Tax Policy

May 2020

  • European Commission defers reporting deadlines of tax intermediaries Directive due to corona
  • Slight delay in upcoming European Commission’s tax package until 15 July
  • OECD announces delay of political agreement on digital tax reform until October

European Commission proposes deferrals to tax intermediaries Directive’s reporting deadlines due to corona

The European Commission has proposed deferrals to the timelines of certain tax obligations due to the corona crisis.

For the Directive on Administrative Cooperation, the following referrals are proposed:

  • DAC 2: defer the time limit for exchanges of information on Reportable Financial Accounts by 3 months, i.e. until 31/12/2020
  • For DAC 6 – the tax intermediaries Directive:
    • Change the date for first exchanges of information from 31/10/2020 to 31/01/2021
    • Change the date for launching the 30-day deadline for the reporting of information from 01/07/2020 to 01/10/2020
    • Change the date for the reporting of ‘historical’ arrangements (i.e. arrangements that became reportable between 25/6/2018 – 30/6/2020) from 31/08/2020 to 30/11/2020

EU member states will have to approve the proposed deferrals by unanimity. A group of EU countries are reportedly calling for even further deferrals.

In the area of VAT, the Commission has proposed to postpone the entry into application of the VAT e-commerce package by 6 months. These rules will apply as of 01/07/2021 instead of 01/01/2021. For the proposed VAT deferrals, see here, here and here.

European Commission

European Commission extends its probe into IKEA

On 30 April, the European Commission announced that it will extend the scope of an ongoing investigation into Inter IKEA’s tax treatment in the Netherlands, which was initially opened on 18 December 2017.

In its 2017 opening decision, the Commission provisionally concluded that the transfer price of the IKEA IP rights may be too high, enabling IKEA to pay less tax and giving them an unfair advantage in breach of EU State aid rules.

But since 2017, Inter IKEA Systems has started to amortise the IKEA IP rights. The Dutch tax authorities confirmed the deduction of such amortisation in their annual tax assessments of Inter IKEA Systems’ tax returns.

The Commission now intends to examine whether the deduction of the amortisation is in breach of EU State aid rules.

European Commission’s tax timeline shifts

The European Commission has altered the timeline and content of its upcoming tax initiatives, initially expected for 10 June.

The Commission now intends to launch on 15 July three initiatives:

  • Action Plan to fight tax evasion and to make taxation “simple and easy”
  • Communication on tax good governance “in the EU and beyond”
  • Proposal to amend the Directive on Administrative Cooperation to include the exchange of information from online platforms (DAC 7)

Moreover, the Commission’s earlier plans to launch a Communication on business taxation for the 21st century, initially scheduled for 24 June, is now absent from the Commission’s planning. This is probably due to the OECD announcing that it would seek a political agreement on digital taxation by October only, rather than July (see article below).

European Commission publishes latest infringements package, including tax cases

In its May infringements package, the European Commission once again announced several new tax infringement cases that it will take against non-compliant EU member states.

For example, the Commission has referred the Netherlands to the Court of Justice of EU for discriminatory tax treatment of international versus domestic transfers of pension capital. Moreover, the Commission orders Luxembourg and Portugal to amend their legislation transposing the anti-tax avoidance Directive (ATAD), deeming that their national measures are too lax compared to ATAD’s minimum requirements. Read more

Commission does not confirm whether it investigates Facebook’s transfer of intangible assets from US to Ireland, and is not aware of how much firms earn by selling personal data

  • Question by MEP Carmen Avram (S&D/Romania)
  • Reply by Commissioner Gentiloni

Commission explains why Turkey was granted more time to comply with EU tax haven list requirements instead of being listed

  • Question by MEP Dimitrios Papadimoulis (GUE-NGL/Greece)
  • Reply by Commissioner Gentiloni

Commission says EU plastic tax could finance 4% of EU budget

  • Question by MEPs Roman Haider and Georg Mayer (ID/Austria)
  • Reply by Commissioner Hahn (budget)

Council publishes tax reform legislation by Barbados, Bahamas, Maldives and Morocco

The Council has published the legislative reforms undertaken by Barbados, Bahamas, Maldives and Morocco as part of the non-cooperative jurisdictions listing process.

For Morocco, see part 1, part 2, part 3, part 4, part 5, part 6, part 7 and part 8.

For Bahamas, see part 1, part 2, part 3, part 4, part 5 and part 6.

For Barbados, see part 1, part 2, part 3 and part 4.

And for Maldives, see part 1, part 2, part 3, part 4 and part 5.

C–661/18: Change of tax deduction method for years that have already elapsed

C‑168/19 and C‑169/19: Alleged loss of pensioner tax advantages

OECD announces delay in digital taxation agreement to October

The OECD has announced that it now plans to reach an international agreement on digital taxation in October, rather than the initially planned July deadline. However, the aim is to still finalise an agreement by the end of 2020.

Although no specific date has been confirmed yet, the most likely forum for the agreement will be the 15-16 October G20 finance ministers’ meeting. However, some aspects of an agreement may have to be delayed and agreed in separate stages in 2021. Moreover, Mr. Saint-Amans said that the corona crisis has given new momentum to minimum tax (Pillar II) discussions.

OECD’s Pascal Saint-Amans made the announcements at a webinar on 4 May. Read more

EBA publishes its inquiry into Cum-Ex and a 10-point action plan

The European Banking Authority (EBA) has published its inquiry and a 10-point action plan on the so-called Cum-Ex scandal.

EBA’s inquiry shows that national authorities do not share the same understanding of dividend arbitrage trading schemes, due to differences in Member States’ domestic tax law. EBA concluded that facilitating, or handling proceeds from tax crimes undermines the integrity of the EU’s financial system and, sets out a number expectations of credit institutions and national authorities under the current regulatory framework.

OECD webinar conference discusses future of country by country reporting

On 12-13 April, the OECD held a webinar to discuss the review of its BEPS Action 13, covering country by country reporting (CBCR).

At the webinar, several stakeholders called for public CBCR. For example, Clark Gascoigne from the FACT Coalition argued that public disclosure is only a matter of time.

A number of interventions also expressed support for Global Reporting Initiative’s (GRI) standard 207 on tax disclosures, emphasised that consolidated data should be disclosed on a country basis rather than aggregated data on an entity basis, called for more information on how tax administrations are using the CBCR information, and urged not to introduce big changes without a cost benefit analysis. Read more

France to impose digital tax this year regardless of any new international levy

France will introduce a new tax on big digital businesses this year whether or not there is progress towards an international OECD agreement, the French finance minister Bruno Lemaire said on Thursday 13 May. He added that given the corona context and economic strain caused by it, such a tax had never been more legitimate or more necessary. Read moreThis 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.