The European Commission has proposed a new budget resource called “CORE” that would be funded by contributions from large companies operating in Europe. Till Valentin Meickmann writes the proposal has revived a long-standing debate over whether the EU should be able to levy its own taxes.
The EU’s budgetary cycle is a well-known pattern, but this time the tune is changing. Faced with unprecedented financial demands – from repaying the landmark NextGenerationEU debt to financing the green and digital transitions – the European Commission has once again turned to the question of fiscal autonomy.
In July 2025, it unveiled an ambitious package of new “own resources” for the 2028-2034 Multiannual Financial Framework. Among these, the most audacious is a new Corporate Resource for Europe (CORE), which would be based on an annual contribution from companies operating in Europe that have a net annual turnover of 100 million euros or more.
The introduction of CORE revives a long-standing debate over the scope of the Union’s fiscal powers: may the EU levy its own taxes, and is Article 311(3) TFEU an adequate legal basis to do so? These questions, which have been debated in academic and political circles, are now taking centre stage as the CORE proposal puts the boundaries of the Union’s fiscal authority to the test.
What is CORE?
CORE is designed to ensure that large companies – major beneficiaries of the single market – contribute directly to the EU budget. It targets companies with an annual net turnover exceeding €100 million, with contributions structured as a graduated lump-sum, capped at €750,000. The Commission estimates this could generate roughly €6.8 billion annually.
Regarding the substantive design of CORE, two features are particularly noteworthy. First, the levy is linked to turnover rather than profit. This approach ignores a firm’s costs and thus would impose a disproportionate burden on companies in low-margin sectors compared to those in high-margin industries. This unusual choice is, however, a pragmatic one: while profit determination is not harmonised across the EU, turnover data is largely standardised due to the common VAT system.
Second, the levy’s design is regressive. Due to its structure as a lump-sum payment within wide turnover brackets, the effective rate declines sharply as a company’s turnover rises. This effect is most pronounced at the top end, as the final bracket is open-ended, meaning that multi-billion-euro corporations pay the same nominal amount as a company with a turnover of €750 million.
Such a design would likely be impermissible under the constitutional law of several member states (such as Germany or Italy), which may explicitly mandate a progressive tax system or at a minimum require close adherence to the ability-to-pay principle. However, as an EU instrument, CORE will be scrutinised under the EU’s own fundamental rights framework. The primary benchmark will be the general principle of equality under Article 20 of the Charter of Fundamental Rights, where the Court of Justice has historically granted the EU legislature a wide margin of appreciation when it comes to taxes.
A genuine EU tax in disguise?
Regardless of being termed a “contribution”, the substance of CORE marks a significant shift. It can reasonably be regarded as a genuine EU tax because it is created by an EU legal act, with proceeds flowing directly to the EU’s coffers. Unlike GNI or VAT-based resources, CORE imposes a direct charge on companies via EU law. In substance, the EU defines who pays, at what rate and where the money goes.
While the proposed collection by national tax authorities avoids creating a new EU tax agency, the core obligation remains uniformly set by EU law, with implementing measures also adopted at the EU level under Article 311(4) TFEU. CORE is therefore a genuine EU tax, not a mere basis for calculating member states’ contributions.
The legal gauntlet
The path to implementing CORE is fraught with legal and constitutional obstacles. The Commission relies firmly on Article 311(3) TFEU, which allows the Council to establish new categories of “own resources” through a special legislative route requiring unanimity and subsequent national approval.
The legal rationale is that this one-stage approach – defining the levy’s essentials within the Own Resources Decision itself – is permitted by the Treaty. Since CORE is a novel charge with no national equivalent, using internal market legal bases like Article 113 TFEU or Article 115 TFEU would be legally awkward and arguably impermissible, as there are no existing national rules to harmonise. However, it must be noted that it is a matter of considerable debate in legal scholarship whether Article 311 TFEU can indeed serve as a legal basis for creating entirely new taxes.
Even if the legal basis on the EU side is secured, national constitutional hurdles loom large. The power to tax lies at the heart of national sovereignty. An EU-imposed levy like CORE is certain to invite scrutiny from national constitutional courts. In Germany, for example, the Bundesverfassungsgericht has repeatedly stressed the German Parliament’s ultimate authority over revenue and expenditure. While it approved the temporary NextGenerationEU recovery fund, a permanent revenue source like CORE could face a stricter examination regarding the transfer of taxing powers.
This leads to the central paradox: the very procedure for adopting CORE provides the built-in constitutional safeguard. The Own Resources Decision must be approved by every member state according to its own constitutional requirements, which in most cases involves parliamentary approval and may open the door for intervention by national constitutional courts. This unanimous national ratification serves as the ultimate check and balance, ensuring that any transfer of fiscal authority happens with high democratic legitimacy at the national level. This national control is crucial, as the European Parliament’s role in this procedure is limited to being consulted.
Finally, the unanimity requirement itself is a major political obstacle. Securing agreement is a formidable challenge, especially since some member states immediately rejected the proposal. A single “no” vote during the ratification process would force the EU to abandon CORE and fall back on less palatable alternatives, such as increasing GNI-based contributions or cutting EU programmes.
A new chapter for EU fiscal autonomy?
The CORE proposal is more than just a new line item in the EU budget. It represents a potential paradigm shift in the Union’s financial architecture. It is a bold step toward establishing a genuine, tax-like revenue stream independent of direct national transfers, thereby significantly strengthening the EU’s own fiscal capacity.
If adopted, CORE would set a powerful precedent by allowing the Union to tap directly into the economic value generated by large corporations, rather than relying almost exclusively on member states’ treasuries. However, the journey from proposal to reality will test the limits of the current Treaty framework and the resilience of national constitutional guardrails.
It will either mark a decisive move toward a more federal-like fiscal union, demonstrating that the EU can exercise a power to tax with the blessing of its member states, or it will underscore the enduring strength of national sovereignty in one of its most protected domains. But regardless of which scenario occurs, the debate around CORE has already opened a new chapter in the story of Europe’s quest for fiscal autonomy, forcing a reckoning with fundamental questions about who gets to levy taxes in the Union and for what purpose.
Ultimately, this debate is not just about institutional power but about the future relationship between the Union and its citizens, and critically, about how to effectively protect European taxpayers in an increasingly complex multi-level fiscal system. This question is even more urgent given the danger that member states might be tempted to use the Union as a vehicle to implement taxes that would not survive constitutional scrutiny at home. Whether CORE succeeds or fails will thus serve as a litmus test for the EU’s evolving fiscal framework.
Note: This article gives the views of the author, not the position of EUROPP – European Politics and Policy or the London School of Economics. Featured image credit: artjazz / Shutterstock.com
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