Update

Tax Policy

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

Tax Policy Update

14 - 25 September

 
 
 
 

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Highlights

 
 
 
 

  • Finance ministers discuss tax at informal ECOFIN
  • European Commission tax webinar sheds light on tax policy developments
  • European Parliament tax Committee begins its work

 
 
 
 
 

EU Developments

 
 
 
 

European Commission


European Commission tax webinar sheds light on tax policy developments

On 21 September, European Commission’s DG TAXUD organised a webinar on fair and simple taxation.

During the webinar, Commissioner Gentiloni stated that proposals for new EU own resources – including new taxes – can be expected for the first semester of 2021.

Olaf Scholz hinted that public CBCR might be coming back to the ministerial agenda before the end of the year. He underlined that although the German government does not have a common position on it, as the Council Presidency holder Germany would support any debates and decision-making processes.

And finally, Benjamin Angel stated that although CCCTB continues to stall in the Council, the Commission may slice out some parts of it into stand-alone proposals. This could, for example, include the debt-equity bias provisions (see article below on CMU). Moreover, Mr. Angel emphasised the importance of tax transparency as a driver for good tax behaviour. Tax transparency can be expected to be included in the Commission’s upcoming Business taxation Communication on 28 October. Read more

Brussels ready to clamp down on sweetheart corporate tax deals

In a FT interview, Commissioner Gentiloni has hinted at the possibility of linking EU member states’ access to the EUR 750 billion COVID aid to addressing national measures that facilitate “aggressive tax planning”. Moreover, the Commission’s first deployment of the so-called Article 116 to address Single Market distortions caused by national tax regimes could come in 2021. Read more

Commission published new capital markets union (CMU) Action Plan with tax measures ahead

On 24 September, the European Commission published its new capital markets union (CMU) Action Plan. It lists measures that the Commission will take in the upcoming years to foster capital market integration in Europe.

On taxation, the Action Plan states that there is a need to address the debt-equity bias. The Commission proposed this already back in 2016 in its CCCTB proposals, but the measure has been held ‘hostage’ to the lack of progress on CCCTB broadly. It might thus be ‘sliced out’ of CCCTB and proposed as a stand-alone measure. Moreover, by Q4 2022 the Commission may issue a proposal for an EU withholding tax relief at source framework. Read more (plus annex)

Brussels set to fight court decision to quash Apple tax ruling

The European Commission will appeal against a court decision that quashed an order for Apple to pay back EUR 14.3 billion in tax advantages to Ireland in a landmark ruling that dealt a big blow to Margrethe Vestager, the EU’s executive vice-president in charge of competition policy.

The Apple tax case was dismissed in July by the General Court on the grounds that not enough evidence had been provided by the commission of wrongdoing by Apple. The appeal is likely to move to the European Court of Justice. Read more

 

 
 
 
 
 

European Parliament


FISC Committee appoints its Chair and Vice-Chairs

On 23 September, European Parliament’s new permanent tax Committee (FISC) held its first formal session to choose its Chair and Vice-Chairs.

As was expected and as reported notably in past Tax Policy Updates, MEP Paul Tang (S&D/Netherlands) was elected as the Committee’s Chair. The Vice-Chairs are MEPs Markus Ferber (EPP/Germany), Martin Hlaváček (RE/Czech Republic), Kira Marie Peter-Hansen (Greens-EFA/Denmark) and Othmar Karas (EPP/Austria). Read more

FISC Committee holds first hearing with Commissioner Gentiloni

On the following day on 24 September, FISC Committee held its first hearing, with Commissioner Gentiloni.

Commissioner Gentiloni said that the Commission is considering tying access to the EU recovery funds to certain member states addressing “aggressive tax planning” concerns raised against them.

In response to a question by MEP Sven Giegold (Greens-EFA/Germany), the Commissioner referred to Article 116 and confirmed that DG TAXUD and DG COMP are working on this, although they are not on the finish line yet. The Commission needs to build a legally very solid case demonstrating Single Market distortions resulting from national tax policies, in order to avoid missteps the first time they will use the Article – probably in 2021. He also underlined that Article 116 is not a way to address systematic aggressive tax planning, but it is a tool to address single, evident and legally proven competition distortions.

 
 
 
 
 

Council


Finance ministers discuss tax at informal ECOFIN

At an informal ECOFIN meeting on 11-12 September, EU finance ministers discussed EU tax policy.

The discussion reportedly revealed that EU countries are somewhat divided on the question of using certain taxes as EU own resources. According to Agence Europe, at least Luxembourg, the Netherlands, Sweden, Estonia, Bulgaria and the Czech Republic do not believe that there is a need to change the current own resources system. But they would be open to analysing proposals for new own resources.

France re-iterated the importance of digital taxation and frustration with the US block of OECD negotiations, but reportedly did not get echo from the other countries. Bruno Lemaire asked the Commission to draw up a roadmap on how to implement the elements discussed at the OECD at EU level.

For the other tax topics on the agenda (VAT, DAC 7, Code of Conduct reform), the ministers did not dwell into details. Read more

 
 
 
 
 

International Developments

 
 
 
 

ESMA makes proposals to help prevent and detect CumEx and withholding tax reclaim schemes

On 24 September, ESMA published the final report on its inquiry into Cum/Ex, Cum/Cum and withholding tax (WHT) reclaim schemes. ESMA’s key proposal is that national competent authorities (NCAs) for securities markets should be empowered to share information with the tax authorities, to assist in detecting WHT reclaim schemes.

ESMA’s inquiry notably highlighted that WHT schemes are primarily a tax related issue and so a response should be mainly sought within the boundaries of the tax legislative and supervisory framework. Read more

 
 
 
 
 

National Developments

 
 
 
 

Sweden proposes to deny tax deductions for interest payments to companies located in EU blacklist countries

The Swedish government has proposed to deny tax deductions for interest payments made to companies located in countries listed on the European Union’s list of non-cooperative jurisdictions.

The purpose of the proposed new regulations is for Sweden to fulfil its obligation as a Member State of the EU and to encourage other countries to act according to relevant international standards. Read more

Netherlands Cancels Corporate Tax Rate Cut

The Dutch Government has decided to cancel a planned decrease in the corporate tax rate in its 2021 Tax Plan.

The Tax Plan, announced on September 15, 2020, maintains the headline corporate tax rate at 25%. This reverses a previous proposal, announced in November 2019, to reduce corporate tax to 21.7% in 2021. However, corporate tax for small companies will be cut from 16.5% to 15% as previously planned. This will apply from 2021 on profits up to EUR 245,000, up from EUR 200,000 currently. This threshold will increase further, to EUR 395,000, in 2022. Read more

Poland proposal would require large companies to make their tax policies public

Poland’s Minister of Finance has proposed corporate taxation legislative changes, including a proposal that would require large corporations to publish their tax policies and tax strategies. The new obligation would apply to the 2700 largest corporations (0.5% of all corporate taxpayers) and would be modelled after UK law. Read more

 
 
 
 
 

Other news

 
 
International
 
New ACCA report on Foundations for a Sound Tax System: Simplicity, Certainty, Stability
 
International
 
OECD/G20 Inclusive Framework on BEPS shows progress in implementing tax transparency through Action 13 CBCR
 

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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