Tax Policy

• European Commission publishes further details on upcoming tax measures
• European Commission soon to launch public consultations on green taxation
• G20 finance ministers call for progress on international tax reform

European Commission publishes further details on upcoming anti-tax fraud measures

On 4 March, the European Commission published a Roadmap that indicated its plans for tax policy reforms in the upcoming months and years.

In June, the Commission will publish an Action Plan to fight tax evasion and simplify taxation. This Action Plan will be accompanied by two legislative proposals:

• To amend the Directive on administrative cooperation in tax (DAC) to enable exchange of data from digital platforms to tax authorities (public consultation currently open on this)
• To authorise the Commission to open negotiations on an agreement between EU and “a major economic player” on administrative cooperation, combating fraud (in particular in ecommerce) and recovery of VAT claims

The Action Plan itself will include indications of additional future legislation and measures. The Roadmap confirms that the Commission will look into the following:

• “Encouraging” cooperative compliance
• Procedures for withholding taxes on cross-border investment
• New digital solutions to improve tax admins’ data analysis
• Digital solutions to levy tax at source in real time
• Switch from exchange of information to sharing of tax data real-time
• Mechanisms to solve cross-border tax disputes in both direct & indirect taxes
• Simplification of VAT rules (without specifying what measures)
• Follow-up to EU tax haven list (including defensive measures, technical help for third countries)

Public consultations will be launched ahead of each legislative initiative in due course. Read more

European Commission

Vestager defends the national digital tax measures of EU Member States

European Commission’s Executive Vice-President Vestager has defended European countries’ plans to impose national digital taxes on large tech firms. In a Bloomberg interview, Vestager said that “I strongly applaud that (EU) member states are picking it up where we failed as a community together to do something”. Read more

Commission to launch public consultations on Energy Tax Directive and carbon border tax soon

The European Commission has published initial impact assessments of its Energy Tax Directive (ETD) revision and the so-called carbon border adjustment mechanism (CBAM).

Most interestingly, public consultations on both will be launched during Q1-Q2 2020. The actual proposals are still scheduled for Q2 2021.

On ETD specifically, the Commission aims to address minimum tax rates for energy products and electricity, how to use taxation to incentivise renewable energy and energy efficiency, and review the treatment of electricity and natural gas products and streamline current reductions, exemptions and subsidies for fossil fuels (including kerosene exemptions for aviation and maritime sectors).

Commission confirms there is scope to align Energy Tax Directive with climate – including kerosene

• Question by MEP Carmen Avram (S&D/Romania)
• Reply by Executive Vice President Timmermans

Commission firmly believes in need for carbon border tax to protect EU industry

• Question by MEP Olivier Chastel (RE/Belgium)
• Reply by Commissioner Gentiloni

Commission’s impact assessment on aviation fuel tax will analyse which flights should be covered and impact on islands

• Question by MEP Karima Delli (Greens-EFA/France)
• Reply by Commissioner Gentiloni

Commission confirms EU will “react as one” on possible trade sanctions against EU member states’ digital taxes

• Question by MEP Mathilde Androuët (ID/France)
• Reply by Commissioner Gentiloni

C‑405/18: Transfer of tax residency to another EU Member State

C-75/18 & C-323/18: The special taxes levied in Hungary on the turnover of telecommunications operators undertakings in the retail trade sector are compatible with EU law

C-482/18:  The system of penalties relating to the Hungarian tax on advertising is not compatible with EU law

G20 finance ministers call for progress on international tax reform

Following their 23 February meeting in Saudi Arabia, the G20 finance ministers adopted a Communique in which they endorse the Outline of the Architecture of a Unified Approach on Pillar One as the basis for negotiations and welcome the progress on Pillar Two.

The ministers encourage further progress on both Pillars reaffirm their commitment to reach a consensus-based solution with a final report to be delivered by the end of 2020. Read more

Czech Republic considers reducing planned “digital tax” following US pressure

Czech Republic may consider reducing its planned digital tax on technology companies. As it currently stands, the Czech tax is expected to be the highest in Europe.

However, the US has threatened to retaliate, saying that it unfairly targets American tech companies. Its ambassador to Prague sent letters to members of the Czech parliament’s budgetary committee calling the tax “discriminatory” and the proposed level of 7% on local revenue as “extraordinarily high.” Now the government will discuss reducing the amount to 5%. Read more

 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.