EU finance minister fail to find common approach on digital tax but amend tax havens list
EU Finance Ministers attempted to find a common position for OECD negotiations on digital tax reforms at their latest ECOFIN meeting.
Even though several Member States were willing to continue discussions to improve coordination, a common EU position was not reached for now. As often is the case, visible camps emerged in the discussions.
For example Ireland, Lithuania and Sweden insisted that they want to retain the freedom to contribute independently to the OECD work. By contrast, Austria, Croatia, France, Greece, Spain, Slovakia and somewhat surprisingly Finland all agreed that a European position is desirable. The Dutch proposed to set up a technical working group in the Council to continue the discussion.
Germany, for its part, continued to insist on the need for a global minimum effective tax rate – as per the second pillar of the OECD’s work. And finally Belgium underlined the need for a tax environment that is fit for SMEs, not administratively burdensome and avoids double taxation.
Several jurisdictions removed from tax haven list
The meeting had more success with the EU list of non-cooperative jurisdictions, as the Member States unanimously agreed to remove Aruba, Barbados and Bermuda from the blacklist.
All three were blacklisted in March. Bermuda and Barbados will be returned to the grey list where jurisdictions are being monitored for progress on commitments. Aruba on the other hand will be completely removed from surveillance, as it adopted a new law on 4 April that removes harmful features of its tax transparency regime.
This means that 12 jurisdictions now remain on the EU list: American Samoa, Belize, Dominica, Fiji, Guam, Marshall Islands, Oman, Samoa, Trinidad and Tobago, United Arab Emirates, US Virgin Islands, and Vanuatu. Read more
Romanian Presidency blames Commission for not doing enough on VAT fraud
And finally, the meeting saw some drama too as the Romanian Presidency accused the European Commission for not doing enough to curtail carousel fraud.
In response, a Commission official reminded that the Commission proposed already in 2017 to move to a so-called VAT definitive regime – a destination based VAT system. The proposal, if adopted, would go a long way in curtailing carousel fraud in the EU. However, it currently remains blocked in the Council by opposition from Germany and a lack of enthusiasm from a number of other Member States.
Leaked draft Directive unveils plans for financial transaction tax
A leaked financial transaction tax (FTT) draft Directive confirms speculations that the tax is tailored to the so-called French model.
The FTT negotiations between 10 voluntarily cooperating EU Member States have been stalling for years, but now a new Franco-German push appears to be giving the file some momentum.
The leaked draft document proposes for a tax rate to be set between 0,2% and 0,3% and for the same rate to apply to all financial transactions. Moreover, the tax would be payable in the Member State where the issuing entity is registered – irrespective of where the actual transaction takes place, for example. This is hoped to limit tax avoidance opportunities.
According to latest intelligence, a request was submitted for a FTT discussion at the finance ministers’ ECOFIN meeting on 14 June.