EU Law and Reform Options for POE

POE proposal. Establish a durable flow of public revenue from the prosperity created by AI and robotics into personal income security, practical support, and meaningful paid opportunities. The concern is that automation can increase production while reducing the earnings and spending that sustain human work. A legal framework should maintain people's ability to participate as that balance changes.

Proposed national POE legislation should require regular public assessment of household purchasing power, access to paid work, income from ownership, the tax base, and the funding needed for chosen programmes. Where these assessments reveal a shortfall, governments should present funded measures for democratic decision. The assessment must account for prices, new employment, existing transfers, and investment effects. These are proposed duties and policy tests; the existing EU provisions below do not themselves impose them.

Existing democratic framework. Article 10 TEU bases the EU on representative democracy: citizens are represented in the European Parliament, while governments representing member states are democratically accountable nationally. It also provides for citizen participation and decisions taken openly and close to citizens. See Article 10 TEU.

TFEU means the Treaty on the Functioning of the European Union. The Council brings together member-state governments; it is distinct from the elected European Parliament. Sources: Article 113, Article 115, Article 311, and Article 153.

Existing law. Council Directive (EU) 2022/2523 establishes the EU minimum-tax framework for multinational and large domestic groups. Its main revenue threshold is EUR 750 million and its minimum rate is 15%, subject to the directive's scope, exclusions, calculations, and other rules. It is not a universal 15% charge on all company income. See Directive 2022/2523, particularly Articles 2 and 3.

The Anti-Tax Avoidance Directive already addresses interest deductions, exit taxation, artificial arrangements, and controlled foreign companies. These are relevant when profit is moved between subsidiaries or jurisdictions. See Directive 2016/1164, Articles 4 to 8.

POE proposal. Strengthen enforcement and coordinate tax bases so that the public contribution can follow business and ownership income when employment income declines. Set the revenue objective around sustaining people's purchasing power and paid opportunities as production becomes more automated. Analyse groups and related-party payments, rather than treating each legal entity as economically independent. Any additional taxes on dividends, gains, inheritance, or assets need their own national or EU legal route and a distributional assessment.

Ordinary corporate-tax rules can tax profits retained within a business; a dividend payment is not generally required. Treatment varies by national system, and investment deductions and losses matter. A funded POE plan must distinguish company profit, owner income, and wealth, and account for overlapping taxes.

Proposal already on the EU agenda. The Commission's Business in Europe Framework for Income Taxation, or BEFIT, proposes common rules to calculate and aggregate the taxable results of covered group members. Its transitional allocation is based on members' taxable results in previous years. The Commission describes it as a proposal requiring unanimous Council agreement. See BEFIT and its legal proposal COM 2023 532.

POE proposal. Use that work as a starting point for more consistent group taxation. If allocation is to depend more on customer location or substantive production, legislate that change explicitly. Taxing rights between countries and the distribution of public spending are separate decisions. A country hosting a headquarters or a data centre should not automatically determine every beneficiary of a POE programme.

Existing law. Directive 2006/112/EC governs VAT. VAT collects tax through a chain of businesses with input deductions and is ultimately a tax on consumption. It can raise revenue even where company profits are small, but its cost reaches households. See the Commission explanation of VAT.

Article 401 limits additional taxes that function as VAT-like turnover taxes. It does not prohibit every tax that uses turnover in its calculation; the tax's characteristics matter. See VAT Directive Article 401 and CJEU judgment C-75/18, paragraphs 58 to 61.

POE proposal for assessment. Compare a broader business contribution with existing employer contributions. A candidate annual base is net value added: output less intermediate purchases and economic depreciation. This reaches a different measure from shareholder distributions, but much of it consists of labour and capital income already considered elsewhere in the tax system. It is not a separate pool of free revenue.

Before adopting such a contribution, specify payroll credits or other offsets, losses, depreciation, cross-border allocation, and effects on prices and investment. Assess its classification under EU law. Harmonisation may require Article 113 or 115, depending on the design. Article 114(2) excludes fiscal provisions from the ordinary internal-market harmonisation route, so calling a tax an internal-market measure does not remove that constraint. See Article 114.

Taxing every internal transaction without appropriate deductions would repeatedly burden some production chains. Funding estimates should measure sustainable net revenue after lost employment taxes, offsets, and changes in behaviour.

Existing law. Article 153 allows specified EU action on working conditions, labour-market integration, and other social-policy matters. It preserves member states' fundamental social-security choices and contains limits, including on pay. For combating social exclusion under Article 153(1)(j), the cooperation route in Article 153(2)(a) excludes harmonisation. The article is not a general authority to impose an EU-wide basic income. See Article 153.

The European Social Fund Plus supports access to employment, skills, self-employment, inclusion, and relevant services within approved programmes and eligibility rules. It offers an existing route for parts of POE; it is not an unlimited fund for permanent wages or universal transfers. See Regulation 2021/1057, particularly Article 4, consolidated following the 2025 amendments and the Council account of those amendments.

POE proposal. Begin with national legislation that defines the income foundation, practical support, and paid-opportunity programmes. Democratically accountable institutions should determine the level of basic income, if adopted, the help available to get on one's feet, and the resources for paid opportunities, through published laws and budgets that can be reviewed and changed. Establish eligibility, fair employment conditions, accessible entry routes, gradual benefit withdrawal, and independent appeal. Preserve room for higher earnings from effort, skill, natural talent, responsibility, and enterprise. Assess taxes and benefit withdrawal together so that people retain a meaningful gain from additional earnings. Use EU co-financing where programmes qualify. A new EU-wide entitlement would require a separately justified legal basis and sustainable financing; it should not be assumed to follow automatically from existing social-policy powers.

Existing law. Article 67 of Directive 2014/24/EU permits public-contract award criteria that include quality and social aspects linked to the contract. Criteria must preserve effective competition and be verifiable; Article 70 addresses contract-performance conditions. This can support well-designed care, training, and other service contracts. It does not permit arbitrary preference for favoured local firms. See Public Procurement Directive, Articles 18, 67 and 70.

Selective support for businesses may also fall under state-aid rules when the legal conditions are met. A programme must use an applicable exemption or obtain approval where required; a social purpose does not automatically remove these requirements. See Article 107 TFEU and Article 108 TFEU.

POE proposal. Design separate legal routes for buying a service, subsidising employment, and supporting an individual. Include programmes for human interaction, sport, craftsmanship, and culture where a defined public purpose justifies funding: for example, care and mentoring, community coaches, craft apprenticeships, restoration work, and local performances. Each programme needs a defined service or outcome, an eligible provider, a budget, and the applicable procurement or aid route. Publish selection criteria, costs, and safeguards against displacement of existing workers. Private firms, cooperatives, associations, and public providers can participate under the relevant rules.

POE proposal. National public investment funds can be considered as a complementary source of long-term income, with a defined legal mandate, financing, risk limits, independent management, and public accountability. Negotiated equity or royalty returns may be appropriate when public funds support commercial development. Buying assets requires resources; mandatory share transfers require separate legal justification and consideration of property rights. Investment returns should not be treated as certain annual revenue.

Existing rights framework. Article 15 of the EU Charter protects work and freely chosen or accepted occupations. It does not itself establish a publicly funded job for every person. Charter Article 51 limits its application to EU institutions and member states when implementing EU law and does not create new EU competences. See Charter Article 15 and Charter Article 51.

Existing equality framework. Charter Article 21 prohibits discrimination on grounds including social origin, property, birth, and disability, within the Charter's scope under Article 51. It also addresses nationality discrimination within the scope of the Treaties and subject to their specific provisions. This protection does not itself equalise starting resources or establish a universal income entitlement. See Charter Article 21 and its official explanations.

POE proposal. Make a good life and meaningful personal choice attainable regardless of family background or birthplace. Translate that objective into accessible education and training, healthcare and disability support, help overcoming financial and geographic barriers, fair programme selection, and independent appeal. People should have real choices between suitable opportunities and support to change direction or recover from setbacks. Basic security should be available under clear rules independent of political loyalty, with additional rewards possible through work, skill, talent, and enterprise. Publish evidence on whether opportunities reach people from different starting circumstances. Constitutional, equality, privacy, and employment rules must be built into each programme. The universal ambition requires implementation and cooperation across jurisdictions; actual legislation must specify its territorial coverage, eligibility, and funding.

Existing law. Article 311 allows new categories of EU own resources through a unanimous Council decision and national constitutional approval. It does not itself settle the legal basis for an underlying new tax or a new spending entitlement. The multiannual budget framework is governed by Article 312; its ordinary adoption route requires Council unanimity and Parliament's consent. See Article 311 and Article 312.

POE proposal. Negotiate EU co-financing for participating national and local programmes, with an allocation formula reflecting population, fiscal capacity, and need. Define collection rules separately from the formula deciding where money is spent. Keep existing services, defence commitments, and other expenditure visible when calculating the additional budget available for POE.

Current spending context. EU member states spent €418 billion on defence in 2025; the Council reports an estimate of €454 billion for 2026, expressed in constant 2025 prices. These are member-state expenditure figures, distinct from spending through the EU budget. Source: Council of the EU: defence in numbers, checked 4 October 2026.

Long-term POE proposal. Support peaceful progress towards effective democracy worldwide, drawing on the Fundamental Democracy's approach to making existing power accountable. If that progress reduces military threats and the defence spending needed to address them, democratic budget decisions can redirect released resources into the POE. This is a potential peace dividend; it is not assumed revenue for today's programmes.

Savings in national defence budgets remain for national democratic budget decisions unless governments separately agree to pool them. Any new EU revenue or common spending programme still needs the applicable legal and budgetary route described above. POE financing can proceed now through existing democratic institutions.

Existing law. Article 48 TEU governs treaty revision. Ordinary amendments require agreement and ratification by all member states under their constitutional procedures. Its paragraph 7 permits certain changes to voting or legislative procedures, but requires unanimous European Council agreement, Parliament's consent, and no national-parliament objection within six months. It cannot increase the EU's substantive competences. See Article 48 TEU.

The general paragraph 7 route cannot be used for the own-resources provisions in Article 311(3) and (4), which are expressly excluded by Article 353 TFEU.

POE proposal. If member states want enduring EU fiscal or social powers beyond those conferred today, pursue explicit treaty reform with democratic accountability. National implementation and lawful existing EU programmes can proceed while that debate takes place.

The following is a proposed agenda, not adopted EU law:

1. National POE legislation and budgets. Define support and opportunity programmes, rights of applicants, employment conditions, provider rules, and published outcome measures. Require regular review of purchasing power, paid opportunities, and revenue as automation develops. Identify actual funding before promising coverage.
2. Coordinated revenue measures. Secure a continuing public contribution from increasingly automated production. Enforce current corporate-tax rules and negotiate any further common base or contribution under the appropriate treaty procedure. Compare net revenues and effects on owners, workers, consumers, investment, and small firms.
3. EU programme and budget decisions. Use qualifying ESF+ programmes, and propose changes to programme legislation where a new instrument is needed. A new category of EU revenue requires the own-resources process; additional spending also requires the relevant budget decisions.
4. Treaty changes if required by the final design. Specify the additional competence or voting change sought. Do not make useful national measures wait for reforms they do not need.

Before drafting operative tax provisions, decide the liable person or group, tax base, rates and thresholds, losses and deductions, cross-border taxing rights, collection authority, and relationship to existing taxes. Before drafting benefits or jobs programmes, decide eligibility, remuneration, support, governance, and the funded scale.

The immediate legal task is to assemble a funded package of compatible national and EU measures to sustain and strengthen the Personal Opportunity Economy.