Top European Union finance ministers said on Tuesday the bloc is considering how to respond to last December’s U.S. tax reform, and will have a clear view on whether it is in breach of international rules in the spring.
The reform slashed corporate tax rates in the largest change to U.S. tax laws since the 1980s, but the EU said some of the measures could breach World Trade Organisation rules and hamper trans-Atlantic trade and investment.
The European Commission was asked to prepare a detailed assessment of the impact of the reform and its compatibility with WTO rules, France’s Finance Minister Bruno Le Maire said on Tuesday, after EU finance ministers discussed the issue in a regular monthly meeting in Brussels.
Asked whether the EU could file a complaint at the WTO, Le Maire told a news briefing: “On the basis of the commission’s conclusions we will see what will do next. All options are open.”
His German counterpart, Peter Altmaier, echoed Le Maire’s remarks. “As a last resort we could insist that WTO rules should be respected,” he said.
“We will look into the economic aspects of the reforms. We want to avoid that companies move their headquarters to the U.S. and that investment flows might be reversed. This is important to keep jobs in Europe. We will do everything to prevent unfair competition,” he added.
EU finance ministers and top EU commissioners wrote to U.S. Treasury Secretary Steven Mnuchin in December saying the reform posed double taxation risks for EU financial firms operating in the United States.
The EU Commission’s Vice President Valdis Dombrovskis said the assessment of the EU executive on the overall impact of the U.S. reform will be ready in spring.
“It is too early to speculate on possible retaliatory measures,” Dombrovskis said.