Update

Tax Policy

 Cannot read this email? Open in your browser.February 2020 
 

Tax Policy Update

10 - 21 February

 
 
 
 

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Taxing smart, taxing green

 
 
 

Join us for a breakfast round-table with MEP Marek Belka discussing green taxation.

 
 
 
 

Highlights

 
 
 
 
  • Commission outlines its tax plans at Accountancy Europe’s tax conference
  • OECD publishes impact assessment of tax reform proposals
  • EU finance ministers add Cayman Islands on tax havens list and adopts two VAT proposals
 
 
 
 
 

Feature story

 
 
 
 

Accountancy Europe’s Tax Day: European Commission provides further details on its plans for months ahead

At Accountancy Europe’s Tax Day on 19 February, the European Commission DG TAXUD’s new Director, Benjamin Angel, provided an update on the Commission’s tax priorities.

According to Mr. Angel, the European Commission will enact a prospective OECD agreement on international tax reform into EU law. If no such agreement is reached this year, the Commission will proceed with EU only action.

He also noted that the CCCTB proposal of the Commission is currently on hold due to the OECD’s international tax reform work. The implication (not explicitly stated by Mr. Angel) is that the Commission might adjust its CCCTB proposal to adapt it to new OECD tax rules.

The Commission also plans to launch a proposal in June to amend the directive on administrative cooperation on tax (DAC) to enable the exchange of information on data from online platforms. The Commission launched a consultation on this a few days ago (see article below).

Mr. Angel confirmed, moreover, that the Commission is reflecting on the possibility of a EU framework on cooperative compliance. Accountancy Europe has worked extensively on this topic, and for example already in 2018 published a paper on the role of accountants and tax assurance in cooperative compliance.

And finally, Mr. Angel underlined that the Commission is strongly considering to use Article 116 of the EU Treaties for tax proposals in the future. That Article allows the Commission to use the ordinary legislative procedure (co-decision by the Council and the Parliament, Council decides by qualified majority) for tax proposals if they address potential distortions in the EU internal market

 
 
 
 
 

EU Developments

 
 
 
 

European Commission


Commission mulls changes to tax admin cooperation to address digital economy

The European Commission has launched a public consultation to review the directive on administrative cooperation for tax (DAC). The consultation was accompanied by a Roadmap that provides rationale and insights into the Commission’s intentions.

Essentially, the Commission aims to address some identified shortcomings in DAC and to provide tax administrations with information on taxpayers who generate income (revenues) through digital platforms.

The consultation runs until 6 April 2020.

Commission considers revising VAT invoicing rules, including e-reporting

The European Commission has published a report on VAT invoicing rules, accompanied by a staff working document.

The report provides an assessment on the functioning of VAT invoicing rules in the EU, and gives indications on possible future initiatives from the Commission in this area.

Interestingly, according to the report the Commission is aware of potential administrative burdens stemming from different e-reporting rules across the EU. It will, therefore, begin a “reflection on the e-reporting requirements and in particular  regarding the impact on the internal market caused by the different rules applicable in Member States”.

Commission flags several EU member states for tax infringements

In its February infringements package, the European Commission announces again several tax related infringement measures it has undertaken against several EU member states.

Notably, the Commission has referred Portugal to the Court of Justice of the EU (CJU) for failing to amend discriminatory legislation on car registration tax. The Commission also calls on Latvia, Germany and Malta to amend their national tax rules to bring them in line with EU rules. Read more

Commission publishes consolidated version of Directive on administrative cooperation

The European Commission has published a consolidated version of its directive on administrative cooperation for tax (DAC) – including the DAC 6 provisions for tax intermediaries. The consolidated legal text is accompanied by a consolidated Annex.

Commission’s expert group on capital markets calls for withholding tax reform

In 2019, the European Commission set up a stakeholder expert group to provide recommendations for the Commission’s Capital Markets Union (CMU) project. This so-called high-level forum (HLF) has now published its interim report.

Interestingly, the HLF picks up diverse and “cumbersome” withholding tax rules as an obstacle to capital market integration and cross-border investment in Europe. HLF therefore highlights the need to look into measures to address the issue.

This interim report does not contain any explicit recommendations for now, but is likely to do so in its final report expected for May. On the basis of the HLF’s recommendations, the Commission may consider legislative follow-up.

 
 
 
 
 

European Parliament


European Parliament discusses Luanda Leaks scandal

On 12 February, the European Parliament discussed the Luanda Leaks scandal with the Council and the European Commission.

During the hearing, some MEPs criticized the role of “consultants” and audit firms in arrangements such as revealed by the Luanda Leaks.

Eero Heinäluoma (S&D/Finland) lamented that “European consultants and experts” have enabled a loss of billions of dollars for Angola. Sven Giegold (Greens-EFA/Germany) argued that auditors should not be involved in arrangements such as the ones revealed in Luanda Leaks, and stated that the Audit Directive should prevent this.

Ramona Strugariu (Renew Europe/Romania) questioned how one of the “four biggest consortia” that work for the EU institutions provides services to ‘dictators in third countries to launder money and squirrel funds away into tax heavens’.

ECON Committee discusses international tax reforms

On February 18, the ECON Committee held an inter-parliamentary conference with representatives from national parliaments to discuss global taxation.

During the hearing, Commissioner Gentiloni listed the Commission’s tax priorities as being the fight against tax avoidance and “tax havens”, green taxation and digital taxation. Mr. Saint-Amans, for his part, warned about trade wars if no international agreement is reached in the OECD by July.

In the subsequent discussion, a member of the Greek parliament stated to be in favour of environmental taxation but warned against the impact of taxes on ship fuels on his country’s economy. MEP Paul Tang (S&D/Netherlands) called for a strong common EU position for OECD discussions.

MEP Paul Tang confirms his interest in chairing the upcoming tax Committee

At Accountancy Europe’s Tax Day on 19 February, MEP Paul Tang (S&D/Netherlands) provided a keynote speech on international tax reform and the role of the European Parliament in the EU’s tax agenda. On the occasion, he also confirmed that he is interested to Chair the European Parliament’s expected permanent tax Committee.

 
 
 
 
 

Council


Poland’s finance minister calls for a EU list of tax havens

Speaking at a Brussels tax conference organised by the think tank Bruegel, the Polish finance minister Tadeusz Kościński proposed for the EU to include low-tax EU member states on a tax haven blacklist. This is currently already being done for non-EU countries.

The Polish minister did not want to explicitly name any such EU countries, but simply stated that “we all know who they are”. However, at the same Piotr Arak, Director of the Polish Economic Institute, argued that The Netherlands, Ireland, Belgium, Luxembourg, Malta and Cyprus should be considered as tax havens.

ECOFIN: EU adds Cayman Islands to tax haven blacklist

On 18 February in ECOFIN, EU finance ministers moved four jurisdictions to the EU blacklist, namely Cayman Islands, Palau, Panama and Seychelles as they had failed to introduce changes to their tax systems requested by the EU. Turkey, which is currently on the grey list, was given more time to introduce required changes. This brings the total number of blacklisted jurisdictions to 12.

16 jurisdictions (Antigua and Barbuda, Armenia, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cabo Verde, Cook Islands, Curaçao, Marshall Islands, Montenegro, Nauru, Niue, Saint Kitts and Nevis, Vietnam) were removed from the so-called grey list. The Council also adopted Conclusions with additional details on the blacklist.

ECOFIN: EU finance ministers formally adopt two VAT files

At the 18 February ECOFIN, the finance ministers also adopted new rules for exchange of VAT payment data to fight VAT fraud (here and here), and simplified VAT rules for SMEs.

The VAT simplifications for SMEs will apply from 1 January 2025. The anti-VAT fraud measures in cross-border e-commerce transactions will apply from 1 January 2024.

 
 
 
 
 

International Developments

 
 
 
 

OECD publishes impact assessment of international tax reform plans

The OECD has announced data from an impact analysis of the proposed solution to tax challenges arising from the digitalisation of the economy, currently under negotiation at the OECD.

According to the analysis, the reforms would have a significant positive impact on global tax revenues, with the combined effect of the two-pillar solution at up to 4% of global corporate income tax revenues, or USD 100 billion annually. The revenue gains are broadly similar across high, middle and low-income economies, as a share of corporate tax revenues.

 
 
 
 
 

In brief

 
 
European Commission
 
Commission publishes updated tax data from across Europe
 
International
 
OECD releases Transfer Pricing Guidance on Financial Transactions
 
International
 
Opinion: role of tax in combatting climate change and achieving the SDGs
 
International
 
OECD secretariat publishes tax report to G20 finance ministers
 
National
 
Spain delays collection of digital taxes amid US pressure
 
International
 
OECD seeks input on Reporting for Platform Operators in the Sharing and Gig Economy
 
International
 
Facebook prepared to pay more taxes, according to Mark Zuckerberg
 
European Commission
 
New report analyses EU's instruments to tackle aggressive tax planning
 
 
 

Events

 
 
05/03/2020
 
Making tax work for all – EPC
 
10/03/2020
 
The Future of Boards: Evolution, Digitalisation and Tax Governance – PwC, Ecoda et al.
 
02/04/2020
 
Trends and Developments on Corporate Tax Transparency and Responsibility – CRS 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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