A meeting of finance ministers in Brussels will see France and Germany present plans to align their national corporate tax regimes, as the European Commission's own attempt at EU-level harmonisation has so far failed to garner the required unanimity among the 27 member states.
France and Germany have taken the lead on fiscal convergence in the eurozone by announcing in August their joint plans to establish a common corporate tax between themselves, as of January 2013.
François Baroin and Wolfgang Schäuble, the two finance ministers, will report progress on those plans at a meeting of the EU's 27 finance ministers in Brussels on Tuesday (21 February).
"Europe goes forward at 27 but it is not forbidden to have smaller groups that go a little bit faster," argues a national diplomat in Brussels, explaining that "the Franco-German couple is bringing forward a number of technical solutions to overcome divergences in fiscal regimes."
The diplomat said the initiative, although bilateral for now, could be seen as a Franco-German contribution to an EU attempt to introduce a Common Consolidated Corporate Tax Base (CCCTB), hoping it will inspire others.
"From this presentation we are expecting to create a dynamic on the issue of fiscal convergence on a subject which requires unanimity," the diplomat said, adding that a European consensus on tax issues was "sometimes difficult to find."
Britain is the staunchest opponent to a European Commission proposal, presented in March last year, to introduce a CCCTB. Ireland has also rejected any change to the corporate tax rate for companies on its soil, which at 12.5% is among the lowest in Europe, but said it was ready to "participate constructively in discussions on the CCCTB and fiscal policy in the framework of the Euro Plus Pact," adopted last March.
Enhanced cooperation?
In a letter to European Council President Herman Van Rompuy, dated 17 August 2011, French President Nicolas Sarkozy and German Chancellor Angela Merkel said discussions on the CCCTB should be concluded "before end 2012", an objective which appears optimistic at the moment.
Otherwise, the two leaders argued that "the member states of the eurozone should be ready to envisage enhanced cooperation to move forward in the domain of fiscal coordination."
Enhanced cooperation is a mechanism in the EU treaty which allows a minimum of nine EU countries to adopt common rules in an area where unanimity cannot be reached.
Twelve EU countries have already signalled their readiness to move forward (see background).