.

Third, in a similar vein of trumpeting non-existent victories over a nefarious “Brussels” monster, a series of newspapers, led by the Evening Standard on 20 December, claimed the UK had “rebuffed plans to slap a £15 tax on i-Pods and other gadgets”. But there are no such plans to rebuff. And European officials were not “set to unveil plans for an EU-wide system of levies set by Brussels”.  Internal Market Commissioner Michel Barnier has indeed asked respected former Portuguese Commissioner and Minister Antonio Vitorino to make a report on the best way of achieving coherence in various rules across Europe on private copying of music, film, etc. But Mr Vitorino has not yet reported. When he does, it will then be for the  Commission to decide whether and how to make legislative proposals to act on what he suggests….and even if the Commission does make proposals, those rules would still only enter into force if a large majority of national Ministers – under the qualified majority voting system – and a majority of MEPs agreed. So no need to “go into battle against Europe” in the colourful but rather over-imaginative phrase used by the Standard. In fact what happens in Europe are discussions between partners, of which the UK is a very influential one, not least on single market issues like this.

Next, the new insurance rules based on the European Court of Justice verdict last year that gender discrimination in pricing was illegal. These rules enter into force today and many media reported this accurately. But many others did not, despite the Commission making a fact sheet available in advance of publication. The Daily Telegraph suggested wrongly that “Although young women tend to be safer drivers than men of the same age the new rules mean they will no longer be able to benefit from their care on the road.” The paper had the good grace to print our letter of correction – in full on this occasion: see earlier posts on this site for example of how they and other newspapers have edited our replies in order to soften them.

The letter reads: “The European Court verdict outlawing gender discrimination in insurance will not stop women drivers benefiting from “their care on the road” (report, December 20). The new rules are about fairer pricing. Male drivers will no longer pay more just because they are men. Instead, all safe drivers will pay less than drivers who are less safe, and the costs and benefits of a private pension will depend on individual circumstances and not just gender. The European Commission is insisting that price cuts be passed on to policy-holders as fairly as increases. Innovative and competitive insurance companies have every incentive to apply fairer pricing cost-effectively. Some are already doing so.”

Finally, and sticking with the insurance industry, several media including the Daily Telegraph, the Daily Mail and the Daily Express followed up previous inaccurate stories on this issue by claiming that “new EU pension rules” would cost 180 000 jobs and cost British business £350 billion. This was based on a press release from the CBI and an initial report from the Press Association (later corrected), neither of which made clear one very important fact – not only are there no new rules but the European Commission has not even put on the table any proposals for new legislation.

What is more, the Commissioner responsible, Michel Barnier, has given repeated assurances – some of which have featured on this site, see here – that many of the fears being expressed are based on misunderstandings.

The reports quoted a range of sources fulminating against the “reckless” – but as yet non-existent – plans. Only the Telegraph, to its credit, came to the Commission for a comment – but it then put it right at the end of its article.

The truth of the situation is that the Commission asked the European Insurance and Occupational Pensions Authority (EIOPA) – an EU advisory and implementing body with no power to make or even propose EU law – to perform an initial study on the issue. When that was submitted in February 2012, the Commission requested that EIOPA follow up with a full quantitative impact study, which is now in progress, based on a wide consultation.  The CBI report will be valuable input to the study and to the wider consultation process.

Only once that impact study is complete – and once the Commission is in a position to take full account of all of the evidence and of the views of all stakeholders  – will the Commission come forward with a proposal.  Even then, such a proposal would only become EU law if agreed by MEPs and Ministers.

The aim of reviewing the relevant EU laws is to make sure that pension schemes are sustainable and that members are not left high and dry with no pay out – as has happened in some cases in the past.

Merry Christmas and a Happy New Year to all
The EC in London team

No “crippling new tax on Britain”

Thursday, January 5th, 2012

Letter sent to the Editor of The Daily Express on 5th January, 2012

Your front page claim that the EU will “hammer Britain with a crippling new tax” (5 Jan) is fantasy. First, as your own article says on page four, the UK has a veto on the proposed financial transaction tax. Second, far from “destroying jobs”, the proposal aims to save jobs by helping prevent crises caused by reckless speculation. The aim is for banks across the EU to contribute fairly to the trillions of pounds and euros it has cost taxpayers to rescue them. Proceeds in the UK would go to national coffers and to reduce the UK’s EU budget contribution. Finally, all EU leaders have repeatedly made clear that they want a responsible City of London to thrive, as thanks to the EU single market it provides vital financial services right across the EU and contributes to jobs and growth in all Member States.

Many thanks

Mark English
Head of Media
European Commission Office in London

Copyright Tax to be levied on all home VCR recordings

Monday, March 20th, 2000

Europe wants tax on taping TV at home
Families face paying a levy to video their favourite television programmes under a new European directive…
(The Sunday Telegraph, page 10, 19 March 2000)

Euro-prats want a tax on TV tapes
Meddling Eurocrats want to tax TV addicts who tape their favourite shows…
(Sunday People, page 35, 19 March 2000)

Euro tax wind-up on vids
The proposal was sneaked into the latest EU copyright directive…
The Star, page 7, 20 March 2000)

So-called “Euro-prats” have not “sneaked” anything into the amended proposal for a Copyright Directive.  In fact, the proposal explicitly states that compensation due to rightholders as a result of private copying of this kind would be “up to the Member States to decide in accordance with their legal traditions and practices”.  The UK would therefore be perfectly entitled to continue its practice of not imposing any such levies.

tax harmonization programme will remove all tax powers from member states

Sunday, December 6th, 1998

Veil is lifted on new order for Britain
Amid all the furore over proposals for EU tax harmonisation, another important aspect of the political integration of the EU has almost wholly escaped attention. Two recent speeches….. have lifted the veil even higher on the plan to split up the United Kingdom as part of a “Europe of the Regions”, sidelining national Governments in favour of regional governments relating directly to Brussels…In the UK….. the setting up of regional assemblies for Scotland, Wales and Northern Ireland is merely a first step, with an assembly for London to follow.
(Sunday Telegraph 6 December 1998, page 16, Christopher Booker’s Notebook)

The creation of regional assemblies for Scotland, Wales and Northern Ireland, as well as the London assembly, are all UK government policies and were part of the Labour Party’s general election manifesto. Furthermore, the creation of assemblies in Scotland, Wales and Northern Ireland were all backed in separate referendums. It would seem that it is Christopher Booker who is out of touch with the will of the British people.

EC employees are over-paid and do not pay tax

Thursday, March 11th, 1993

Myth: European Commission employees are over-paid and whatsmore do not pay tax.

Response: All European civil servants are subject to income tax. This is deducted at source, and is paid into the Community budget. The rate paid varies from 10% to 45% depending upon marital status and family situation. Moreover, civil servants do not benefit from any tax relief (eg. for cars, mortgages, etc.) and are subject to local, municipal taxes.

The European Commission does indeed make sure that its employees are well paid, and it is in the Member States’ interest that Community employees are competent and independent as they have to deal with a demanding, multilingual environment, yet it should be borne in mind that their salaries are not excessively high, and they get relatively few fringe benefits. For instance diplomats working in Brussels for their respective Member State Governments earn on average between 30% and 50% more than the equivalent grade Community official. Indeed the Commission has difficuties recruiting in certain fields (such as British lawyers or financial advisers, or German or French computer experts) for exactly this reason.

Contrary to practices normally undertaken by national authorities European Community civil servants’ salaries are published in the Official Journal of the European Communities and are therefore open to scrutiny.

EC in the UK

Check the EC Representation in the UK website

Please note that all statements in all entries were correct on the date of publication given. However, older archived posts are not systematically updated in the light of later developments, for example changes to EU law.

Share buttons

Twitter feeds


We welcome your comments. They will be moderated. Please keep to the topic and use respectful language.