Commission reportedly considering regulating tax advisers
EC is reportedly looking into regulating professional tax advisers on a EU wide basis in response to the Pandora Papers revelations of aggressive tax avoidance by wealthy and politically powerful individuals.
Regulating the conduct of advisers when they have breached professional ethics is difficult in the EU, where each of the 27 Member States has different — and in some cases non-existent — regulations governing the selling of tax advice, Law360 writes. The EC’s Directorate-General for Taxation and Customs Union (DG TAXUD) is therefore investigating the possibility of creating an EU-wide framework and enforcement mechanism, according to an official who spoke on the condition of anonymity. Read more
Commission’s 22 December tax package: shell entities Directive
The shell entities Directive sets up a process for identifying tax-evading shell companies in the EU. Any company established for tax purposes in an EU country, regardless of its size, would first be required to self-assess against three cumulative ‘gateway criteria’.
Companies that meet all three criteria will have to justify in their annual tax return how they meet three substance indicators each tax year:
- the company has its own premises in the Member State or premises for its exclusive use
- it has at least one active bank account of its own in the EU
- a manager resides in the vicinity of its premises and is dedicated to the activities of the business or, a sufficient number of employees are engaged in the main activities of the business and reside in the vicinity
The process for approving the Directive is as with the Pillar 2 Directive – Council unanimity with European Parliament’s (EP) non-binding opinion.
Commission’s 22 December tax package: new own resources
Finally, EC also issued a proposal for 3 new own resources to flow into the EU budget, and notably to help repay the EU’s jointly issued COVID recovery debt of EUR 750 billion. These new own resources are:
- 75% of the revenues generated by the carbon border adjustment mechanism (CBAM). Revenues for the EU budget are estimated at around EUR 0.5 billion per year over the period 2023-2030
- 25% of the revenues generated by EU emissions trading scheme (ETS). Revenues for the EU budget are estimated at around EUR 9 billion per year over the period 2023-2030
- 15% of the share of the residual profits of the largest and most profitable multinational enterprises, as defined in the OECD Pillar 1 agreement. Revenues for the EU budget could amount to up to EUR 2.5-4 billion per year
Council unanimity will be required for adopting these new own resources.