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(Except clauses 7, 8, 9, 11, 14, 16, 20 and 92) - Clause 56

Part of Finance Bill – in a Public Bill Committee at 11:30 am on 16th June 2009.

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Photo of Kitty Ussher Kitty Ussher Parliamentary Secretary, HM Treasury 11:30 am, 16th June 2009

I hope to be able to come back to the net position of the UK Exchequer as a result of all the changes. What I think his question was getting at was that marginal rates, and the way in which they are tiered, are actually higher in the UK than the EC rates. Therefore, as a result of the double taxation treaty, they will pay more tax in total, although there is a sort of credit put in as part of that process.

How will the tax work if an official is employed by the EU, but, for example, works in London? We have heard members of the Committee mention, perhaps, the EIB staff in London and, of course, the European Commission has staff in London. EU officials working in this country will generally be liable for UK tax. Those working in Brussels will generally be liable for Community tax, but obviously each individual situation will be looked at individually.

Are there any cases in which someone working for the EU has been taxed twice? We are not aware of any such cases. The clause is required only because a specific statute has been introduced which provides for MEPs to be paid by the EU instead of by national Governments. That was not previously the case, so MEPs were not previously subject to Community tax.

There was a specific question about Community taxes being levied on transitional allowances. Those MPs who have recently stood down are entitled to resettlement grants under existing pay arrangements. Resettlement grants are subject only to UK tax; they are not subject to Community tax. There were a lot of questions about people who were not, perhaps, UK residents and what their situation was with respect to other member states. Not being a Minister for another member state Government, or indeed a tax administrator for the European Community, I am not able to provide specific answers. However, I will write to the hon. Member for Hammersmith and Fulham to answer the question whether MEPs need to pay tax to the Belgian or French authorities if they are resident there.