Accountancy Europe welcomes today’s publication by the European Commission of a comprehensive package of tax simplification proposals aimed at reducing administrative burdens for businesses and their advisors across the EU. If adopted by the Council, the measures would significantly support the EU’s objective of cutting reporting requirements and strengthening Europe’s competitiveness.
Accountancy Europe CEO Eelco van der Enden commented:
“There is much in this package that could make a real difference for businesses and tax administrations alike, while preserving the underlying policy objectives. Accountancy Europe has actively contributed to the Commission’s consultation processes over the past year, and I am delighted to see that several of our recommendations have been reflected in the proposals.”
While many elements deserve praise, some aspects would benefit from further refinement.
The Commission proposes ambitious measures, including excluding Pillar Two entities from the scope of the Controlled Foreign Company (CFC) rules, introducing an automatic inflation adjustment to the interest limitation rule, and removing participation thresholds under the Parent-Subsidiary Directive (PSD) and the Interest and Royalties Directive (IRD).
However, the proposed partial exemption of SMEs from the Anti-Tax Avoidance Directive (ATAD) raises important questions.
Eelco commented:
“It is difficult to see the rationale for exempting SMEs only from the CFC rules, which in practice apply to relatively few SMEs, while leaving them subject to many of the other substantive ATAD requirements. A complete SME exemption would be welcome”.
The package also misses an opportunity to further strengthen the EU tax dispute resolution framework, for example by making joint audits mandatory in cross-border tax disputes.
“The recast of the Directive on Administrative Cooperation (DAC) is long overdue, and there is much to welcome here as well,” Eelco said.
For DAC6, the extension of the reporting deadline from 30 to 90 days, the commitment to provide guidance on the Main Benefit Test, the exclusion of Pillar Two entities, and many others are all practical and constructive improvements.
At the same time, the Commission’s decision to maintain the primary DAC6 reporting obligation with intermediaries remains problematic.
“Tax advisors often only have a partial view of an arrangement, whereas taxpayers have access to the complete picture. In addition, the current approach further exacerbates the uneven playing field between different categories of tax professionals. Assigning the reporting obligation to taxpayers would address both concerns in one go.”
The proposal to introduce a single, central filing mechanism for DAC4 and DAC9 is another positive development. However, there is little justification for not extending this simplification to the other DAC reporting frameworks as well.
Eelco concluded:
“Accountancy Europe will continue engaging constructively with policymakers to explore whether the package’s level of ambition can be strengthened further. Overall, these are solid proposals that deserve broad support, and we hope the Council will preserve their simplification objectives throughout the legislative process.”
