Opinion Statement FC 7/2020 on the EU Consultations on the Carbon Border Adjustment Mechanism & Energy Taxation Directive

CFE Tax Advisers Europe welcomes the opportunity to provide input on the EU consultations concerning the Energy Taxation Directive and the Carbon Border Adjustment Mechanism.

Climate changes affects us all. CFE accordingly welcomed the goal announced by European Commission President Von der Leyen during her first State of the Union address on 16 September 2020, to reduce EU emissions by 55% by 2030, up from the planned 40% reduction in emissions. CFE also welcomed the announcement that almost 40% of funds generated by the New Generation EU recovery instrument will be invested in projects which are in line with the EU Green Deal Objectives.

CFE is of the view that any new tax measures and the Carbon Border Adjustment Mechanism must be designed in a manner to avoid double taxation, such as in instances where countries have an existing national carbon border adjustment measure, and must come within the ambit of existing dispute resolution mechanisms. CFE understands the challenges in designing new tax rules that are not going to produce unintended consequences and lead to double taxation. The issue of double taxation is already difficult to address at present, considering the inadequacy of tax dispute resolution mechanisms.

As such, coordinated measures among EU Member States’ rules would prevent mismatches among national legislations, which is an element to consider for a competitive tax environment, taking the interest of the Single Market as whole. From CFE’s perspective, simplicity must be a key design-element in the development of any new taxes.

We invite you to read our Opinion Statement and remain available for any queries you may have.