Update

5 August 2016

FEE Tax Policy Update 25 July – 5 August

The next FEE Tax Policy Update will be published on Friday 2 September

Highlights

  • G20 Finance Ministers and Central Bank Governors meet in China – 24 July
  • Commission launches consultation on VAT for e-publications – 25 July
  • CJEU Rejects Belgium’s State Aid Appeal – 25 July
  • OECD releases discussion draft on approaches to address BEPS involving interest in the banking and insurance sectors – 28 July

 

European Commission

Four tax opinions submitted by the REFIT Platform – June

The Commission’s REFIT Platform has submitted four opinions in the area of tax. They focus on reverse liability, VAT information portal, standard VAT declaration and intra-community trade, respectively. The purpose of the REFIT Platform is to assess the merits of stakeholders’ contributions and suggestions on EU policies, and to look at “practical ways” to follow up on these suggestions. The Commission has no legal obligation to follow the Platform’s proposed course of action, but has to publicly indicate whether or not it will do so, and why. The REFIT Platform consists of representatives from the Commission, from each Member State as well as stakeholder and industry groups.

Source:

http://ec.europa.eu/smart-regulation/refit/refit-platform/index_en.htm#recommendations

Commission launches consultation on VAT for e-publications – 25 July

The European Commission has published a public consultation on reduced VAT for e-publications. The consultation forms a part of the Digital Single Market project on the one hand, and Commission efforts to revamp the EU VAT system, as defined in the VAT Action Plan, on the other. The Commission made a commitment in its VAT Action Plan to put forward a legislative proposal in 2016 to allow Member States to apply the same VAT rates that they currently apply to printed publications on equivalent e-publications as well. To support such a proposal, the consultation seeks views on:

  • Allowing Member States the application of reduced rates for electronically supplied publications;
  • Allowing Member States the application of super-reduced and zero rates for electronically supplied publications;
  • The definition and scope of electronically supplied publications;
  • The potential impacts of reduced rates for electronically supplied publications.

In terms of next steps, the deadline for submitting answers is 19 September. A legislative proposal on VAT obstacles to cross-border e-commerce is to be expected for winter 2016. In parallel, the Commission Vice-President Andrus Ansip responsible for the digital agenda has pledged that no additional tax burdens will be imposed on small businesses as a part of the digital reforms.

Source:

http://ec.europa.eu/taxation_customs/common/consultations/tax/super_reduced_rates_vat_en.htm

https://www.theparliamentmagazine.eu/articles/news/digital-single-market-no-extra-tax-burden-smes-insists-commission

Commission publishes paper on the French VAT system and revenue efficiency – 25 July

The European Commission has published a paper on the French VAT system and its revenue efficiency. It focuses, in particular, on use of reduced VAT rates in France and its implications for revenue efficiency. It argues that the system’s efficiency is visibly and negatively affected by the number of reduced rates and exemptions, and recommends action for France to improve its VAT rate structure.

Source:

http://ec.europa.eu/economy_finance/publications/eeeb/pdf/eb015_en.pdf

Public consultation on a potential EU personal pension framework – 27 July

The European Commission has launched its long-anticipated public consultation on a possible EU personal pension framework. The consultation (and any proposal that comes out as a result of it) links directly to the Commission’s Capital Markets Union (CMU) project. The establishment of a EU personal pensions framework would seek to link retail investors, and specifically long-term savers, with long-term investment opportunities. The consultation seeks stakeholders’ views on a number of areas that pose potential opportunities or challenges for the establishment of a EU personal pension framework, including the effects of different national tax regimes and incentives. The deadline for providing comments is 31 October.

Source:

http://ec.europa.eu/finance/consultations/2016/personal-pension-framework/index_en.htm

 

European Parliament

EU Parliament to ask Mossack Fonseca representatives to testify – 1 August

The European Parliament will invite representatives from the Panama-based Mossack Fonseca firm to attend a PANA Committee hearing with the purpose of investigating the Panama Papers scandal. The Committee will start its work in autumn with a mandate expiring on 8 June 2017.

Source:

https://www.theparliamentmagazine.eu/articles/news/panama-papers-eu-parliament-ask-mossack-fonseca-representatives-testify

 

MEP Questions & Answers

VAT accounting periods – 22 July

The European Commission has replied to a question asked by the MEP Julia Pitera (EPP/POL) with regard to VAT accounting periods. In her question, Ms. Pitera asks the Commission how long the VAT accounting periods are in each Member States, whether the Commission has conducted studies linking VAT accounting periods to the scale of tax fraud, and to what degree shortening the tax period to once per month would cause additional administrative burdens for businesses. In his reply, Commissioner Moscovici states that the VAT period must be set by Member States at one, two or three months, but different periods can be established as long as these do not exceed one year. The Commission has, moreover, looked into the impacts of a common EU standard VAT return, which provides an overview of filing periods per Member State (link to the study is available from the Commission answer). Most Member States require monthly returns, except Cyprus, Malta and the UK which have quarterly reporting. The study, furthermore, indicates potential savings of €1,8 billion when moving from monthly to quarterly reporting, and there is a need to reduce the frequency of filing VAT returns for “smaller businesses”. Commissioner Moscovici finally confirms that the expected SME simplification package as announced in the VAT Action Plan and expected for 2017 the anti-fraud dimension and easing administrative burdens will be taken into account.

Question: http://www.europarl.europa.eu/sides/getDoc.do?type=WQ&reference=E-2016-004627&format=XML&language=EN

Answer: http://www.europarl.europa.eu/sides/getAllAnswers.do?reference=E-2016-004627&language=EN

Oxfam Novib study and European tax havens – 25 July

The European Commission has replied to a question asked by the MEP Hugues Bayet (S&D/BEL) with regard to a recent study on tax havens by Oxfam, as well as on tax advisors (for further details on the study, please see FEE Tax Policy Update from 10 June). In his question, Mr. Bayet asks the Commission whether it will indeed go through with the Common Consolidated Corporate Tax Base (CCCTB) and whether the Commission will take action against tax advisors. In his reply, Commissioner Moscovici confirms that the Commission will re-launch the CCCTB in autumn (probably November). Furthermore, he refers to OECD BEPS Action 12 which entails rules for requiring tax advisors and taxpayers to disclose their “aggressive tax planning” schemes. The Commission published its Communication on further measures to address tax advisors earlier in July (see FEE Tax Policy Update from 8 July), and will explore best ways to establish effective “disincentives” for promoters and enablers of such schemes, including transparency on the schemes towards tax authorities. A public consultation on the matter is expected for autumn.

Question: http://www.europarl.europa.eu/sides/getDoc.do?type=WQ&reference=E-2016-004159&format=XML&language=EN

Answer: http://www.europarl.europa.eu/sides/getAllAnswers.do?reference=E-2016-004159&language=EN


Lack of transparency in financial transactions in Europe and the US – 26 July

The European Commission has replied to a question asked by the MEP Kostas Chrysogonos (GUE-NGL/GRE) with regard to transparency of financial transactions. In his question, Mr. Chrysogonos asks the Commission whether it is aware of “non-transparent policies” undertaken by Switzerland and “certain US states” that could be classified as “tax havens”, and what action it will take to reduce “amounts lost to EU Member States” in corresponding international financial transactions. In his question, Commissioner Moscovici lists measures that the Commission has already undertaken to address the issues highlighted by Mr. Bayet, including reforms put forward in the 4th Anti-Money Laundering Directive and the Directive’s expansion to cooperative measures on tax, the recently published Communication on further tax transparency (see FEE Tax Policy Update from 8 July), relevant amendments to the Administrative Cooperation Directive, the proposal for public Country by Country Reporting (CBCR), as well as the External Strategy on tax that was published in January and in which the Commission commits itself to identifying “third countries that facilitate tax abuse”.

Question: http://www.europarl.europa.eu/sides/getDoc.do?type=WQ&reference=E-2016-003870&format=XML&language=EN

Answer: http://www.europarl.europa.eu/sides/getAllAnswers.do?reference=E-2016-003870&language=EN

VAT exemption – 26 July

The European Commission has replied to a question asked by the MEP Neoklis Sylikiotis (GUE-NGL/CYP) with regard to VAT exemptions. In his question, Mr. Sylikiotis asks the Commission whether all Member States, on top of Cyprus, impose VAT on sales and transfers of immovable property and if not, which of them are exempt from the provisions of the VAT Directive. In his reply, Commissioner Moscovici states that the supply of immovable property is taxable. However, an exemption may apply after first occupation of a building and of land other than building land. He moreover elaborates that the supply (before first occupation) of a building or building land is subject to VAT in all Member States except Belgium, Germany, Greece, Luxembourg, Malta, Austria, Portugal, Finland, Sweden, and the UK.

Question: http://www.europarl.europa.eu/sides/getDoc.do?type=WQ&reference=P-2016-004920&format=XML&language=EN

Answer: http://www.europarl.europa.eu/sides/getAllAnswers.do?reference=P-2016-004920&language=EN

European Taxpayer Identification Number – 29 July

The European Commission has replied to a question asked by the MEP Brian Hayes (EPP/IRL) with regard to a European Taxpayer Identification Number (TIN). In his question, Mr. Hayes asks the Commission to elaborate what would be the positives and negatives of an EU TIN. In his reply, Commissioner Moscovici states that a study will be published in 2017 on the possible merits of such a scheme. Moreover, the Commission has launched the TIN on Europa portal which provides information on individuals’ national TINs. Since March 2016, the portal also enables the checking of various national TINs’ structure and syntax.

Question: http://www.europarl.europa.eu/sides/getDoc.do?type=WQ&reference=E-2016-004370&format=XML&language=EN

Answer: http://www.europarl.europa.eu/sides/getAllAnswers.do?reference=E-2016-004370&language=EN

Effect on competition of deferring VAT on imports into Spain – 2 August

The European Commission has replied to a question asked by the MEP Izaskun Bilbao Barandica (ALDE/SPA) with regard to the competition implications of deferring VAT on imports into Spain. In her question, Ms. Bilbao Barandica refers to a Spanish scheme for compensating import VAT which has caused legal issues due to the scheme’s suspected discriminatory nature. According to the scheme, only those taxpayers who pay VAT other than import VAT to the central tax authority are able to benefit from the scheme, even though all taxpayers are obliged to pay import VAT to the tax authority. The scheme is suspected to be in violation of EU state aid rules. Ms. Bilbao Barandica asks the Commission what action it will take with regard to the case. In her reply, Commissioner Vestager confirms that the Commission received a complaint on the matter in February 2015, and emphasises the complexity of the issue given that it concerns national and regional fiscal competencies. The Commission is currently assessing information on the case and can therefore not disclose further details yet.

Question: http://www.europarl.europa.eu/sides/getDoc.do?type=WQ&reference=E-2016-004768&format=XML&language=EN

Answer: http://www.europarl.europa.eu/sides/getAllAnswers.do?reference=E-2016-004768&language=EN

Principles for paying tax – 3 August

The European Commission has replied to a question asked by the MEP Morten Messerschmidt (ECR/DEN) with regard to principles for paying tax. In his question, Mr. Messerschmidt calls on the Commission to elaborate what it means with the expression ‘tax is payable, where profits are generated’ and to explain where the emphasis should be – where an item is designed, manufactured or sold. In his reply, Commissioner Moscovici maintains that taxation and tax systems are Member State competences, and the Commission’s role is to protect the tax base generated in the EU; the expression should be understood in this context, according to the Commissioner. He moreover states that the focus should be on “real economic activities” carried on in a jurisdiction. Commissioner Moscovici refers also to the planned re-launch of the Common Consolidated Corporate Tax Base (CCCTB) (probably November this year), which includes a formula apportionment method based on three different factors (labour, assets and sales). This will according to the Commissioner provide “appropriate weight” to the interests of all the Members States involved and should reflect well the value created by the different actors.

Question: http://www.europarl.europa.eu/sides/getDoc.do?type=WQ&reference=E-2016-004020&format=XML&language=EN

Answer: http://www.europarl.europa.eu/sides/getAllAnswers.do?reference=E-2016-004020&language=EN

VAT Directive review – 4 August

The European Commission has replied to a question asked by the MEP Deirdre Clune (EPP/IRL) with regard to the review of the VAT Directive. In her question, Ms. Clune asks the Commission to clarify when it intends to carry out a review of the coverage of Annex III of the Directive, so that the provision may be extended to defibrillators and “other life-saving equipment”. In his reply, Commissioner Moscovici refers to a planned 2017 proposal on VAT rates, announced earlier in the VAT Action Plan, which could include an extension of the list of goods and services eligible for reduced rates. When and what the Commission will propose depends, according to the Commission, on the choices made by the Member States themselves in the Council.

Question: http://www.europarl.europa.eu/sides/getDoc.do?type=WQ&reference=E-2016-004737&format=XML&language=EN

Answer: http://www.europarl.europa.eu/sides/getAllAnswers.do?reference=E-2016-004737&language=EN

 

Council

Council legal service argues European Parliament is abusing its powers with the PANA Committee

According to the Czech newspaper Hospodárské Noviny, the Council of the EU’s legal counsel believes that MEPs have gone beyond their powers by establishing the special PANA Committee to investigate suspected mis-implementation and -application of EU legislation by Member States and the Commission. The legal counsel maintains that the PANA Committee exceeds the powers of the European Parliament, and for example only the European Commission has responsibility over ensuring the implementation of EU law.

Source:

http://m.ihned.cz/zahranicni/c1-65380540-europarlament-chce-vice-moci-na-ukor-jednotlivych-statu

 

Court of Justice of the EU

“EU Court Rejects Belgium’s State Aid Appeal” – 25 July

As reported notably by Tax News, the Court of Justice of the EU (CJEU) has refuted arguments provided by Belgian authorities for not recovering €700 million in tax income from up to 35 companies as a follow-up of Belgium’s so-called excess profit scheme which was deemed by the Commission to be in breach of EU state aid provisions. Belgium had attempted to delay or suspend the procedure by arguing that the decision has caused immense uncertainty to companies. CJEU, however, argues that Belgium has failed to provide convincing evidence that serious harm would be caused.

Source:

http://www.tax-news.com/news/EU_Court_Rejects_Belgiums_State_Aid_Appeal____71829.html

VAT on services provided by lawyers – 28 July

The Fourth Chamber of the Curt of Justice of the EU (CJEU) has issued a ruling on VAT on services provided by lawyers. The case code is C‑543/14. In the ruling, the Court notably establishes that services provided by lawyers to persons not qualified for legal aid may be subject to VAT.

Source:

http://curia.europa.eu/juris/document/document.jsf?text=&docid=182290&pageIndex=0&doclang=en&mode=req&dir=&occ=first&part=1

See also A/E 29/07

Right to deduct VAT – 28 July

The Seventh Chamber of the Curt of Justice of the EU (CJEU) has issued a ruling on VAT deduction. The case code is C‑332/15. In the ruling, the Court establishes that limitation periods for exercising the right to deduct are allowed as long as the principles of equivalence and effectiveness are observed. Furthermore, tax authorities may refuse a taxable person the right to deduct VAT when the person concerned has fraudulently failed to fulfil most of the formal obligations incumbent upon him in order to be able to benefit from that right.

Source:

http://curia.europa.eu/juris/document/document.jsf?text=&docid=182294&pageIndex=0&doclang=en&mode=req&dir=&occ=first&part=1

 

International

G20 Finance Ministers and Central Bank Governors Meeting – 24 July

The Communique of the G20 Finance Ministers’ meeting from late-July in China has been published. Of particular interest, the Ministers call for currently non-committed countries to implement international standards on tax transparency and exchange of information, as well as coordinated efforts to identify “non-cooperative jurisdictions” against which “defensive measures” should be devised. The Communique, moreover, establishes “tax certainty” as a pivotal element in devising tax systems that provide stability for investors.

Source:

http://www.g20.utoronto.ca/2016/160724-finance.html

“French surpass Belgians as EU’s highest taxpayers” – 26 July

As reported notably by Politico, the French have surpassed Belgians as the highest taxpayers in Europe. The article refers to a recent study by the Institut Économique Molinari, which demonstrates that Belgium has now the second highest labour taxes amongst the EU 28. This is the result of labour tax cuts introduced by the current government led by the Prime Minister Charles Michel, which saw a labour tax reduction from 59,47% to 56,9%.

Source:

http://www.politico.eu/pro/french-surpass-belgians-as-eus-highest-taxpayers/

“MPs condemn ‘sticking plaster’ response to corporate tax avoidance” – 4 August

As reported notably by the Guardian, a number of British MPs have criticised what they see as a weak international response to tackle “corporate tax avoidance”. These views are presented in a recently published report of an all-party parliamentary group of the British parliament focusing notably on tax matters. The MPs moreover call for further “more radical reforms” to address new tax structures potentially used by companies active in the digital sphere. The report also calls for public Country by Country Reporting (CBCR) and argues that the new rules put forward by the OECD risk creating new loopholes that can be exploited by tax advisors.

Source:

https://www.theguardian.com/business/2016/aug/04/mps-condemn-sticking-plaster-response-to-corporate-tax-avoidance

http://www.appgresponsibletax.org.uk/wp-content/uploads/2016/08/Sticking-Plaster-APPG-Responsible-Tax-Report.pdf

 

OECD

OECD Secretary-General report to G20 Finance Ministers – 24 July

The OECD has published its Secretary-General tax report to G20 Finance Ministers, drafted for the G20 China meeting in late-July. The report is divided into two parts. The first part provides an overview of recent developments and state of play of the OECD BEPS project, tax transparency, tax and development, and tax policy tools in support of sustainable development. The second part is a progress-report on the work of the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum).

Source:

http://www.oecd.org/tax/oecd-secretary-general-tax-report-g20-finance-ministers-july-2016.pdf

OECD report on Enhancing the Effectiveness of External Support in Building Tax Capacity in Developing Countries – 25 July

The IMF, OECD, UN and the World Bank have initiated their joint work as members of the new Platform for Collaboration on Tax as called for by G20 Finance Ministers back in February 2016. The organisations have now published a report which seeks to identify the key elements behind successful tax capacity building programmes. It also puts forward a number of recommendations and “enabling actions” for countries to follow. The Platform sought stakeholder input on its report (for further details, please see FEE Tax Policy Update from 8 July). The G20 Finance Ministers have asked for a progress update on the report’s recommendations and their implementation by mid-2017.

Source:

http://www.oecd.org/tax/report-by-the-platform-for-collaboration-on-tax-to-the-g20-enhancing-the-effectiveness-of-external-support-in-building-tax-capacity-in-developing-countries.htm

International community continues movement towards greater tax transparency – 26 July

The Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) has published a total of 10 peer review reports on the implementation of the international standard for exchange of information on request. According to the OECD, the reports demonstrate a continuing progress in this area. Switzerland for example received a “Largely Compliant” ratings, confirming the efforts it has undertaken in past years to improve tax transparency.

Source:

http://www.oecd.org/tax/international-community-continues-movement-towards-greater-tax-transparency.htm

OECD releases discussion draft on approaches to address BEPS involving interest in the banking and insurance sectors – 28 July

The OECD has published a discussion draft on addressing BEPS in the banking and insurance sectors. The discussion draft relates to the BEPS Action 4 (interest deductibility and other financial payments), and looks in greater detail to the BEPS risks posed by banks, insurance companies and conglomerates. The discussion draft does not provide one-size-fits-all solutions for banks and insurance companies as there are significant differences in the specific risks faced by different countries. It instead proposes for countries to introduce rules that are better tailored for their national circumstances. For other entities in a banking or insurance group however, the discussion draft identifies a higher BEPS risk and consequently proposes for countries to apply the fixed ratio rule as well as the group ratio rule to such entities. The deadline for providing comments is 8 September.

Source:

http://www.oecd.org/tax/aggressive/discussion-draft-beps-action-4-banking-and-insurance-sector.pdf

  

State Aid

Commission authorises alternative income tax regime for wholesale diamond sector in Belgium – 29 July

The European Commission has concluded that a Belgian corporate tax applicable to the wholesale diamond sector is in line with EU state aid provisions. The Commission was notified of the Belgian corporate tax scheme in May 2015, and its purpose is to enable diamond traders to address “specific challenges” in the application of the general income tax regime for the sector. The Commission expressed reservations on the scheme earlier due to state aid concerns, but the Commission assesses that Belgium has managed to address these properly.

Source:

http://europa.eu/rapid/press-release_IP-16-2683_en.htm

 

Other News

Business Europe publishes position paper on public CBCR – 6 July

Business Europe has published its position paper on the Commission proposal for public Country by Country Reporting (CBCR). Business Europe is unsurprisingly highly critical of the Commission proposal, arguing that it poses a threat to EU competitiveness as an investment destination, undermines the authority of tax administrations, and is in its current form impossible for businesses to comply with, amongst other issues.

Source:

https://www.businesseurope.eu/sites/buseur/files/media/position_papers/ecofin/2016-07-06_cbcr_position_paper.pdf

“On debt and taxation, rich and poor countries are worlds apart” – 26 July

Eurodad’s Tove Maria Ryding has criticised the attitude of developed countries towards developing ones on taxation matters in her article to the Guardian. She argues that developing countries have undermined developing countries’ right to participate on international tax matters on an equal footing with them, in particular by turning down an initiative to establish an intergovernmental tax body for the UN during the Addis Ababa development conference last year. Moreover, developed countries have been reluctant to grant the Unctad a greater mandate in advising developing countries in tax matters.

Source:

https://www.theguardian.com/global-development/2016/jul/26/debt-taxation-rich-poor-countries-worlds-apart-un-trade-conference-kenya

“Democrats resurrect ‘insane’ financial transaction tax” – 29 July

John Dizard criticises the US Democrats’ plans for a financial transaction tax (FTT) in his article in the Financial Times (only available to subscribers). Mr. Dizard argues with reference to a Brookings study that a FTT, in any form, could cause unwarranted dangers to liquidity, and maintains that the measure is mainly of appeal to the “voting public”.

Source:

https://next.ft.com/content/fc718e7c-5571-11e6-9664-e0bdc13c3bef?siteedition=intl%23axzz4G3XdNsRr&ftcamp=engage%2Femail%2Fnewsletters%2Fsmart_brief%2Fsmartbriefnewsletterscontrafcf%2Fauddev&segid=0800933

 

Events

6-7/09/2016, Bruegel Annual Meetings, Bruegel, Brussels.

28/09/2016, From tax transparency to responsible tax behaviour, CSR Europe, Brussels.

13/10/2016, EPC 20th Anniversary Conference, EPC, Brussels.

18/10/2016, Tax transparency: Do new global standards really provide a level playing field?, Euractiv.

  • Source: tbc

20/10/2016, Public Country-by-Country Reporting: Tax disclosures in the spotlight, Federation of European Accountants (FEE), Brussels.

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