FEE Tax Policy Update

November 2015



  • OECD publishes International VAT/GST guidelines – 6 November
  • Negotiations for a Financial Transactions Tax advance but no final deal in sight – 10 November
  • 11 Multinationals attend TAXE Committee hearing on corporate tax – 16 November


European Commission


Commissioner Vestager attends ECON Committee hearing, addresses tax rulings – 9 November

Commissioner Vestager, who attended a hearing of the European Parliament (EP) ECON Committee in early November, stated during the meeting that it may take time some time to draft EU guidelines enabling Member States to comply with EU state aid provisions when providing tax rulings. Consequently, in the short term the focus on Commission’s side would be to provide advice and orientation to Member States. Moreover, Commissioner Vestager stated with regard to Country by Country Reporting (CBCR) that drawing on the experience of banks, it would not necessarily be harmful for businesses and could positively contribute to ensuring compliance with EU state aid rules.



VAT Committee guidelines on crowdfunding – 12 November

The VAT Committee of the European Commission, consisting of Member State representatives, has published its guidelines on crowdfunding. The Committee is advisory in nature and consequently holds no legislative powers nor the ability to take legally binding decisions. However, it can and does provide advisory guidance on the correct application of the VAT Directive.



European Commission November infringements package – 19 November

The European Commission has published its infringements package for November. In the area of tax, the package includes three cases involving Germany, Spain and the Netherlands. The German case concerns inheritance tax rules on special maintenance allowances which in Commission’s assessment are not in line with EU law, as it is potentially a restriction on the free movement of capital. The Spanish case relates to the country’s tax treatment of foreign non-profit entities and of their contributors which in Commission’s assessment is discriminatory in nature due to again being a potential breach of the free movement of capital. And finally, the Dutch case concerns the Limitation on Benefits clause in the Dutch-Japanese Tax Treaty for the Avoidance of Double Taxation. The Commission argues that a “Member State concluding a treaty with a third country cannot agree better treatment for companies held by shareholders resident in its own territory”. In all three cases, the concerned Member State has two months to provide a satisfactory answer, or the Commission may refer it to the Court of Justice of the EU.



European Parliament


Motion for a European Parliament resolution on a ‘digital tax’ – 27 October

In late-October, the MEP Nicola Caputo (S&D/ITA) submitted a Motion for a European Parliament (EP) resolution on digital tax. In the Motion, Mr. Caputo notes that there are no currently EU-level rules requiring multinationals “operating in the digital economy” to pay taxes in countries where they operate, and the lack of such common legislation is detrimental to the fight against tax evasion. He consequently calls for an European “digital tax” applicable to companies with a “significant turnover” in EU online sales and in order to tackle tax evasion in the digital sector. The Motion will be considered by the EP, but will not commit the Commission or any other body to legislative action.



10 steps towards tax justice in Europe – 4 November

The Greens-EFA Group of the European Parliament (EP) has published a ten-point list of measures aiming to foster “tax justice” in Europe. Of particular interest, the Greens are calling for publication of information regarding tax rulings; public Country by Country Reporting (CBCR); a ban on shell companies; harmonisation of tax bases and rates at a European level; sanctions against tax havens as well as companies using them; and regulating the “tax dodging helping industry”, including “separation between the audit and consulting activities of accounting firms” as well as “strengthened ethical behaviours”. The list also singles out the profession for its role in tax planning, stating that accountants “are always eager to find new ways of offering tax advantages”.



ECON Committee discusses amendments to the Dodds-Niedermayer report – 10 November

In early-November MEPs of the ECON Committee discussed the amendments to the Dodds-Niedermayer report on corporate tax transparency. According to one of the co-rapporteurs, MEP Anneliese Dodds (S&D/UK), the tabled amendments demonstrate that there is broad consensus in the Committee for dealing with aggressive tax planning. However, she stated that with regard to the role of tax advisors and accountancy firms, there are differences between the two rapporteurs as well as political groups, and consequently the matter is likely to remain open all the way until the Plenary vote currently scheduled for 15 December. MEP Molly Scott Cato (Greens-EFA/UK) for her part singled out the accountancy firms for driving the agenda of tax avoidance since this is a profitable endeavour for them. She therefore emphasised the need for strong amendments to curtail accountancy firms’ practices in the area of tax planning, breaking up alleged monopolies of accountancy firms in the sector, as well as addressing potential conflicts of interest. In terms of next steps, the report is currently scheduled to be voted on in the committee on 30 November followed by a Plenary vote on 15 December.



First steps taken towards extending the mandate of the TAXE Committee – 16 November

The Conference of the Presidents of the European Parliament (EP) has decided to look into the possibility of a six-month extension of the mandate of the special TAXE committee on tax rulings. The decision follows an agreement on it between the coordinators of political groups. In particular, the coordinators feel that more time is required in order to access and analyse documents requested from the Commission and Member States as part of the Committee’s investigative work into Member States’ tax policy practices. Moreover, the coordinators would like to keep monitoring legislative developments related to corporate taxation. It has come to our attention moreover that another rationale behind an extended mandate would be to add pressure on the Council’s Code of Conduct Group on Corporate Taxation, criticised by many stakeholders for lack of transparency and progress on key issues. The decision on the extension is currently expected to take place on 26 November, a day after the Plenary vote on the Committee’s report.



11 Multinationals attend TAXE Committee hearing on corporate tax – 16 November

On 16 November a total of 11 multinational corporations (MNCs) attended a hearing of the European Parliament’s (EP) TAXE Committee to reply MEPs’ questions with regard to their tax practices. This was a second attempt at such a hearing, given that earlier this year most MNCs declined the invitation to attend much to the frustration of the Committee, thus leading to MEPs demanding for non-cooperative companies to be blocked from lobbying EP. The hearing was attended by representatives from Amazon, AB InBev, Barclays, Coca-Cola, Facebook, Google, HSBC Bank, IKEA, McDonald’s and Walt Disney. Walmart and Fiat declined the invitation, the latter on grounds of the ongoing Commission investigation into suspected illegal state aid granted to it by the Luxembourgian authorities.


MEPs asked a series of general as well as company-specific questions, challenging the firm representatives on their organisations’ practices notably with regard to tax planning, profit shifting and company structures. The role of tax advisors was brought up, MEPs urging the companies to reveal whether they have hired consultants in order to minimise their tax obligations; something that all company representatives denied, stating instead that the use of tax consultants is for compliance purposes only. Furthermore, the companies were requested to state their stance with regard to public Country by Country Reporting (CBCR), most of which with the exception of the two banks expressed their opposition. And finally, on CCCTB the companies stated broad approval for the Commission’s efforts to revive the proposal. In terms of next steps, the TAXE Committee report is scheduled to be voted on in Plenary on 25 November.



 MEP Questions & Answers


Benefits of shifting the tax burden away from labour – 4 November

The European Commission has replied to a question asked by the MEP David Casa (EPP/MLT) late end-August with regard to shifting the tax burden away from labour. In his question, Mr. Casa asks the Commission where this shift away from labour should be directed to in order to “make it effective”. In his reply, Commissioner Moscovici states that the Commission is monitoring progress in Member States in this regard and will make recommendations if deemed appropriate.




VAT Mini One-Stop Shop (MOSS) legislation – 11 November

The European Commission has replied to a question asked by the MEP Margot Parker (EFDD/UK) in late-August with regard to the VAT Mini One-Stop Shop (MOSS) legislation. In her question, Ms. Parker asked the Commission asks the Commission what it intends to do in order to “ease the suffering of micro-business owners”, given that the MOSS scheme has allegedly failed. In his reply, Commissioner Moscovici re-iterates that the Commission intends to put forward a proposal in 2016 on modernising VAT for cross-border e-commerce, including addressing limitations of the MOSS system. With regard to special schemes for SMEs, the Commission has initiated work to evaluate the functioning of the current scheme and to identify possible reform possibilities.




Implementation of the VAT MOSS rules – 11 November

The European Commission has replied to a question asked by the MEP Amjad Bashir (ECR/UK) in late-September with regard to the implementation of the VAT Mini One-Stop Shop (MOSS) rules. In his question, Mr. Bashir asked the Commission whether a threshold will be established for smaller companies, whether a simplification to the place of supply rules will take place, and whether a mechanism will be implemented in which enquiries from other Member States’ tax authorities go through the national tax authority of the business concerned. In his reply, Commissioner Moscovici refers for the two first questions to the answers already provided to another MEP question (see question above by Margot Parker). With regard to the third question, the Commissioner states that there are currently no legal provisions for it. Having said that, the Commission has asked Member States to address any queries to business “through the tax administration in the Member State where a business is established”. He furthermore confirms that the Commission will consider “home country controls and a single audit in the context of its proposal in 2016 to modernise VAT for cross-border e-commerce”.




Compulsory registration of VAT payers in Slovakia – 11 November

The European Commission has replied to a question asked by the MEP Richard Sulik (ECR/SVK) in early-September with regard to the compulsory registration of VAT payers in Slovakia. In his question, Mr. Sulik asks the Commission whether “raising the minimum annual turnover threshold that makes the registration of a taxable person as a VAT payer in Slovakia compulsory “ would constitute a breach of EU law, and if the threshold can be raised only under certain conditions, he demands the Commission to specify what these are. In his reply, Commissioner Moscovici emphasises that unilateral action by Member States is unacceptable, and any exceptions from the harmonised VAT system, including on thresholds, is subject to a unanimous decision by all Member States.




Commission’s position on establishing international tax rules – 11 November

The European Commission has replied to a question asked by four French MEPs of the ENF Group; Steeve Briois, Dominique Bilde, Sophie Montel and Bernard Monot. In their question, the MEPs ask the Commission for its views on “an agreement laying the foundations for an international tax system” and aiming to reduce developing countries’ losses resulting from multinationals’ tax planning activities, and whether the Commission would want to increase the involvement of developing countries in the negotiations for such agreements. In his reply, Commissioner Moscovici states that the Commission “strongly supports” international efforts aiming to tackle tax evasion and avoidance, and in particular welcomes the Addis Tax Initiative which aims to improve developing countries’ tax income. He furthermore brings forward Commission’s prioritisation of tax issues in its work, as well as the OECD BEPS proposals as an example of international efforts to address the issue raised by the MEPs.






“Netherlands plans to rein in tax avoidance during EU presidency” – 2 November

According to Guardian, the Dutch finance minister and Eurogroup President Jeroen Dijsselbloem has announced that tackling corporate tax avoidance will be one of the priority areas during the Dutch Presidency of the Council, starting January 2016. The announcement comes in the context of the recent European Commission state aid decision requiring the Netherlands to recover €20-30 million in tax income from Starbucks. The prioritisation is moreover understandable given ongoing political momentum in corporate tax practices, with both ECON and TAXE Committees of the European Parliament pushing for the finalisation of two related reports before the end of the year. Furthermore, the European Commission is expected to finalise its impact assessment on corporate tax transparency, and Country by Country Reporting (CBCR) in particular, in the upcoming weeks based on which it will put forward a proposal possibly around March 2016.



“Schelling Says EU Needs December Decision on Transaction Tax” – 10 November

According to Bloomberg, the Austrian finance minister Hans Joerg Schelling has called for a decision to be reached in December between the 11 participating Member States on whether or not an agreement on a Financial Transactions Tax (FTT) is possible. Despite progress in negotiations, there has been no final deal so far. The participating Member States still have differing views notably with regard to sovereign debt derivatives as well as the cross-border scope of the FTT scheme.



Savings taxation directive repealed – 10 November

The Council has repealed the Directive on savings taxation. Member States felt that the Directive might cause duplications with the OECD standard on automatic exchange of information, which is implemented into an EU framework through another amending Directive on automatic exchange of information in the field of taxation.



Council Conclusions on the Capital Markets Union Action Plan – 10 November

The Council has adopted its conclusions on the Commission proposal for an Action Plan aiming for the establishment of a more integrated Capital Markets Union (CMU) in the EU, published on 30 September. Overall, there were no surprises when it comes to policy prioritizing. Securitisation, SMEs and the Prospectus Directive remain on top of the Council’s priority list. When it comes to the procedure, the Council wants to ensure that progress will not lag behind and has asked for the Commission to report back on CMU progress “at least every 6 months”. Of particular interest, the Council notably endorses dismantling cross-border barriers to capital markets, finding “pragmatic solutions to long standing tax obstacles such as double taxation linked to current withholding tax arrangements”, as well as discussing the debt-equity bias in taxation.





“Indirect Tax Updates from France” – 11 November

The International VAT Association has published an update of recent policy changes in French tax and VAT provisions. The article includes details with regard to a French Draft Finance Act for 2016, changes with regard to the VAT margin scheme on second-hand vehicles, reduced VAT rates on e-books, “modalities of correction” of VAT return insufficiencies, as well as new applicable customs duties in the energy sector.



“Democratic Candidates Take Aim at Wall Street” – 11 November

According to the Wall Street Journal (article only available to subscribers), three Democratic candidates for US presidency, Hillary Clinton, Bernie Sanders and Martin O’Malley, would like to see a financial transactions tax on Wallstreet. The main purpose of the tax would be to better control the financial markets. According to the article, all three candidates agree on a levy on the sale of securities. One cannot but make comparisons to the ongoing work by 11 EU Member States to agree on a financial transactions tax in Europe.




 “The German Federal Fiscal Court tightens the requirements for invoices” – 17 November

According to the International VAT Association (IVA), Germany’s Federal Fiscal Court has tightened requirements for the “deduction of input VAT from invoices”. According to IVA’s assessment, the Court decision might have far-reaching consequences.





OECD publishes International VAT/GST guidelines – 6 November

Senior policy officials from over 100 countries have endorsed the new OECD International VAT/GST (Goods and Services Tax) Guidelines, considering it to be the preferred international standard for the application of VAT/GST to international trade in services. The Guidelines notably include recommendations for VAT collection on cross-border services to private consumers, for “foreign sellers (to) register and remit tax on sales of e-books, apps, music, videos and other digital goods in the jurisdiction where the final consumer is located”, and for mechanisms ensuring effective VAT collection from foreign sellers by national tax authorities, thereby contributing to a level playing field between domestic and foreign suppliers. This is according to OECD an important step in ensuring that “consumption taxes on cross-border transactions are effectively paid in the jurisdiction where products are consumed”.



OECD holds first Asia-Pacific Technical Meeting on BEPS in Indonesia – 11-12 November

The first Asia-Pacific Technical Meeting on BEPS has taken place in Indonesia. The meeting was attended by a total of 75 participants, representing 17 economies. During the meeting, the representatives provided technical level feedback on the implementation of the BEPS measures, presented their respective priority areas, and discussed key challenges.



 “G20 leaders endorse OECD measures to crack down on tax evasion, reaffirm its role in ensuring strong, sustainable and inclusive growth” – 16 November

G20 leaders have endorsed the recommendations put forward as part of the BEPS project. They furthermore called on the OECD to monitor progress on the project’s goals and implementation, and to develop by early 2016 “an inclusive framework including the participation of developing countries on equal footing”. The G20 leaders furthermore reiterated commitments to the agreed scheme for automatic exchange of information, which is scheduled to be implemented by 2018 at latest.



 State Aid


Commission orders Estonia to recover incompatible aid from national air carrier Estonian Air – 7 November

The European Commission has ruled that Estonia has breached EU state aid rules by granting aid to the national carrier Estonia Air. In the Commission’s view, the aid constitutes an unfair advantage over the airline’s competitors. Consequently, Estonia Air will be required to pay back already received state aid amounting to at least €85 million, and will not be allowed to receive an additional €40 million of aid. According to the Commission, Estonia Air has been making consistent losses since 2006, and consequently the aid granted to it by the state is repeated public support that did not enable the company to restore its competitiveness.



Other News


“A year after LuxLeaks, it is high time for EU action on corporate tax-dodging” – 4 November

The Guardian has published a letter calling for EU-level action to tackle “corporate tax dodging”. The letter is signed by a number of prominent figures including Thomas Piketty, British Labour MEPs Anneliese Dodds, Glenis Willmott and Neena Gill, as well as several former Ministers of member states, including two former prime ministers. The letter criticises the lack of legislative progress since the Luxleaks scandal, and in particular calls for public disclosure of Country by Country Reporting information.




24/11/2015, 2015 EBF Tax Conference, EBF, 09:30-17:30, 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.

10/12/2015, The OECD/G20 Base Erosion and Profit Shifting (BEPS) Action Plan: Latest developments and implications for the EU, ERA, 08:45-17:30, Brussels.