EU Considers Broadening Business Tax Plan to Secure Funding Amid Trade Tensions

• The European Commission is seeking new revenue sources for its 2028–2034 budget as member states push for significant spending cuts.
• A proposed "Corporate Contribution for Europe" (CORE) aims to replace stalled digital tax initiatives by taxing revenue rather than profit.
• EU officials are reportedly reworking the CORE proposal to focus exclusively on large corporations to avoid overburdening small and medium-sized enterprises.

Strategic Challenges and Trade Risks

• The shift toward a broader corporate tax model is designed to avoid specifically targeting U.S. technology giants, thereby minimizing the risk of retaliatory tariffs from the Trump administration.
• Negotiating these fiscal changes is complex, as EU tax policy requires unanimous approval from all member states.
• EU Council President António Costa aims to finalize the long-term financial framework by the end of the year to avoid complications from upcoming national elections in countries like France, Poland, and Italy.

Alternative Revenue Perspectives

• Research from the Vienna Institute for International Economic Studies suggests a more robust approach is needed to reduce reliance on national budget contributions.
• Proposed long-term solutions include:
  • A financial transaction tax.
  • A bank levy.
  • Taxation on large wealth holdings and crypto transactions.
• Experts argue that diversifying revenue streams could reduce tax competition among EU states and create a more equitable funding distribution.