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The infringement package published by the European Commission (EC) on 25 July includes some tax-related cases, such as:
As usual, if the Member States (MS) fail to address the EC’s concerns, they may face legal action.
The roadmap on the functioning of the EU’s Anti-Tax Avoidance Directive (ATAD) lists minimum standard rules targeting the most common forms of aggressive tax planning and tax avoidance practices that directly impact the EU internal market.
Under Article 10, the EC must evaluate ATAD implementation and report to the Council. Stakeholders had until 11 September to provide feedback, which will inform the EC’s report on ATAD and potential legislative action.
On 1 August, the EC published an implementing regulation introducing a common template and electronic formats for country-by-country (CBC) reports. As a reminder, large multinational corporations operating in the EU must disclose information on the corporate taxes they pay, including contextual information, in the form of annual CBC reports. Stakeholders had until 6 September to provide their feedback.
In September, the EC published a new paper examining the fiscal implications of the global transition to climate neutrality. The paper focuses on government expenditures, revenues, and the need for a comprehensive fiscal strategy within country level transition plans.
It analyses the impact of climate change and related policy on public finances, highlighting potential decreases in public revenues and increased expenditures due to climate-related damages and mitigation measures. Additionally, it explores tax incentives and the revenue potential of tax measures such as air and maritime transport levies as well as financial transaction taxes (FTT).
Ursula Von Der Leyen (VDL) was re-appointed as EC’s President for a second 5-year term in a European Parliament (EP) Plenary vote on 18 July. She secured 401 votes, well above the 361 needed, 284 votes against, 15 abstentions and 7 void votes. This is a much larger margin than what she gained in2019..
VDL will now form her new “College of Commissioners” and assign thematic portfolios to the Commissioner candidates appointed by EU Member States, including the new tax Commissioner for DG TAXAUD.
Speculation is growing about which candidate will get which portfolio, but the final ‘line-up’ won’t be revealed before16 September. After nominations, the EP will hold hearings to assess candidates, with the power to approve or reject the new EC as a whole – although MEPs can use this as a leverage to try to force VDL and Member States to change individual appointees as well.
In the meanwhile, VDL published her political priorities for the next 5 years. They indicate a clear shift towards improving Europe’s competitiveness, reducing administrative burdens, unlocking the potential of EU’s capital markets, addressing geopolitical challenges and continuing to foster Europe’s twin digital and sustainable transitions.
Tax initiatives will likely align with the above-mentioned priorities.
The EP’s subcommittee on tax matters (FISC) held its constitutive meeting on 23 July, following the June 2024 elections. New FISC MEPs elected their bureau for a two-and-a-half year term,. with the following appointments:
FISC’s work will begin in autumn. New Chair Pasquale Tridico plans to focus on gathering information and expert input to make constructive tax policy recommendations, continuing his predecessor Paul Tang’s approach.
The work of the Hungarian Council Presidency resumes after the summer break. According to latest information and intelligence, the Presidency is aiming for an agreement on the VAT in the Digital Age (ViDA) at the finance ministers’ meeting (ECOFIN) on 8 October. In parallel, they plan to advance negotiations on the Energy Taxation Directive (ETD), with the latest relevant Council working party meeting taking place on 16 September. Time will tell how much progress on these – as well as other outstanding tax files – can be reached in the next few months and until the end of Hungary’s Council Presidency. Poland will take over from Hungary in January 2025.
The OECD published four reports on tax transparency and the link between taxation and inequality on 25 July. The reports confirm ongoing income inequality and the rising concentration of wealth at the highest end of the distribution. While some countries, in particular middle-income countries, have seen declines in income and wealth concentration at the top, inequality persists in many countries, and the share of wealth held by the top 0.001% globally has been rising.
There is therefore significant scope to improve the progressivity of tax systems, such as by amending tax schedules, broadening tax bases, and achieving greater neutrality between the taxation of different types of income and assets. However, any reform requires careful consideration of potential policy trade-offs and impacts on economic growth.
Here are the links to the 4 reports:
*Article published on Agence Europe [Read more]
The EU Court of Justice (CJEU) upheld the validity of Directive 2018/822 on administrative cooperation in the field of direct taxation (DAC6), specifically Article 8, which addresses aggressive cross-border tax arrangements. This judgment, published on29 July, Clarifies an earlier ruling from 8 December 2022. The previous ruling had stated that the obligation for lawyer to notify other intermediaries involved in the tax arrangement of their own reporting obligations breached professional secrecy and applied only to lawyers. The CJEU argued that the confidentiality of the lawyer-client relationship is uniquely protected due to the lawyer’s special role within the judicial systems of Member States.
The Belgian Constitutional Court had referred these questions to the CJEU for a preliminary ruling. In 2020, organisations representing lawyers and tax consultants, along with bar associations, challenged the Belgian law transposing the directive, seeking its annulment.
*Article published on Agence Europe [Read more]
A new study, published on 22 August, provides a global and systematic ex-post evaluation to identify policy combinations that have led to significant emission reductions among 1500 climate policies implemented between 1998 and 2022 across 41 countries from six continents.
The authors’ approach integrates a comprehensive climate policy database with a machine learning–based extension of the common difference-in-differences approach. The study identified 63 successful policy interventions, resulting in total emission reductions between 0.6 billion and 1.8 billion metric tonnes CO2.
The authors’ insights on effective but rarely studied policy combinations highlight the important role of price-based instruments in well-designed policy mixes and the policy efforts necessary for closing the emissions gap. Interestingly, tax related measures were identified as among the most effective policy measures in helping to curb carbon emissions.
The report, published on 9 September after months of delay, outlines a comprehensive problem analysis and potential solutions to help the EU regain its global competitiveness. While its recommendations are not binding, they are likely to generate political momentum for significant changes at the start of the new EU term.
Authored by Mario Draghi, former Italian prime minister and previously chair of the European Central Bank (ECB), the report carries considerable weight.
The report strikes a balance between calling for vast investment of up to EUR 800 billion to support green energy and sustainable transition, European defence industry, technology and productivity improvements and more. This funding should come from a combination of both private but also public funding, including via common EU debt issuance. ‘In turn’, the report also calls for strong reductions in administrative burdens on companies and legislative simplification. In that sense, the report could be seen as ‘offering something for everyone’, politically speaking.
Tax is not a primary focus, though the report suggests tax reforms could reduce administrative burdens, and new taxes at either EU or national levels may help raise part of the EUR 800 billion.
The report explicitly calls for a review of energy taxes to reduce costs for consumers and businesses and address tax barriers.
The CJEU issued a landmark ruling on 10 September in the Apple Ireland tax state aid case. Apple must now pay a EUR 13 billion tax bill back to the Irish tax administration.
In 2016, the EC ordered Apple, whose EU headquarters are in Cork, to repay EUR 13 billion of the money it had saved through tax reductions allowed under Irish law. However, the EC argued in 2016 that the Irish rulings that allowed such tax arrangements – one from 1991 and one from 2007 – “artificially” reduced Apple’s tax burden, breaching state aid rules.
Apple and the Irish government appealed against the EC’s decision in 2016 and 2017, and the EU’s General Court eventually annulled the Commission’s ruling in July 2020. The EC then appealed against this judgement in September 2020, bringing the case to the CJEU – the highest court in the EU.
The CJEU ruling is final, handing a big victory to Commissioner Margarethe Vestager who is just about to end her mandate as soon as the new Commission begins its work.
*Article inspired by Euroactiv [Read more]
European Commission
EC publishes proposals on an electronic VAT exemption certificate (Directive)
European Commission
EC publishes proposals on an electronic VAT exemption certificate (Implementing Regulation)
European Commission
EC publishes report on VAT treatment of vouchers
European Parliament
EP research services publishes paper giving an overview of pending tax legislative files and reflecting what is to come next
OECD
OECD publishes latest corporate tax statistics
Agence Europe
G20 makes pledge on taxation of high net worth individuals
EU Tax Observatory
Automatic exchange of bank information can reduce possibilities for tax evasion, says EU Tax Observatory
Bruegel
Pascal Saint-Amans publishes report with recommendations to new EU tax Commissioner
