As part of its general strategy of addressing the cross-border tax problems facing individuals and business operating within the Internal Market, the Commission is currently considering closely the possible conflicts between the EC Treaty and the bilateral double taxation treaties that Member States have concluded with each other and with third countries.
In relation to company taxation the Commission is in the process of assessing the various options for tackling the problems set out in the Commission's 2001 study on company taxation. Issues include the question of equal treatment of EU residents and the application of bilateral treaties in situations where more than two countries are involved (triangular situations).
In June 2005 the Commission presented in a working document (document ; annex A ; annex B ) a general legal analysis of problems regarding tax treaties, especially the consequences of certain rulings of the Court of Justice (ECJ) in this area together with possible solutions such as the creation of an EU version of the OECD Model Convention on which Member States' bilateral tax treaties are based or a multilateral EU tax treaty.
These issues were discussed with Member States in a workshop that took place in Brussels in July 2005. Several experts in this matter contributed to the workshop.
The double-taxation agreements of Member States will continue to be subject to review by the ECJ. In particular, the problems resulting from the current lack of co-ordination in this area, notably in triangular situations and with regard to third countries, will increase even further. Without Community action, there may be important political and economic repercussions for Member States' policies in this area. Therefore, the Commission hopes that its approach of gradual and measured co-ordination of treaty policies will eventually gain support and meet with a constructive attitude from Member States.
Discussions among Member States on this subject will be resumed in 2006 in the framework of a working group. The Commission intends to present a communication in 2006 explaining its short and long term strategy.