Update

Tax Policy

 Cannot read this email? Open in your browser.6 December 2019 
 

Tax Policy Update

25 November - 6 December

 
 
 
 

OECD consultation - Pillar 2

 
 
 

Accountancy Europe replies to OECD Pillar 2 consultation. See here!

 
 
 
 
 

Tax Day 2020

 
 
 

Our Tax Day is back. See the draft programme and speakers who join us. Register now!

 
 
 
 

Highlights

 
 
 
 
  • Accountancy Europe responds to OECD Pillar 2 consultation on minimum taxation
  • EU finance ministers reach Conclusions on energy taxation, VAT and withholding taxes
  • New Commission formally begins its work following approval of the European Parliament
 
 
 
 
 

Feature story

 
 
 
 

Public CBCR blocked by a minority of EU ministers

On 28 November, EU ministers at the competitiveness Council failed to find agreement on public country by country reporting (CBCR).

A blocking minority of countries rejected the Finnish Presidency compromise, and continue to insist that public CBCR is a tax file and not one of corporate reporting. If CBCR was legislated under tax, the European Parliament would only have a consultative role and EU member states would need to decide unanimously.

The country positions at the 28 November meeting were as follows (UK did not participate in the vote):

  • In favour: Spain, Denmark, Italy, Netherlands, Romania, Belgium, France, Portugal, Greece, Lithuania, Slovakia, Poland, Bulgaria, Denmark
  • Abstained (equivalent to rejecting under Council’s voting rules): Germany
  • Against: Luxembourg, Latvia, Slovenia, Cyprus, Ireland, Estonia, Austria, Sweden, Czech Republic, Hungary, Malta, Croatia

Following the vote, the opposing countries published a joint statement explaining their position. Sweden also published its separate statement, in which it argues in favour of keeping tax matters strictly under the tax decision-making procedures in the EU.

The file was further discussed at the finance ministers’ ECOFIN meeting on 5 December that did not bring about any clear conclusions either (see article below). At this stage, it is unclear what the file’s future will be.

 
 
 
 
 

EU Developments

 
 
 
 

European Commission


Commission issues several tax related decisions against EU Member States

The European Commission has published its latest monthly infringements package which lists all most recent legislative breach cases that it has undertaken against EU member states.

As always, several cases link to taxation. For example, the Commission has ordered Austria and Ireland to properly implement the interest limitation rule from the Anti-Tax Avoidance Directive (ATAD). The Commission believes that the national measures taken by these two countries are not “equally effective” to those from ATAD. Read more

Commission will not challenge Starbucks case in Court

The European Commission does not intend to appeal the Court of Justice of EU’s (CJEU) ruling on the Dutch Starbucks tax state aid case, according to Commissioner Vestager.

CJEU made its ruling on 24 September 2019, questioning the Commission’s claims that the Netherlands had granted illegal state aid to Starbucks in the form of unfair tax advantages.

Despite being overturned in the Starbucks case, the Commission has expressed satisfaction about the ruling as the CJEU did not question the Commission’s right to investigate whether taxation arrangements between different entities of the same group lead to an unfair tax advantage.

 
 
 
 
 

European Parliament


European Parliament approves new Commission

The European Parliament has approved the European Commission led by Ursula Von Der Leyen with 461 votes in favour, 157 against and 89 abstentions. This means that the Commission’s work can now finally start.

To mark the occasion, the European Parliament services published the tax commitments made by the new EU Commissioners at their scrutiny hearings with the European Parliament that took place earlier this autumn.

See here for the commitments by Commissioner Vestager, here for Gentiloni and here for Dombrovskis.

European Parliament supports VAT exemption for EU defence cooperation

On 26 November, the European Parliament adopted its position on the proposal for a directive on VAT exemption for supplies to armed forces participating in a European defence effort. The vote passed by 528 in favour, 78 against, and 61 abstentions.

The Parliament’s draft position was prepared by the MEP Paul Tang (S&D/Netherlands).

In their position the MEPs support the proposal but seek to clarify that the exemptions should not cover civilian missions under EU defence cooperation.

The EU Council already adopted its position at the 8 November ECOFIN. The European Parliament only provides its non-binding opinion. Read more

ECON votes on resolution for international tax reform

On 3 December, the ECON Committee adopted its draft position on the Fair Taxation in a digitalised and globalised economy – BEPS 2.0. The draft motion was adopted with 40 votes in favour, 11 against and 6 abstentions. It was drafted by the MEP Irene Tinagli (S&D/Italy).

In the position, ECON MEPs call on the Commission and EU member states to agree on ambitious and strong common positions for international negotiations at the OECD level. On Pillar 1, the MEPs argue that all large companies should be included within the scope, not only more digitalised ones or more consumer facing businesses. Finally, the MEPs call on the Commission to propose unilateral EU measures if there is no OECD agreement by the end of 2020.

The ECON draft position, which still has to be ratified in Plenary, is legally non-binding. Read more

ECON adopts positions on two VAT files

ECON Committee has adopted positions on two VAT files: requirements for payment service providers and measures to strengthen administrative cooperation to combat VAT fraud. Both files were led by the MEP Lidia Pereira (EPP/Portugal), and adopted respectively by 51 votes in favour to 4 against, and 50 to 2 against.

Both files will be discussed on 16 December in Plenary. The European Parliament only provides its non-binding opinion as the files concern VAT.

 
 
 
 
 

MEP QUESTIONS & ANSWERS


Commission re-iterates measures taken to address Cum-Ex like tax scandals

  • Question by MEP Aurore Lalucq (S&D/France)
  • Reply by (former) Commissioner Moscovici
 
 
 
 
 

Council


Code of Conduct Group publishes assessments of additional tax regimes and proposes changes to tax haven list

The Council’s Code of Conduct Group has published further assessments of several jurisdictions’ tax regimes.

These include Vietnam (here and here), Mongolia, Cabo Verde, Belize (here, here and here), Poland (here and here) and Malta.

The Code of Conduct Group also published its proposals to amend the EU’s list of non-cooperative jurisdictions. More specifically, it proposes to remove Jordan from sections 1.2 and 3.1 of the so-called grey list. The Group feels that since Jordan has joined the Global Forum on Transparency and Exchange of Information for Tax Purposes and the Inclusive Framework on BEPS, it has fulfilled the tax good governance requirements set out by the EU.

The EU blacklist now contains eight jurisdictions: American Samoa, Fiji, Guam, Oman, Samoa, Trinidad and Tobago, the US Virgin Islands and Vanuatu.

EU finance ministers take position on sustainable taxation

At the 5 December ECOFIN, EU finance ministers adopted Conclusions on environmental taxation. These conclusions send a strong political signal to the European Commission to follow-up with relevant legislative proposals.

In the Conclusions, the finance ministers call for a revision of the EU’s Energy Tax Directive (ETD) but in a way that it improves the functioning of the EU internal market, supports transition to a climate-neutral EU, and contributes to the long-term competitiveness of the EU and its member states fiscal needs.

They also call on the Commission to give particular consideration to minimum rates, and specific tax reductions and exemptions.

As a reminder, currently a revision of the ETD is expected in early-2020 to address tax exemptions to kerosene specifically, and later 2020 with a broader set of changes. Read more

EU finance ministers shed light on way forward on VAT and e-commerce

The finance ministers also adopted Conclusions on VAT and e-commerce. The Conclusions make reference to a wide range of detailed VAT reforms that the member states want to see materialised, including measures to improve administrative cooperation between member states’ tax authorities in the fight against VAT fraud and to make use of technology for this purpose. Read more

EU finance ministers call for addressing tax obstacles to capital market integration

Furthermore, the finance ministers adopted Conclusions on improving capital market integration in Europe and, specifically, the next steps for the Commission’s Capital Markets Union (CMU) project.

Of interest from a tax perspective, the member states call on the Commission and each other to study the prospect of further cooperation and “targeted harmonisation” on withholding taxes, in order to foster cross-border investment. Read more

EU finance ministers take step towards coordinated defensive measures against non-cooperative jurisdictions

The Council also adopted Conclusions and endorsed a six-monthly report on the progress achieved by the Code of Conduct Group on business taxation.

The report includes in particular a detailed state of play on the EU list of non-cooperative jurisdictions for tax purposes.

It also includes guidance on further coordination of national defensive measures in the tax area towards non-cooperative jurisdictions. The guidance invites all member states to apply a legislative defensive measure in taxation vis-à-vis the listed jurisdictions as of 1 January 2021, aiming to encourage those jurisdictions’ compliance with the Code of Conduct screening criteria on fair taxation and transparency.

See also here for a handy overview of overall work progress by the Code of Conduct Group during the Finnish Presidency.

EU finance ministers fail to progress on public CBCR

And finally, at the request of Sweden the finance ministers also discussed public country by country reporting (CBCR). The discussion was a repetition of the earlier discussions in the competitiveness Council (see feature story), with same country positions expressed.

As a next step, the Council will continue in the future discussions on the public CBCR legal base but no further breakthroughs should be expected for the time being. However, reportedly the Council’s legal service expressed its readiness to help adapt the proposal’s recitals in an effort to change the text’s emphasis from tax to company law.

 
 
 
 
 

International Developments

 
 
 
 

New voluntary tax disclosure standard launched

The Global Reporting Initiative (GRI), a global sustainability reporting standard setter, has published its new standard for voluntary company tax disclosures.

The standard provides for disclosures of tax strategies, approach to stakeholders, public country by country reporting (CBCR) and more.

A number of investors have already expressed their support for the standard. The standard will enter into effect from 1 January 2021.

Accountancy Europe, represented by the Chair of its tax working group Eelco Van Der Enden, contributed to devising the standard.

 
 
 
 
 

National Developments

 
 
 
 

France supports Pillar 1 solution

The French Finance Minister Bruno Le Maire has declared to support the OECD’s proposals on international tax reform on Tuesday 26 November, at a speech at the OECD Global Forum on Tax Transparency.

He believes the OECD secretariat’s proposal to be a good basis for reaching an international consensus. He also argued that the US no longer has any reason to oppose.

On Pillar 2 minimum taxation, he said that countries still need to agree on the method of taxation and tax rate. He also proposed an overall minimum reference rate of 12.5% for corporate income tax.

Trump threatens France with $2,4 billion wine tariffs over digital tax plans

On 2 December, the Trump administration announced that it would impose tariffs of up to $2.4 billion worth on French goods in a dispute over the country’s new digital services tax. The US also said it could impose fees or restrictions on some French services.

The Office of the US Trade Representative said an investigation found that France’s tax unfairly discriminates against big US tech companies like Facebook, Google, Apple and Amazon, which dominate the digital services market.

The European Commission stands firmly behind France, and Commissioner Gentiloni re-iterated that the EU itself would restart work on its own digital tax solutions should the OECD fail to deliver.

 
 
 
 
 

Other news

 
 
Bloomberg
 
Netherlands is scaling up its efforts to fight against corporate tax evasion
 
CIRCABC
 
Commission’s VAT expert group publishes clarifications to 2020 quick fixes
 
Council
 
EU finance ministers publish report on tax work intended for heads of governments
 
OECD
 
OECD conference welcomes progress by international community in fighting offshore tax evasion
 
Council
 
Latest Presidency compromise on CCTB published, shows some progress
 
OECD
 
OECD releases peer review reports on dispute resolution
 
Fair Tax
 
New report argues large digitalised businesses paying negligible taxes
 
Irish Fiscal Advisory Country
 
Irish Fiscal Advisory Council concerned about reliance on taxes paid by multinationals
 
OECD
 
OECD publishes public comments received on minimum tax Pillar 2 consultation
 
OECD
 
New OECD statistics show countries’ tax revenues stalling
 
Council
 
Council publishes latest overview of preferential tax regimes examined by the Code of Conduct Group
 
Council
 
Council publishes agreed guidance by the Code of Conduct Group since 1998
 
 
 

Events

 
 
10/12/19
 
The Future of EU Tax Harmonization - HEC Liege
 
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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