Update

Tax Policy

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

Tax Policy Update

16 - 30 September

 
 
 
 

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Highlights

 
 
 
 
  • European Parliament will set up a permanent tax Committee
  • European Commission lands major victory in tax state aid cases
  • Germany’s finance minister shifts stance to support tax transparency
 
 
 
 
 

Feature story

 
 
 
 

European Parliament to set up a permanent tax Committee

On 16 September, the coordinators of European Parliament’s ECON Committee agreed to set up a permanent tax sub-Committee.

This Committee would replace the several ad-hoc tax Committees we have seen in past years. It will keep tax prominently on the European Parliament’s agenda for the whole of the new term.

The Committee’s exact mandate is yet to be decided, but the Greens at least would like it to also include AML. Moreover, the Coordinators will need to decide whether the Committee takes up actual legislative work or just own-initiative reports.

The setting up of the Committee will have to be approved by the Parliament’s Conference of Presidents, but they are unlikely to turn down the Coordinators’ decision.

Even though the European Parliament has little formal powers on tax, it demonstrated during the last term its ability to set the agenda and harness public opinion and pressure.

A few measures, including the tax intermediaries Directive, public country by country reporting (CBCR) and the whistleblower protection Directive can be traced back to the Parliament’s advocacy.

 
 
 
 
 

EU Developments

 
 
 
 

European Commission


Commission publishes evaluation of Directive on Administrative Cooperation

The European Commission has published its evaluation and first findings on the functioning of the Directive on Administrative Cooperation (DAC) in the area of tax. The evaluation looks at factors such as costs, relevance and effectiveness of DAC’s provisions.

The Commission’s evaluation only covers DAC 1-3, so for example the relatively recent DAC 6 (transparency rules for tax intermediaries) is not within its scope.

Accountancy Europe also participated in an earlier consultation on DAC evaluation.

Commission opens in-depth investigations into individual “excess profit” tax rulings granted by Belgium to 39 multinational companies

The European Commission has opened separate in-depth investigations to assess whether “excess profit” tax rulings granted by Belgium to 39 multinational companies gave those companies an unfair advantage over their competitors, in breach of EU State aid rules.

This new set of investigations is a second attempt by the Commission to address the issue.

In February 2019, the General Court of the EU annulled the Commission’s earlier decision on the Belgian excess profit scheme. The Court found that the Commission had failed to establish the existence of an aid scheme. Read more

 
 
 
 
 

European Parliament


European Parliament publishes draft position on VAT distance sales of goods

The MEP Ondrej Kovarik (RE/Czech Republic) has published his draft report on the Commission’s proposal on VAT for distance sales of goods. This paves the way for the proposal to finally become EU law.

ECON Committee will vote on the draft report in the upcoming weeks, with a final vote in Plenary to take place another few weeks after that.

The European Parliament only provides its non-binding opinion on the Commission proposal. EU member states make the actual decision by unanimity, which they already did on 12 March 2019. Once the Parliament has adopted its final position, the Council decision can become EU law.

 
 
 
 
 

Council


Olaf Scholz backs public CBCR

The German finance minister Olaf Scholz has announced that he is in favour of public country by country reporting (CBCR).

This is a significant shift in position for the German finance ministry, which has until now opposed the measure. It is also Germany that is leading a minority of EU member states that continue to block the proposal in the Council. However, it is not certain that the leading partner in the German government coalition, CDU, will approve.

In parallel, the Finnish Presidency already declared a few weeks ago that it will try to find solutions to get the file moving in the Council.

We will see later in autumn whether this combined shift in German finance ministry’s position and the Finnish Presidency’s efforts will be sufficient to bring about progress.

FTT negotiations stalling, no future timeline set

On 20 September, member states’ tax attaches held a technical working party meeting to discuss the financial transaction tax (FTT). The 10 enhanced cooperating member states updated the rest of their colleagues on latest progress.

It became apparent at the meeting that things have not progressed significantly in the past weeks. Even though progress has been visible at a technical level, political obstacles remain, in no small part the lack of governments in both Spain and Belgium.

As a result, the 10 enhanced cooperators have not submitted any draft legal texts to the Finnish Presidency, or indicated any timetable. The Presidency intends to hold no further FTT technical meetings unless explicitly asked to do so by the 10 enhanced co-operators.

 
 
 
 
 

CJEU – Rulings


General Court confirms Commission decision on Fiat but rules in favour of Starbucks in landmark tax rulings

The EU’s General Court has ruled against the European Commission in a case against Starbucks which was accused by the Commission of enjoying illegal state aid in the form of a tax ruling granted by the Netherlands.

However, in another case the Court found that the car manufacturer Fiat Chrysler did enjoy preferential tax treatment from Luxembourg in a way that breached state aid rules.

Despite being overturned in the Starbucks case, the Commission expressed overall happiness about the rulings as in both cases the Court confirmed that the Commission has the power to investigate whether taxation arrangements between different entities of the same group lead to an unfair tax advantage.

 
 
 
 
 

International Developments

 
 
 
 

OECD publishes report on fuel taxation

The OECD has published a new report which argues that taxes on polluting fuels are too low to encourage a shift to low-carbon alternatives.

The report maintains that taxing polluting sources of energy is an effective way to curb emissions, and the income generated can be used to ease the low-carbon transition for vulnerable households. Yet 70% of energy-related CO2 emissions from advanced and emerging economies are entirely untaxed, offering little incentive to move to cleaner energy, according to a new OECD report. Read more

OECD report highlights benefits of digital technologies for tax compliance

According to another new OECD report, the use of digital technologies can increase tax compliance. The report shows how tax administrations are increasingly moving to e-administration and using a range of technology tools, data sources and analytics to increase tax compliance. Read more

 
 
 
 
 

Other news

 
 
International
 
OECD releases latest dispute resolution statistics
 
CJEU
 
Apple argues Commission ruling in tax state aid case “defies reality and common sense”
 
National
 
The Netherlands plans major reforms of its corporate tax system
 
International
 
International Chamber of Commerce calls for simpler indirect tax regimes for SMEs
 
National
 
German bank fined for cheating Danish tax system
 
National
 
Germany announces major climate strategy, including carbon taxes
 
National
 
France to join multilateral tax risk assessment pilot project
 
 
 

Events

 
 
19/02/2020
 
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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