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European Commission’s (EC) re-elected President Ursula von der Leyen announced the portfolio allocations for Commissioner nominees and outlined her expectations in ‘mission letters’ on 17 September.
VDL has appointed Wopke Hoekstra from the Netherlands as the new Commissioner for taxation and climate, combining both portfolios under one person. Green tax measures are likely to feature prominently on the agenda, as in her mission letter to Hoekstra, VDL has, for example, asked him to focus on the following initiatives:
Other familiar tax initiatives featured in Hoekstra’s mission letter include the fight against tax avoidance and evasion, and identifying solutions for a “coherent tax framework for the EU’s financial sector”. Moreover, all Commissioner nominees – including Hoekstra – have been tasked with cutting administrative burdens on companies. For example, VDL calls on all the nominees for a 25% reduction in reporting burdens, with a 35% reduction specifically for SMEs.
The next EC may also focus on developing new ‘EU own resources’ (i.e., pan-EU taxes) to collect funds for Europe’s massive investment needs into its digital and sustainable transitions, improve its productivity, respond to global challenges etc. In this light, the Polish Commissioner nominee Piotr Serafin is of interest as his portfolio includes leading work to introduce new EU own resources.
Commissioner nominees will face European Parliament (EP) hearings from November 4-12, with the new EC potentially starting its work in December. Any delays, such as a candidate rejection by the EP, could push the start to 2025.
The EC published its latest monthly infringements package on 3 October. Notably, the EC announced it would refer Spain, Cyprus, Poland and Portugal to the Court of Justice of the EU (CJEU) for failing to notify the measures transposing the Pillar 2 Directive into national law.
All EU Member States were required to bring into force the laws necessary to comply with the Pillar 2 Directive by 31 December 2023 and communicate the text of those measures to the EC immediately. While the EC acknowledges these countries’ efforts to finalise the Directive’s implementation into national law, it has decided to initiate the formal step of referring them to the CJEU due to significant delays.
On 19 September, the EP Plenary held a debate with representatives of the EC and the Council on the historic CJEU ruling on the Apple state aid case and its consequences. The court’s decision requires Ireland to recover €13 billion in unpaid taxes from Apple, and overturns a previous General Court ruling that was favourable to Apple. This ruling is final and definitive. Practically all MEPs, from across the political groups who spoke, welcomed the judgement and voiced their concerns about profit shifting and ‘aggressive tax planning’ by large multinationals and criticised unfair state aid practices in the EU.
Find out more (recording of the session)
On 9 October, the EP Plenary debated a proposal with the EC’s Vice-President Margaritis Schinas to raise taxes on the world’s richest people to end poverty and reduce inequality.
MEP Gabriele Bischoff (S&D/Germany) opened the debate by arguing that while families and small companies are required to pay their taxes, the “super-rich” do not contribute their fair share. Mr. Schinas acknowledged that this is a growing concern for European citizens, highlighting ongoing international discussions at the G20 and OECD levels. For example, he referenced to a G20 request for the OECD to look into the exchange of real estate information for tax purposes.
The rest of the discussion broadly followed the Left-Right divide, with MEPs from both sides either supporting or, for various reasons, criticising higher taxes on the wealthiest. For instance, concerns were raised about capital flights and the creation of an investment-unfriendly environment in Europe. Mr. Schinas concluded by once again emphasising the importance of international cooperation, insisting that the time has come to address tax avoidance and inequalities.
Find out more (recording of the session)
MEP Herbert Dorfmann (EPP/Italy), responsible for EP’s opinion on the withholding tax Directive (FASTER), has published a new draft report on the file, in which he proposes for the EP to adopt its opinion to the Council’s final agreement through a so-called fast-track procedure. This would ensure that FASTER is published in the EU Official Journal more quickly.
The Council reached a final agreement on the EC’s FASTER proposal back in May 2024. However, as the Council position differed significantly from the initial EC proposal, the EP was asked to provide a new opinion on the basis of the Council text.
Although the EP now has a legislative role on tax files, including FASTER, its non-binding opinion is still required before a tax proposal can become EU law. With MEP Dorfmann’s fast- track suggestion, the EP opinion could be delivered this year, thus enabling the Council’s May position to be published more swiftly in the EU Official Journal and formally enshrined in EU law.
On 8 October, Member States’ finance ministers (ECOFIN) updated the EU list of non-cooperative jurisdictions for tax purposes. Antigua and Barbuda was removed from Annex I (list of non-cooperative jurisdictions) after being granted a supplementary review by the Global Forum on Tax Transparency and Exchange of Information with regard to exchange of information on request. However, pending the results of this review, Antigua and Barbuda will remain on Annex II (state of play of commitments).
Following this update, the number of countries on the EU list (Annex I) now stands at 11: American Samoa, Anguilla, Fiji, Guam, Palau, Panama, the Russian Federation, Samoa, Trinidad & Tobago, US Virgin Islands, and Vanuatu.
Additionally, 9 jurisdictions now feature in Annex II, having made commitments to improve their tax good governance. The EU will closely monitor these commitments to make sure they are fulfilled.
On 8 October, ECOFIN ministers also approved the EU’s position for the 79th session of the UN General Assembly. In this position, the EU regrets that the UN Terms of Reference for international work on taxation does not consider its key points, such as consensus based decision making and maintaining the UN’s work at a high-level nature.
The EU also noted that insufficient account has been given international fora for advancing international tax cooperation, such as the OECD.
The EU concluded that “for the UN Framework Convention and its protocols to be successful, with the broadest participation, coverage and implementation possible at the global level, more needs to be done to ensure a fair balance of interests of all parties”.
