Update

Tax Policy

 Cannot read this email? Open in your browser.September 2019 
 

Tax Policy Update

2 - 16 September 2019

 
 
 
 

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Get the latest news on SME, tax, technology, audit and sustainable finance.

 
 
 
 
 

Tax dispute resolution

 
 
 

Our new factsheet gives an overview of the Directive and informs accountants on how to address double tax disputes.

 
 
 
 

Highlights

 
 
 
 
  • Ursula Von Der Leyen nominates her new cabinet, with ambitious tax agenda
  • Finnish Presidency will seek progress on several tax files and public CBCR
  • EU finance ministers discuss energy taxation at informal ECOFIN
  • Save the date – Accountancy Europe’s next Tax Day in February 2020!
 
 
 
 
 

Feature story

 
 
 
 

Von Der Leyen announces her new cabinet of Commissioners with ambitious tax agenda

The new Commission President Ursula Von Der Leyen (VDL) has announced the three main priorities for the next five years will be sustainability, digitalisation and the economy.

The former Italian Prime Minister, Paolo Gentiloni, was appointed as the Commissioner for taxation, thus succeeding the incumbent Pierre Moscovici. VDL announced the following priorities for Gentiloni’s mandate as the tax Commissioner:

  • Digital taxation: lead efforts for an international solution but if this is not found in 2020, take forward a European digital tax
  • Environmental taxation, including carbon border tax and revising the Energy Tax Directive
  • CCCTB and overall simplifications to the tax system
  • Anti-avoidance with emphasis on VAT and administrative cooperation
  • Third country tax havens and so-called list of non-cooperative jurisdictions
  • Abandoning unanimity on tax decision making and moving to qualified majority voting (QMV)

On top of Gentiloni, Frans Timmermans (in charge of the climate agenda) has been tasked to coordinate the work on environmental taxes. Margrethe Vestage (in charge of competition and digitalisation), for her part, will coordinate on digital taxation.

As a next step, the European Parliament’s Committees will hold hearings with the appointed Commissioners. These will take place around late-September to early-October. The European Parliament will then vote on the Commission as a whole in late-October. If all goes well, the new Commission begins its work on 1 November. Read more

 
 
 
 
 

EU Developments

 
 
 
 

European Commission


Commission study on VAT gap finds EU lost EUR 137 billion VAT revenue in 2017

The European Commission has published latest VAT gap figures. They show that in 2017, EU countries lost EUR 137 billion in VAT revenues.

The largest VAT gaps were in Romania (36%), Greece (34%) and Lithuania (25%). The smallest gaps of just 1% of VAT revenues were to be found in Sweden, Luxembourg and Cyprus.

In absolute terms, the highest VAT gap was in Italy, with around EUR 33,5 billion. Read more

Commission evaluates Energy Tax Directive

The European Commission has published its evaluation of the Energy Tax Directive (ETD). It concludes that ETD is outdated and in need of revision.

Commission laments, in particular, the current amount of leeway for member states in setting tax exemptions and criteria for them. Moreover, the Commission finds the lack of indexation of minimum tax rates problematic, and criticises the mandatory exemptions for aviation and maritime sectors.

According to leaked Commission documents, a possible ETD revision in early-2020 would seek to remove kerosene tax exemptions for maritime and aviation sectors. A more extensive ETD revision could be ready by late-2020. In both revision rounds, the Commission will consider using the Passerelle Clause which allows to avoid unanimity in the Council. Read more

 
 
 
 
 

European Parliament


JURI and ECON hearings with Finnish Presidency

The European Parliament’s ECON and JURI Committees have held hearings with the Finnish ministers of finance and justice to discuss with the priorities of the Finnish Council Presidency for the next four months.

Presidency confirms it will try to unlock public CBCR

At the JURI hearing, MEPs Tiemo Wolken (S&D/Germany) and Manon Aubry (GUE-NGL/France) both underlined the importance of public CBCR for the fight against tax avoidance.

In response, the Finnish minister for justice announced that the Presidency will try to progress on public country by country reporting (CBCR). She also argued that with public CBCR, companies would be more responsible on tax.

Presidency outlines its priorities for tax

At the ECON hearing, the Finnish minister of finance explained to the MEPs which tax files the Presidency would aim to advance.

According to the minister, the Presidency will:

  • Continue work on OECD negotiations for international tax reform
  • Seek progress on VAT definitive regime, and try to take out e-commerce elements from the VAT definitive regime proposal
  • Progress on other VAT files like data collection from payment services providers, VAT for SMEs and VAT for defence industry
  • Advance C(C)CTB
  • Facilitate discussions on the financial transaction tax (FTT)
  • Launch the debate on energy taxation.

Replying to the MEP Ludek Niedermayer’s (EPP/Czechia) question about enhanced cooperation for C(C)CTB, the minister hinted that the scope of the proposal could be broadened to cover all companies.

The minister also highlighted in response to MEP Eero Heinaluoma (S&D/Finland) that although digital tax progress should be made internationally, EU-level is still better than national.

 
 
 
 
 

Council


ECOFIN discusses energy taxation, Malta sceptical about ending exemptions

On 13-14 September, EU finance ministers gathered in Helsinki for an informal ECOFIN to discuss financial sector priorities.

Energy taxation was on the agenda too, as finance ministers reflected on the direction of the expected Energy Taxation Directive (ETD) revision.

One of the ideas that is currently being planned by the European Commission’s administration is to put an end to the current tax exemption on kerosene for aviation and maritime sectors.

At the ECOFIN meeting, Malta expressed some reservations about ending the exemption, fearing that it would have a negative impact on the country’s economy. Malta underlined that removing the exemption is a measure that would be better taken at an international level.

At the same time, pressure to increase the price of flying is amounting. The Netherlands, for example, has already stated that it will introduce a national flight tax should the EU fail to take coordinated action.

Moreover, Germany’s finance minister recently stated that a EU flight tax could help fight climate change.

 
 
 
 
 

CJEU – Rulings


C‑71/18: VAT exemption for supply of buildings intended for demolition

 
 
 
 
 

International Developments

 
 
 
 

Several jurisdictions mulling digital taxes

A number of countries across the world are now planning to introduce national digital tax systems. See here for a helpful overview from Bloomberg, as well as more specific details on plans in Mexico and Indonesia

IMF underlines need to simplify withholding taxes to foster capital markets

The IMF has published a new study on how best to foster capital markets integration in Europe. One of the measures the study calls for is to streamline cross-border withholding tax procedures in order to foster cross-border investment.

Accountancy Europe has also underlined the importance of simplifying and unifying withholding tax procedures in Europe in order to improve capital market integration.

IMF study argues a third of FDIs are motivated by tax optimisation

According to a new IMF study, approximately one third of global foreign direct investments (FDIs) are so-called “phantom investments”, or investments that pass through empty corporate shells often for tax optimisation reasons. The study argues that such phantom investments, often operated through “tax havens”, undermine tax collection across the world. Read more

OECD’s Pascal Saint-Amans: international tax reform will not radically alter taxing rights

Currently planned reforms for taxing digital businesses would not create significant changes to countries’ existing taxing rights, according to preliminary results of an impact assessment launched by the OECD.

Pascal Saint-Amans, OECD’s tax director, said that countries need to “relax” as the purpose of the reform is not to create winners and losers. He also stated that the next step in negotiations is to agree to turn the three pillar one proposals into one unified proposal that can become the basis for negotiations.

The OECD will publish its suggestion for such a unified proposal ahead of the 17 October G20 meeting. The full results of the impact assessment will be published around year-end. Read more

 
 
 
 
 

News in brief

 
 
OECD
 
Action 13 Country-by-Country reporting shows big progress
 
OECD
 
OECD publishes new report on tax policy reforms in its member countries
 
The Guardian
 
Opinion: Is it time to switch income tax with a sales tax?
 
IMF
 
IMF economists argue “tax havens” have negative consequences on economies
 
EESC
 
EESC publishes opinion on digital taxation
 
OECD
 
New working paper looks into the potential of tax microdata for tax policy
 
European Commission
 
Commission publishes statistics on VAT Mini One Stop Shop (MOSS)
 
OECD
 
OECD publishes report on tax morale
 
National
 
Google agrees on $1 billion tax settlement with France
 
 
 

Events

 
 
26/09/2019
 
The rule of law, legitimacy and ethics in international taxation - Transparency International, Loyens & Loeff
 
19/02/2019
 
Tax Day 2020 – Accountancy Europe
 

This curated content was brought to you by Johan Barros, Accountancy Europe policy manager since 2015. You can send him tips by email, follow him on Twitter and connect with him on LinkedIn.

 
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