TAXATION: COUNCIL SETS UP HIGH-LEVEL GROUP TO BREAK TAX PACKAGE DEADLOCK.

Direct reference was made to the creation of a High-Level Group in the Conclusions of the Helsinki Summit. While its composition has not yet been published, some Ministers have already indicated that they would be appointing Secretaries of State (Portugal, France, Germany and Belgium) while the United Kingdom will be sending a high-ranking civil servant.--The Council of EU Finance Ministers committed itself in its December 1, 1997 session to adopting a package of three direct taxation measures, covering company taxation, savings tax and the thorny issue of withholding tax on cross-border interest and royalty payments and inter-company payments. Including these three pillars in a single "tax package" was intended to strike a balance between the interests of the different Member States and highlight the benefits to Member States of EU tax harmonisation. They also aimed to make tax policies more conducive to job creation by reducing the tax burden on companies and employment. At its Vienna and Cologne meetings, the European Council looked forward to broad agreement being reached on the essential pillars of this tax package at the Helsinki Summit in December 1999. Disagreement over the draft Directive on savings taxation (essentially due to British intransigence on Eurobonds) prevented the package from being adopted, since Member States had insisted that the three pillars of the package were inseparable. The Portuguese Presidency was then asked to continue negotiations and the European Council decided to entrust a High-Level Group with the task of finding the most efficient means of enforcing the principle of EU citizens paying tax on the interest on their entire savings. Tax issues have to be adopted unanimously by the Council.--Joaquim Pina Moura, Portuguese Minister and President-in-Office of the Council, explained that he had committed himself to make progress over...