The tax provisions of the new Multiannual Financial Framework fuel uncertainty among MEPs. Many warn that the new corporate turnover tax, CORE weakens Europes competitiveness, the very goal the Commission purports to boost.
Ms Von der Leyen pitched the proposal as a forward-looking investment plan, with €410bn earmarked for competitiveness — roughly 23 per cent of the total budget. This includes funding for research, innovation, clean tech, and industrial capacity. Much of this seeks to unlock private capital and reduce the EU’s strategic dependencies. “This is a real investment in our capacity to respond and in our independence,” she said.
At the heart of the proposal is the European Competitiveness Fund, dubbed the ‘Draghi Fund’, referring to a 2023 report by former European Central Bank (ECB) chief Mario Draghi. In it, the Italian ex-PM rang the alarm about Europe’s declining productivity and waning competitiveness on the global stage.
A pivot, or a freeze?
Heeding those signals, the newly unveiled MFF proposal promises a sharper focus on strengthening Europe’s economic power. But while the Commission brands the €410bn Competitiveness Fund a breakthrough, reactions across EU institutions and business circles suggest a wide gap remains between ambition and credibility.
“However you try to package this, what we have is a real-terms investment and spending freeze — plus repayment of NextGenerationEU borrowing,” said the parliamentary co-rapporteurs Siegfried Mureşan (EPP/ROU) and Carla Tavares (S&D/PRT). “It is the status quo, which the Commission has always insisted is not an option.” The Parliament’s rapporteurs criticised the budget for falling short on key priorities: not only competitiveness, but also cohesion, agriculture, climate adaptation, and defence.
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Industry Commissioner Stéphane Séjourné (Renew/FRA) called the fund pivotal for strategic sectors, claiming it could mobilise over €1tn in private capital toward EU industrial goals, from clean energy to AI, biotech, and defence. “A strike force and investment in strategic sectors. A true Draghi Fund. This is how we can summarise the competitiveness fund that I have just presented as part of the next EU budget,” Mr Séjourné said on X.
CORE tax
The Competitiveness Fund aims to strengthen Europe’s economy. Critics warn, however, that another part of the Commission’s proposal risks undermining that very goal: a new EU-wide corporate levy known as CORE (Contribution on Revenue of Enterprises).
Under the plan, companies, including foreign firms, operating in the EU with net annual turnover above €100m would be subject to a fixed annual charge, scaled in brackets. The Commission estimates it would raise €6.8bn per year.
The backlash, however, was swift. BusinessEurope, the continent’s main business lobby, called the levy “totally counterproductive”, warning that it would further erode the EU’s attractiveness for investment. “At a time when the EU is already facing significant competitiveness challenges and comparatively high overall taxation, such an approach will create additional barriers to growth,” the group said in a statement.
Entrepreneurs make Europe strong. But instead of giving them room to grow, we’re burdening them further. – MEP Anouk van Brug (Renew/NLD)
The corporate levy has also immediately sparked a strong opposition from member states. “There is no question of the EU taxing companies, as the European Union has no legal basis for this,” said German Chancellor Friedrich Merz on Thursday, 17 July. Similar statement came from the Netherlands. According to a spokesperson for the Dutch government introduction of such a levy “is not up for discussion”.
The proposed levy would apply to turnover rather than profits, making no distinction between high- and low-margin sectors, and would be calculated at company or permanent establishment level, not at group level.
Room to grow
Several MEPs have echoed that opposition. Dutch MEP Anouk van Brug (Renew/NLD) warned that the levy could end up doing more harm than good: “Entrepreneurs make Europe strong. But instead of giving them room to grow, we’re burdening them further. With the proposed corporate tax in the EU budget, we risk chasing businesses away. The EU must choose: invest in innovation, AI and defence – not in higher tax pressure.”
“These are precisely the businesses we are actively supporting through a Competitiveness Fund aimed at driving innovation and boosting productivity,” said Monika Hohlmeier (EPP/GER), vice chair of the Parliament’s Committee on Budgets.
Rihards Kols (ECR/LVA) voiced similar concerns: “With a 1.26 per cent GNI ceiling, the numbers simply don’t add up for competitiveness or defence. Core priorities remain undefined, while the trend toward centralised control, sidelined regions, and weakened democratic oversight is worrying. To top it off, the proposal includes new EU-level taxes, on tobacco, e-waste, and corporate profits, which flies in the face of the EU’s supposed ambition to strengthen competitiveness.”
Meanwhile, the S&D group expressed support for the levy, welcoming it as a step toward fair taxation: “Our long-standing and persistent calls for fair taxation have finally been heard by the European Commission. We believe big corporations have to pay fair taxes and contribute to the European budget as part of a system of new and genuine own resources.”
