Tax Policy

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

Tax Policy Update

14 - 28 October


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  • European Parliament calls for progress on public CBCR
  • G20 finance ministers re-iterate support for way forward on international tax reform
  • Germany and Italy plan tax reforms on sustainability and digitalisation

Feature story


European Parliament calls for progress on public CBCR

On 24 October, the European Parliament adopted a resolution on public country by country reporting (CBCR), supported by all major political Groups. It was adopted by a massive majority of 572 MEPs in favour, 42 against and 21 abstentions.

The resolution calls on the Council and the Finnish Presidency to “prioritise” and unlock the file in the Council, and enter trilogue negotiations with the Parliament.

The Parliament’s resolution is legally non-binding, but is intended to pile up political pressure on the blocking minority of EU member states that keep the file locked.

On 25 October, member states’ company law attaches will meet to discuss the file. The Finnish Presidency intends to assess to what degree country positions have shifted.

At a hearing with MEPs on Tuesday 22 October, the Finnish Presidency clearly attempted to stifle expectations, stating that there are still obstacles for progress in the Council. This statement was not well received by key MEPs such as Sirpa Pietikainen (EPP/Finland), Tiemo Wolken (S&D/Germany), Luis Garicano (RE/Spain) or Sven Giegold (Greens-EFA/Germany). The MEPs insisted that the Council must finalise the file, and blamed Germany for blocking the file.

However and as a reminder, Germany’s Olaf Scholz recently announced that he is now in favour of public CBCR. It remains to be seen whether this translates into the German government as a whole shifting its stance. Read more


EU Developments


European Commission

EU risks trade fight over carbon border tax plans

The upcoming new European Commission’s plans for a EU carbon border tax has already attracted a lot of criticism. The prospective plans of the Commission would be to compel third countries to meet its climate standards, or else face extra taxes to their products at the EU’s borders.

EU officials are concerned that the measure could be seen as protectionist, and are carefully trying to design provisions that are compliant with WTO rules. It remains to be seen whether this is possible, and what the international reactions to such a measure could be. Read more


European Parliament

European Parliament publishes draft positions on two VAT proposals

MEP Lidia Pereira (EPP/Portugal) has published her draft opinion on two VAT proposals by the European Commission: the first one on strengthening VAT administrative cooperation to fight against fraud, and the second on VAT requirements for payment service providers.

Ms. Pereira considers including virtual currency exchange platforms in the scope of the two proposals, and calls on EU member states to invest in the digitalisation of their tax collection procedures using blockchain.

ECON Committee will vote on the draft opinions in the next few weeks, followed by a confirmatory vote in Plenary. On all VAT files the Parliament only submits a non-binding opinion but has no decision-making powers otherwise.



Romania holding VAT for defence cooperation proposal hostage

Reportedly, Romania intends to hold “hostage” the Commission’s proposal to exempt supplies to armed forces participating in a European defence effort from VAT. Its objective is to get other EU member states to approve its request for an excise duty exemption to home-made alcohol.

Apparently, most technical questions have been solved and the Directive was supposed to be adopted at the November meeting of EU finance ministers. Given Romania’s objection, however, this is now uncertain.

Czech Republic employed a similar approach not long ago, when it blocked the reduced VAT for e-publications proposal until other EU member states agreed to its demands on an unrelated VAT reverse charge mechanism proposal. Such methods are possible because in EU decision-making, all tax (and VAT) proposals must be adopted by a unanimity, granting a veto to every single EU member state.


CJEU – Rulings

Case C-270/18 : Tax exemption for small electricity producers

C‑692/17 : VAT exemption for transactions concerning the granting, negotiation or management of credit

C‑653/18 : Tight to VAT exemption where the person acquiring the goods exported is not identified


International Developments


OECD’s Pascal Saint-Amans says no unanimity needed for international agreement on tax reforms

The OECD’s tax director, Pascal Saint-Amans, has argued that there is no need for unanimous agreement between countries for international tax reform to take place.

He was speaking with reference to the OECD’s current work around digital taxation, re-allocating taxing rights to market jurisdictions (Pillar 1) and minimum taxation (Pillar 2).

On Pillar 1, Mr. Saint-Amans underlined that although a broad consensus of countries is needed, the process would not stall if a small number of smaller countries reject it. He is concerned, however, about small developed export jurisdictions teaming up with a larger economy to block the proposals.

On Pillar 2, Mr. Saint-Amans argued that things could move forward in theory just with two countries on board. Read more

G20 finance ministers support OECD push for international tax reforms

On 18 October, G20 finance ministers re-iterated their support for the OECD’s work on international tax reforms at their meeting in Washington.

The ministers called on the Inclusive Framework to agree on the “outlines of the architecture” in January 2020, with the view of a final agreement hopefully in June 2020.

The ministers also called on the OECD to provide them a further update on progress in February 2020. Read more


National Developments


Germany plans to major tax increase on short-haul flights

Germany plans to almost double taxes on short-haul flights under the country’s emissions reduction programme. This constitutes an even bigger increase than initially expected.

With the new measures, the tax on domestic and intra-European flights would rise to EUR 13,03 from the current EUR 7,5. For medium-haul flights it would rise to EUR 33,01 from EUR 23,43 and for long-haul flights to EUR 59,43 from EUR 42,18.

The tax hikes form part of a climate package aiming to make Germany carbon neutral by 2050 and are accompanied by measures to promote public transport use. Read more

Italy will introduce its own digital tax from 2020

Italy has approved a new tax on digital companies as part of its 2020 draft budget. This move could provoke retaliation from the US.

The Italian digital tax is due to be introduced from 2020, and will impose a 3% levy on internet transactions. It is expected to yield about EUR 600 million per year. Read more


Other news

Council publishes assessment of several jurisdictions’ legislation for tax haven list ( Marshall islands)
Council publishes assessment of several jurisdictions’ legislation for tax haven list (UAE)
Council publishes assessment of several jurisdictions’ legislation for tax haven list ( Cayman Islands)
European Commission
Commission publishes evaluation of tax evasion by individuals
OECD supports APEC Economies in fight against tax crime with new report
Council publishes guidance on foreign source income exemption regimes
Financial Times
FT opinion: Uber is a test case for taxing digital platforms
OECD publishes tax report to update G20 ministers on work progress
Updated guidance by the Council’s Code of Conduct Group published
Code of Conduct Group publishes assessment of Swiss practice on finance branches - part 1
Code of Conduct Group publishes assessment of Swiss practice on finance branches - part 2
G24 developing countries express support for multilateral solution to taxing digital economy
European Parliament
European Parliament research services publish briefing of EU tax haven list work
European Parliament
European Parliament research services publish briefing on BEPS
UN Tax Committee meets to discuss role of tax in attaining SDGs
Eurojust supports action against tax fraud in Hungary
OECD publishes new report on taxing energy use
Eurojust takes successful action VAT fraud with mobile phones
OECD releases new BEPS Action 14 peer review reports on tax dispute resolution


Future dynamics of EU tax policy - ETAF
VAT in the Digital Age - European Commission
Tax Day 2020 save the date - 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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