Commission publishes proposal for additional financial resources
European Commission Proposes New Corporate Resource for Europe (CORE)
The European Commission has unveiled a proposal package for the 2028 to 2034 EU budget, which includes the introduction of the Corporate Resource for Europe (CORE). This new own resource targets large companies in EU member states with a net annual turnover of at least €100 million, and could potentially generate approximately €6.8 billion annually for the EU budget.
Under CORE, companies are divided into four brackets based on their annual net turnover, and their contributions are structured as lump-sum payments ranging from €100k to €750k annually. Companies with annual net turnover between €250 million and less than €500 million would pay €250,000, those with turnover between €500 million and less than €750 million would pay €500,000, and those with turnover €750 million or more would pay €750,000. Companies with annual net turnover more than €100 million but less than €250 million would pay €100,000.
The CORE contribution would be payable by any company that is resident for tax purposes in a Member State or has a permanent establishment located in a Member State, excluding governmental entities, international organizations, and nonprofit organizations. The proposal designates it as a "financial contribution," but it appears to directly target economic actors similar to a tax, potentially raising questions regarding its legal basis.
The European Commission's Own Resources Decision (ORD) introduces five new own resources for the European Union (EU). The ORD aims to address the need for alternatives to Pillar One and Digital Services Taxes amid ongoing trade negotiations with the United States. The ORD requires unanimous agreement by all EU Member States in the Council after a consultation of the European Parliament. Following Council adoption, the decision must be ratified by all Member States in accordance with their constitutional requirements.
However, the CORE proposal faces heavy criticism in the European Parliament and some Member States have expressed dissent. The introduction of CORE would be based on Article 311 TFEU and does not necessitate additional sectoral legislation. Following adoption, each EU Member State must approve the agreement at the national level, in accordance with respective constitutional requirements.
The Commission proposes that the new system of own resources shall generate revenues of €58.2 billion per year in total. The ORD will now move to negotiations between Member States. The net turnover for CORE contributions would be calculated according to Article 2 (5) of Directive 2013/34/EU, meaning it includes amounts derived from the sale of products and the provision of services after deducting sales rebates and value added tax and other taxes directly linked to turnover.
As the negotiations continue, it remains to be seen whether the European Parliament and the Member States will agree on the implementation of the Corporate Resource for Europe (CORE) and whether it will become a permanent fixture in the EU's budget.
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