European Commission publishes its Work Programme for 2016 – 27 October
The European Commission (EC) adopted and published its Work Programme (WP) for 2016 in late-October. In a nutshell, the WP touches on a range of areas of relevance to FEE’s work on tax, including VAT, corporate taxation, SMEs, Business Insolvency as well as Cross-Border Services. As indicated in the WP’s title “No time for business as usual“, EC is following a different approach to this year’s WP. In particular, the Commission is not only proposing new initiatives but also existing proposals and laws to be withdrawn – “no longer relevant”. In addition, the WP also provides for a list of existing initiatives which require “speedy adoption”.
Although there are no surprises on the content itself – most of these proposals have been “de facto” withdrawn anyway- this is the first time that EC is taking such drastic measures for its WP. It seems that President Juncker continues to work on his strategy for task prioritization and cutting down on pertinent costs. This is also reflected in the introduction where EC is promising to propose a strategy on an “EU Budget Focused on Results” to “ensure that future financing has a stronger focus on achieving results”. It remains to be seen whether this will change anything in practice.
New initiatives include a VAT Action Plan, a Corporate Tax Package, action to assist SMEs, and a new approach to business failure and insolvency as well as for cross-border service provision. Existing proposals to be withdrawn include a range of past proposals that have now been replaced by new ones, including VAT regime for insurance and financial services, standard VAT return, a previous proposal on a financial transaction tax, as well as the 2011 proposal to establish a CCCTB.
In accordance with a new agreement, Liechtenstein and EU Member States will start to automatically exchange information on the financial accounts of their residents, starting 2017. According to Commissioner Pierre Moscovici, EU and Liechtenstein are now “partners in the international campaign for greater tax transparency”. Under the agreement, EU Member States will receive the names, addresses, tax ID numbers, dates of birth as well as other financial and account information of their residents who have accounts in Liechtenstein. According to the Commission, this is in line with the OECD/G20 standards with regard to automatic exchange of information.
The effects of reforms of regulatory requirements to access professions: country-based case studies – 28 October
In late-October the European Commission (EC) published four independent country case-studies assessing the economic impact of reforms to regulations of various professions. The studies concern Germany, Greece, Italy and the UK. In summary, all studies find little to no negative impacts in professional de-regulation. The Greek study in particular looks into the state of play, reforms and their impacts with regard to accountants and tax consultants.
EC Single Market strategy – 28 October
The European Commission (EC) has published its awaited Single Market strategy in late-October aiming to further improve its functioning in a wide range of sectors and service areas. The strategy includes an Action Plan (AP) with specific measures and broad timelines, ranging from a first set of measures in 2016 all the way to initiatives for 2018. Of particular interest, the measures include EC legislative action to simplify VAT systems as well as the introduction of a VAT Action Plan in 2016 which will include a simplification package for SMEs; specific actions targeting regulated professions, including accountants, and in particular the introduction of a services passport and addressing regulatory barriers (2016); and an EC assessment on the need for reform (including consideration of regulation) and specific measures with regard to a wide range of professions, including tax advisors (2016).
Explanatory notes on EU VAT place of supply rules on services connected with immovable property that enter into force in 2017 – 29 October
The European Commission (EC) has published explanatory notes on EU VAT place of supply rules applicable to services connected to immovable property entering into force in 2017. The purpose of the note is to provide further clarifications to enable better compliance with the provisions, and as such is not legally binding.
Commission report on national rules applied in Member States for the use of the mini one-stop shop (MOSS) – 29 October
The European Commission (EC) has published details with regard to applicable national rules in Member States for using the mini one-stop shop (MOSS). The document, in the form of an Excel file, provides for each Member State detailed provisions for a variety of sectors, forms of application of relevant EU Directives, as well as any other provisions and rules specific to the given Member State.
EU Agenda for the G20 summit in Antalya – 4 November
The European Commission (EC) has published EU’s agenda of priorities for its delegation attending the G20 Summit taking place on 15-16 November in Antalya, Turkey. Of particular interest, advancing in G20’s work on tax transparency is on the menu, as the EU is calling for an “ambitious agreement” to take additional steps towards tackling cross-border tax evasion and avoidance. In particular, tax competition and exchange of information on rulings are brought up in the press release.
The EU and Andorra have finalised their work on a new tax transparency agreement under which Andorra and EU Member States will be obliged to exchange information on the financial accounts of their respective residents starting 2018. The information to be exchanged will include the names, addresses, tax identification numbers and dates of birth of each jurisdiction’s residents with accounts in in the counter-party jurisdiction, as well as other financial and account balance information. The agreement is in line with the one recently finalised with Liechtenstein (see above), and a similar project is currently undergoing with San Marino as well as Monaco.
ITRE Amendments to Dodds-Niedermayer report – 6 October
The ITRE Committee (Industry, Trade and Research) amendments to the ECON Committee draft report with regard to corporate tax transparency (“the Dodds-Niedermayer report”) have been published. Overall, a number of amendments call for a comprehensive and binding system for a Common Consolidated Corporate Tax Base (CCCTB), public Country by Country Reporting (CBCR), harmonisation of corporate tax rates in the EU, development of criteria for identifying tax havens and establishing sanctions on companies using them, the establishment of “transparent and coherent rules on the accounting of profits and value creation” (amendment 35), drafting of a blacklist of companies evading taxes as well as firms advising them (amendment 47), as well as condemning the “complicity of financial and consultancy corporations in the development of aggressive tax planning in the EU” (amendment 72). In terms of next steps, the lead Committee (ECON) will vote on amendments to the report on 1 December, and may or may not provide consideration for the amendments as tabled by other Committees, including ITRE.
Motion for a European Parliament resolution on the OECD’s proposals to combat tax evasion – 14 October
In mid-October a Motion for resolution with regard to OECD proposals to combat tax evasion was submitted by three ENF (far-Right) French MEPs – Sophie Montel, Florian Philippot and Dominique Bilde. In their motion, the MEPs claim that OECD did not go far enough with its BEPS proposals especially with regard to Country by Country Reporting (CBCR) as well as automatic exchange of information (AEOI) on tax rulings. In this regard, the MEPs call on the Commission to enable Member States to adopt tax systems based on profit sharing, as well as introducing greater transparency to CBCR and AEOI. Motions for resolution are legally non-binding, but have the potential to maintain and foster debates and attention on specific topics in the European Parliament and potentially beyond.
Amendments to ECON draft opinion on DSM – 19 October
In late-October, a total of 124 amendments were posted to the ECON Committee draft opinion on the Digital Single Market (DSM). As a reminder, the ECON Committee draft opinion with Mr. Renato Soru (S&D/ITA) as its lead-rapporteur calls for public disclosure of country-by-country reporting (CBCR) information. Several amendments delete or significantly amend the paragraph calling for public CBCR, whilst others maintain or even strengthen it. It remains to be seen to what degree the lead Committee (IMCO – Internal Market and Consumer Protection, and ITRE – Industry, Research and Energy) will accommodate the opinion provided by ECON. IMCO Committee is set to vote on its draft report on 14 December.
DSM amendments IMCO – 21 October
In relation to the above, the lead Committees IMCO (Internal Market and Consumer Protection) and ITRE (Industry, Research and Energy) responsible for the European Parliament (EP) draft report on the Digital Single Market (DSM) has published tabled amendments to the report, a total of 1287. Of particular interest, the amendments notably call to address particular tax-related challenges generated by digitalisation of economies and societies, greater tax fairness, as well as greater VAT harmonisation and simplification. In terms of next steps, IMCO will vote on its draft report on 14 December, whilst a Plenary vote is currently scheduled for 18 January.
EP Plenary debate on tax – 26 October
In late-October the European Parliament (EP) Plenary held a debate on tax. The debate was opened by Commissioner Pierre Moscovici, who in his statement notably praised the political agreement reached in the Council with regard to automatic exchange of information (AEOI) on tax rulings, referred to the ongoing political momentum on tax fairness and related Commission actions as a “transparency revolution” that is only at its beginning, and referred to upcoming Commission action with regard to the Common Consolidated Corporate Tax Base (CCCTB) as well as Country-by-Country Reporting (CBCR), where he urged MEPs to show patience and wait for the results of the ongoing impact assessment; at the same time, the Commissioner reiterated his political preference for public disclosure as long as this does not penalise companies. With regard to sanctions, the Commissioner stated that he firmly believes that companies will change their behaviour themselves if greater transparency is introduced. Several MEPs, including from the centre-Right EPP, made further calls for wider CBCR, for the establishment of a CCCTB, greater tax transparency as well as mixed feelings about the AEOI agreement but with a mainly negative connotation.
TAXE vote on tax rulings – 26 October
On the evening of 26 October a vote took place in the TAXE Committee on the draft report on tax rulings and measures similar in nature or effect. The MEPs of the Committee voted on what was initially a total of 1047 amendments, and the final text passed with 34 votes in favour, 3 opposed and 7 abstentions. A great number of amendments make further references to conflicts of interest in the tax advisory sector, call for sanctions against those conducting or promoting aggressive tax planning, demand for a legislative framework providing for sufficient sanctions against stakeholders involved in illegal tax practices, call for a mandatory and full system of Common Consolidated Corporate Tax Base (CCCTB), and urging to generate a new tax competition framework ensuring “fair competition” between jurisdictions as well as a level playing field for companies regardless of their size. In terms of next steps, the report will be voted on in the Plenary on 24 November
EP Plenary votes on AEOI – 27 October
On 27 October the European Parliament (EP) plenary adopted its opinion on the automatic exchange of information (AEOI) on tax rulings. The final opinion is in line with the well-known disagreements between the Parliament and the Council, such as on retroactivity (Council established for 5 years, EP wishes the scheme to cover all valid rulings), scope (EP wants all rulings to be included, not only those of cross-border nature), role of the Commission (EP wants the Commission to have more extensive access to the information), as well as the timeframe for informing on new rulings (where EP wants the information to be exchanged once a ruling has been issued). The Council is aiming for a speedy adoption of the Directive at the end of this year, and it will remain to be seen to what degree Member States will take the EP position into account.
Use of tax lists – 19 October
The Council of the EU has replied to a question asked by the MEP Dimitrios Papadimoulis (GUE-NGL/GRE) with regard to tax lists. In his question, Mr. Papadimoulis asked EC whether it will conduct a “systematic investigation” into EU Member States’ tax lists in order to fight against tax evasion. In its reply, the Council states that it has not discussed specific lists of Member States, but provides in the answer a list of other measures that the Council has undertaken in the past years to tackle tax fraud and dodging.
Common consolidated corporate tax base – 19 October
The Council of the EU has replied to a question asked by the MEP Hugues Bayet (S&D/BEL) with regard to the common consolidated corporate tax base (CCCTB). In his question, Mr. Bayet refers to the apparent obstacles that the initial 2011 Commission proposal on CCCTB faced in the Council, and asks specifically the Council to elaborate on what those obstacles are, as well as to clarify its views with regard to the Commission’s efforts to re-launch the initiative. In its reply, the Council states that it has divided the work on CCCTB into six thematic blocks: general issues, basic elements of the base, anti-avoidance, international aspects, operational issues and consolidation. Currently the negotiations are ongoing in the area of international aspects and more specifically on the definition of permanent establishment, interest limitation rule, exit taxation, switch-over clause, general anti-abuse rule, controlled foreign companies rules and hybrid mismatches. The Council states that under the Luxembourg Presidency it is in particular continuing to work on anti-BEPS elements of the proposal, including the possibility of splitting the proposal (this probably refers to establishing consolidation at a later stage). The overall aim is to reach an overall technical examination and assess whether a political agreement is possible. The Council will be informed of progress by the end of 2015.
VAT MOSS centralised collection system – 23 October
The European Commission (EC) has replied to a question asked by the MEP John Stuart Agnew (EFDD/UK) with regard to VAT MOSS. In his question, Mr. Agnew asked EC whether it will commit to putting forward “temporary measures” in order to ease the burdens caused by the scheme on SMEs and micro-businesses in the immediate term, instead of waiting for a full review of regulation which could take several months. In his reply, Commissioner Moscovici states that EC will put forward a proposal in 2016 aiming to provide a “level playing field for European business, promote the single market for e-sellers and reduce the burdens that business, particularly small business, face in accessing the single market”. Moreover, he emphasizes that EC and individual Member States such as the UK cannot suspend unilaterally VAT laws that have been agreed on by all Member States.
Taxation of blank digital media – 26 October
The European Commission (EC) has replied to a question asked by the MEP Marc Tarabella (S&D/BEL) with regard to the taxation of blank digital media. In his question, Mr. Tarabella asked EC whether it will propose a “uniform taxation” for more recent types of digital media such as external hard drives, USB sticks and memory cards. In his reply, Commissioner Gunther Oettinger (Digital Economy & Society) refers to EU provisions as well as Court of Justice of the European Union’s (CJEU) rulings concerning private copy levies, and confirms that EC is monitoring national schemes and CJEU developments in this area. The Commissioner emphasises the need to carefully consider these developments before assessing “whether an intervention at EU level is needed”.
CBCR Trilogues – 27 October
On Tuesday 27 October, the European Parliament (EP), the European Commission (EC) and the Council had its first “trilogue” on the Shareholders’ Rights Directive (SHRD). A main topic of contention is the EP introduction of Country-by-Country Reporting (CBCR) into the draft Directive. During the first round of negotiations, EP and the Council agreed that until the solution is found at a political level, discussions should continue on other aspects of the Directive – according to the principle “nothing is agreed until everything is agreed”. This in essence means that the Council will use the time until EC comes out with the outcome of the CBCR impact assessment to discuss other points of the Directive. Based on what has been discussed so far, EC does not seem to be in favour of including CBCR in the SHRD, so it remains to be seen whether the Parliament will have enough arguments to insist on this. In terms of next steps, three “technical” trilogues (i.e. discussions not conducted at a Ministerial level) are scheduled for 13 November, 16 November and 30 November. These discussions will concentrate on non-CBCR points of the Directive, and currently the expectation is that no definite solution will be achieved under the Luxembourgish Presidency, which will consequently probably pass the torch to the Dutch.
“Gauke: ‘Google’ tax consistent with BEPS” – 29 October
According to AccountancyAge, the UK Treasury Minister David Gauke has defended the famous ‘Google tax’, or the diverted profits tax, arguing that it is perfectly in line with the BEPS project. His comment comes in response to concerns expressed by OECD’s director responsible for BEPS, Mr. Pascal Saint-Amans, who back in April stated that the UK plans for the Google tax could establish a dangerous precedent encouraging other countries to take similar unilateral action, as opposed to coherent and coordinated projects undertaken at an international level.
UK sponsors face tax on pension fund investment costs – 3 November
According to IPE, UK sponsors will no longer be able to claim back tax for “asset management costs paid on behalf of pension funds”. This clarification from the HMRC is in accordance with an European Court of Justice (ECJ) 2013 ruling on a case by a Dutch engineering company. In HRMC’s assessment, tripartite agreements between sponsors, service providers and UK trustees are not eligible for corporate tax deductions, although they may still receive VAT refunds.
“Turkish finance minister pledges widespread reforms after AKP victory” – 4 November
According to Financial Times (article only available to subscribers), the recently elected AKP government in Turkey is engaging on a wide range of reforms aiming to boost the economy and implement structural reforms. Of particular interest, the first set of reforms will aim to boost tax collection, as well as amending tax laws towards incentivizing local borrowing and encouraging equity raising instead of taking on debt.
“Global Forum on tax transparency pushes forward international co-operation against tax evasion” – 30 October
Members of the Global Forum on tax transparency are continuing to take major steps towards ensuring greater transparency, with more countries joining in on automatic exchange of information (AEOI). 96 member countries of the Global Forum have already committed to AEOI starting 2017 or 2018, with Panama and Cook Islands as the latest joiners.
After Starbucks, other companies now under Commission’s microscope in the Netherlands – 3 November
According to the Dutch newspaper Trouw, the European Commission (EC) is now interested in the deals struck by the Netherlands with Pfizer, GlaxoSmithKline, Kraft Foods and Microsoft following earlier action taken against Starbucks. If EC judges that the Netherlands has indeed made arrangements with the companies that might be considered as illegal state aid, it may request it to recover the non-collected tax income. This development is in line with EC’s approach to tax avoidance, clamping it down notably through means of state aid investigations.
Commission approves two schemes aimed at encouraging investment in innovative SMEs – 5 November
The European Commission (EC) has given its blessing to two French schemes aiming to improve investment in SMEs, judging them to be in line with EU state aid rules. The first one of the schemes grants a 50% wealth tax reduction below a €18.000 threshold for individual taxpayers who have subscribed to the capital of innovative SMEs, whilst the second grants companies the right to “spread the depreciation of investments in SMEs over a period of five years”. The schemes concern innovative SMEs which have been active on their respective market for less than ten years following a first commercial sale.
“How one of the most obese countries on earth took on the soda giants” – 3 November
The Guardian has published in early-November a reportage with regard to Mexico’s struggles with the implementation of a soda tax. The reportage describes the obstacles faced by decision-makers in attempting to implement a tax on soda drinks in a bid to tackle the country’s alarming obesity crisis. Powerful soda companies have lobbied hard against such efforts.
Report on tax dodging across the world – 3 November
A report published by a group of NGOs and coordinated by Eurodad looks into tax dodging practices from across the world, and in particular “scrutinises the role of the EU in the global tax crisis, analyses developments and suggests concrete solutions”. Of particular interest, the report includes a comprehensive list of EU Member States’ positions with regard to public country-by-country reporting (pp. 30-37).
Luxleaks and tax avoidance at EU level: Talk less, act more – 5 November
Aurore Chardonnet, EU Policy Advisor for inequality and taxation from Oxfam, has written an article in Euractive which criticises the apparent lack of progress in the EU anti-tax avoidance agenda following Luxleaks. In her article, Ms. Chardonnet notably states that only “giant multinationals, big audit firms and secrecy jurisdictions” benefit from large-scale tax dodging. She notably calls for public disclosure of country-by-country reporting (CBCR) information, and urges on the Member States to endorse the European Parliament’s calls for such a scheme in the frames of the Shareholders’ Rights Directive.
10/11/2015, POLITICO Brussels Playbook Breakfast event, Politico, 08:30-09:45, Brussels.
24/11/2015, 2015 EBF Tax Conference, EBF, time N/A, Brussels.
30/11/2015, The priorities of the Dutch Presidency of the Council, EPC, 08:00-09:30, Brussels.
09/12/2015, EU Tax Policy – Evolution or Revolution?, ICAEW, 12:00-14:30, Brussels.