Tax Policy

May 2019

  • Commission President candidates clarify their tax positions, Greens publish tax manifesto
  • EU Finance Ministers struggle to find common ground on OECD digital tax approach
  • Dutch government plans national aviation tax if no EU agreement by 2021
  • Leaked financial transaction tax Directive unveils plans, Ministers possibly to discuss in June

European Commission

Commission launches new tool to help fight VAT fraud

The European Commission has launched a so-called Transaction Network Analysis (TNA) tool to assist in the fight against VAT fraud.

TNA will allow tax authorities fast access to cross-border transaction information, enabling quick action when potential VAT fraud is flagged. It will also allow much closer cooperation between EU’s network of anti-fraud experts (‘Eurofisc’) when it comes to jointly analysing information so that VAT carousel fraud can be detected and intercepted as fast and effectively as possible. And finally, it will boost cooperation and information exchange between national tax officials, allowing Eurofisc officials to cross-check information with criminal records, databases and information held by Europol and OLAF, the EU’s anti-fraud agency, and to coordinate cross-border investigations. Read more.

Commission President candidates clarify positions on tax

The candidates for European Commission Presidency attended a last comprehensive election debate prior to the European Parliament elections on 26 May. This debate was also joined by Commissioner Vestager.

At the debate, taxation emerged again as one of the hot topics. The Greens’ leading candidate Ska Keller accused the centre-Right, liberals and conservatives for stalling progress on public country by country reporting (CBCR) – a file that remains blocked in the Council.

Frans Timmermans from the social-democrats, for his part, called for kerosene and CO2 taxes to help fight against climate change. He has been consistent in these proposals.

On digital taxation, Commissioner Vestager, Keller and the Christian democrats’ Manfred Weber all agreed that digital giants need to pay more. Weber went as far as to say that the current Council’s unanimity rule for tax proposals should be abandoned altogether.

Finally, Timmermans called for a minimum effective corporate tax rate of 18%, whilst the conservative nationalists’ Jan Zahradil rejected any idea of pan-European taxes.

European Parliament

Greens publish tax manifesto ahead of EU elections

The Greens Group of the European Parliament has published additional tax proposals for its electoral programme. The proposals come in the form of a 10-point action plan.

One of these 10 proposals is a call to regulate tax advisors, so that they can no longer influence legislative processes and afterwards advice their clients on how to circumvent tax legislation.

The other proposals include a call for public country by country reporting (CBCR), introduction of a minimum effective tax rate in Europe, digital taxes, taxes on flying and pollution, as well as ending the unanimity rule on tax decision-making.

The Greens’ views on taxation matter because in all likelihood they will play a “king’s maker” role in the next European Parliament. Read more


EU finance minister fail to find common approach on digital tax but amend tax havens list

EU Finance Ministers attempted to find a common position for OECD negotiations on digital tax reforms at their latest ECOFIN meeting.

Even though several Member States were willing to continue discussions to improve coordination, a common EU position was not reached for now. As often is the case, visible camps emerged in the discussions.

For example Ireland, Lithuania and Sweden insisted that they want to retain the freedom to contribute independently to the OECD work. By contrast, Austria, Croatia, France, Greece, Spain, Slovakia and somewhat surprisingly Finland all agreed that a European position is desirable. The Dutch proposed to set up a technical working group in the Council to continue the discussion.

Germany, for its part, continued to insist on the need for a global minimum effective tax rate – as per the second pillar of the OECD’s work. And finally Belgium underlined the need for a tax environment that is fit for SMEs, not administratively burdensome and avoids double taxation.

Several jurisdictions removed from tax haven list

The meeting had more success with the EU list of non-cooperative jurisdictions, as the Member States unanimously agreed to remove Aruba, Barbados and Bermuda from the blacklist.

All three were blacklisted in March. Bermuda and Barbados will be returned to the grey list where jurisdictions are being monitored for progress on commitments. Aruba on the other hand will be completely removed from surveillance, as it adopted a new law on 4 April that removes harmful features of its tax transparency regime.

This means that 12 jurisdictions now remain on the EU list: American Samoa, Belize, Dominica, Fiji, Guam, Marshall Islands, Oman, Samoa, Trinidad and Tobago, United Arab Emirates, US Virgin Islands, and Vanuatu. Read more

Romanian Presidency blames Commission for not doing enough on VAT fraud

And finally, the meeting saw some drama too as the Romanian Presidency accused the European Commission for not doing enough to curtail carousel fraud.

In response, a Commission official reminded that the Commission proposed already in 2017 to move to a so-called VAT definitive regime – a destination based VAT system. The proposal, if adopted, would go a long way in curtailing carousel fraud in the EU. However, it currently remains blocked in the Council by opposition from Germany and a lack of enthusiasm from a number of other Member States.

Leaked draft Directive unveils plans for financial transaction tax

A leaked financial transaction tax (FTT) draft Directive confirms speculations that the tax is tailored to the so-called French model.

The FTT negotiations between 10 voluntarily cooperating EU Member States have been stalling for years, but now a new Franco-German push appears to be giving the file some momentum.

The leaked draft document proposes for a tax rate to be set between 0,2% and 0,3% and for the same rate to apply to all financial transactions. Moreover, the tax would be payable in the Member State where the issuing entity is registered – irrespective of where the actual transaction takes place, for example. This is hoped to limit tax avoidance opportunities.

According to latest intelligence, a request was submitted for a FTT discussion at the finance ministers’ ECOFIN meeting on 14 June.

CJEU – rulings

C‑235/18: VAT exemption on service granting credit

T–836/16 and T–624/17: General Court annuls the Commission’s decisions on Polish retail sector tax

MEPs questions & answers

Commission re-iterates commitment to tax good governance conditionality in EU trade agreements

  • Question by MEP Dominique Martin (ENF/France) Read more
  • Reply by Commissioner Malmström (trade) Read more

Commission confirms Croatian tourist tax in line with EU law

  • Question by MEP Angelika Niebler (EPP/Germany) Read more
  • Reply by Commissioner Moscovici Read more

Commission will assess Italian request to extend tax deductibility of corporate vehicles

  • Question by MEPs Elisabetta Gardini (EPP/Italy) & Lorenzo Cesa (EPP/Italy) Read more
  • Reply by Commissioner Moscovici Read more

The Dutch plan unilateral aviation tax if no EU measure by 2021

The Dutch government has announced that it intends to introduce a unilateral national aviation tax regime by 2021 unless there is EU agreement on a European framework. This ‘threat’ of unilateral measure in absence of international coordination resembles that of France on digital taxation.

The planned Dutch flight tax would impose a EUR 7 fee for passengers departing from the Netherlands with an exemption for connecting passengers. A tax on air cargo transport is also under plans. Noisiest planes would be taxed at EUR 3.85 per tonne of cargo and the quietest at EUR 1.925 per tonne of cargo. The weight of the aircraft would also be taken into account.

The Dutch government also plans to organise an international conference on aviation taxes in the Hague on 20-21 June.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.