According to the European Commission’s Work Programme for 2021 published on 19 October, the following items should be expected for tax by June 2021 at latest:
Moreover, according to the Work Programme’s annexes, the familiar buzzwords public country by country reporting (CBCR), financial transaction tax (FTT) and the common consolidated corporate tax base (CCCTB) will continue to be the Commission’s priorities. Read more
The European Commission’s roadmap published on 22 October presents what is to be expected for the Commission’s upcoming legislative package concerning VAT for financial services. The Commission highlights that current VAT rules for financial and insurance services are criticised for being complex, difficult to apply and not having kept pace with the development of new services in the sector. This seems to have led to:
The initiative will aim to address these issues by modernising how VAT is applied in the sector. The Commission will launch a public consultation in the first quarter of 2021, followed by the legislative package in the fourth quarter of 2021. Read more
This is what DG TAXUD’s Reinhard Biebel confirmed when speaking at the 29 October SDG Summit organised by CSR Europe. Mr. Biebel also confirmed that the Communication would include “other points” than merely digital taxation. Read more
In its October infringements package, the Commission announced that it has referred the following EU countries to the Court of Justice of the EU:
In the infringements package, the Commission also issued warnings to several other member states for suspected breach of EU tax rules. Read more
On 24 November, the European Commission published an Inception Impact Assessment on the upcoming revision of the Directive on Administrative Cooperation (DAC8). The revision aims to improve cooperation between national tax authorities, particularly in emerging areas such as crypto-assets. This initiative should provide tax administrations with information to identify taxpayers who are actively using new means of exchange, notably crypto-assets and e-money, in order to curb tax fraud and evasion.
Stakeholders have until 21 December to provide feedback on the Inception Impact Assessment. A more comprehensive public consultation is scheduled for first quarter of 2021, followed by the proposal in the third quarter of 2021. Read more
On October 28, the new FISC Committee of the European Parliament held a hearing with the Commission and OECD on international tax reform.
At the hearing, OECD’s Pascal Saint-Amans pointed to the (now confirmed) Biden administration and that it might take until March for the OECD to find out what its stance on Pillars 1 and 2 are. He did point out that both political parties in the US have said that they would retaliate in case of unilateral digital taxes. Mr. Saint-Amans also argued that EU countries could already go ahead with Pillar 2, and that it is understandable that the OECD work is delayed by a few months given COVID and the US elections.
DG TAXUD’s Benjamin Angel contended that OECD needs time until mid-2021, but that this would be the last deadline for the European Commission. Answering to a question by MEP Marek Belka (S&D/Poland), he also underlined that the Commission will need a new own resource based on digital tax income.
European Parliament’s FISC Committee has published its work plan for the months ahead. According to the work plan, notably the following are to be expected:
On 16 November, European Parliament’s FISC Committee held a hearing on the role of tax policies in post-COVID economic recovery. The hearing hosted as external speakers Grace Perez Navarro from the OECD, Joaquim Miranda Sarmento, Professor at the University of Lisbon and Liina Carr, ETUC Confederal Secretary.
At the hearing, Ms. Navarro emphasised that governments will have to look at different angles of tax policy to support post-COVID recovery, ranging from fighting tax avoidance to environmental and labour taxation. Professor Sarmento called for tax support measures for SMEs, and to create minimum and maximum corporate tax rates (25%-50%). Ms. Carr among other measures underlined the importance of public country by country reporting (CBCR).
In their reactions, FISC MEPs stressed the need to reduce the tax burden on SMEs, shifting it instead to those who can and should pay more taxes. The discussion thus focused on ways to develop the financial transactions tax (FTT), recalibrate corporate taxation and develop green taxes. Read more
FISC Committee has published its first draft motion for resolution, prepared by the Committee Chair MEP Paul Tang. The resolution, which focuses on the EU list of “tax havens”, laments the removal of jurisdictions such as Cayman Islands from the EU list. It also calls for EU member states to be subjected to the same criteria than the ones set for third countries.
The draft resolution will be subject to further amendments, and will be voted in the ECON Committee (under which FISC Committee functions) on 12 December. The resolution is legally non-binding. Read more
Commission clarifies what methodology it used to calculate EUR 10 billion revenue estimation for Single Market Tax
Commission estimates tax revenue losses in the EU due to tax avoidance and VAT gap
The Council’s draft Conclusions, adopted on 27 November, focus on tax challenges from digitalisation, economic recovery and taxation, and tax good governance. They constitute EU member states’ positions on the various tax questions, and include the following:
EU member states have reached a consensus on the Commission’s latest amendment to the Directive on tax administrative cooperation (DAC 7).
The Council text retains the main elements of the Commission’s initial proposal, which establishes an obligation on digital platforms to report once a year to tax authorities all revenues generated by vendors or service providers through their platforms.
The EU Council text specifies that the reporting obligation should cover both cross-border and non-cross-border activities, and maintains that the reporting obligation would apply to all platforms regardless of their legal nature, with the exception of government entities.
The Council also proposes to postpone the application of DAC 7 by 1 year – from 1 January 2023. Council agreement
In a statement issued on 12 October, the OECD announced that an agreement on international tax reform (including digital taxation) would be postponed until mid-2021. The negotiations failed to reach their initial timeline due to COVID and continued US insistence on its safe harbour proposal for Pillar 1.
Despite the timeline setbacks, G20 finance ministers already committed to further work with the aim of reaching an agreement by the mid-2021 deadline. Ahead of the G20 meeting, the OECD also published a report on its latest tax work progress. The report provides insights on the state of negotiations.
Finally, the OECD also published its blueprints for Pillar 1 and Pillar 2 and launched a public consultation on them, with a deadline of 14 December.
On 14 October, French finance minister Bruno Lemaire announced that France will begin collecting tax on big digital companies this year after international talks failed to agree on a global levy.
“With the US it has always been clear,” Bruno Le Maire said in a call with reporters after a virtual meeting of G20 finance officials.
“If there was no agreement at the OECD in the autumn, we would levy our national tax,” he added. “There has never been any ambiguity on the subject.” On 25 November, France confirmed that it will levy a tax on digital giants before Biden administration takes office Read more/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.
