Decrease of PIT in European Union

02.06.2014

Commissioner for taxation, A. Šemeta, stressed the need of decrease of PIT rates in European Union.

Realization of tax policy in the way of decreasing the PIT rates may create new jobs. Measure for implementation of this European initiative were especially recommended to Austria, Belgium, Chezh Republic, Germany, France, Hungary, Italy, Latvia, Lithuania, Holland, Romania and Spain.

It was suggested to these countries to switch their attention to environmental taxes and VAT, and also to the progressive methods of taxation.

As Commissioner said, the high PIT rate in European Union promotes tax evasion amongst employers. Therefore, the decrease of this rate will contribute to conscientious taxpayer behavior.

Source: http://europa.eu/rapid/press-release_SPEECH-14-415_en.htm?locale=en

Expert’s opinion

High PIT rates are a commonly known problem in Member States of European Union. The decision to decrease the rates seems like rational and logical one, and it might help countries of EU to avoid problem with work migration of citizens. Probably it will have a positive impact on taxpayers’ behavior. But for now it all is just recommendations.

Alexandra Mihno ( Lawyer, Honest&Bright)