News from the EU - October 2019

European Commission

Taxation: Commission requests that ITALY communicate national transposition measures as regards VAT obligations for supplies of services and distance sales of goods

The European Commission decided today to send a reasoned opinion to Italy following its failure to communicate national transposition measures around the place of supply of services and on rules governing invoices for VAT purposes as required by EU law (Article 1 of Council Directive 2017/2455 amending Directive 2006/112/EC and Directive 2009/132/EC). The rules are part of a broader package of measures agreed by the EU Member States in 2017 to improve VAT collection in e-commerce and cut down on VAT fraud in the sector. The deadline to comply was 31 December 2018. If Italy does not act within the next two months, the Commission may decide to bring the case before the Court of Justice of the EU.

Taxation: Commission requests that GERMANY withdraw recent legal changes affecting European businesses selling goods online to German consumers

The Commission decided today to send a letter of formal notice to Germany in relation to its new legislation on distance sales of goods sold through digital marketplaces. According to German law, as of 1 October 2019, a marketplace becomes jointly and severally liable for the VAT due on goods being sold by EU companies through its platform when transport for these goods begins or ends in Germany. This liability can be avoided only if marketplaces produce a paper certificate which has been provided by the German Tax Administration to businesses selling on their electronic platform. The Commission considers this obligation as an inefficient and disproportionate measure that hinders the free access of EU businesses to the German market in violation of EU Law. Furthermore, this measure comes as EU Member States have already agreed on common and more efficient measures to combat VAT fraud – those rules will come into force on 1 January 2021. The obligations put on the marketplace operators to avoid the joint and several liability go beyond what is provided for by the EU rules and are at odds with the goals of the Digital Single Market Strategy for Europe. If Germany does not act within the next two months, the Commission may send a reasoned opinion to the German authorities.

Gentiloni re-iterates his tax priorities

The future Commissioner for taxation, Paolo Gentiloni, confirmed during the hearing that his priorities would be CCTB, digital taxation and carbon taxes. He would also maintain the fight against tax evasion and avoidance high on the agenda.

Gentiloni specified on international tax reform that the EU would resume work on a unilateral digital tax solution in Q3 2020 if there is no OECD agreement by then.

In reply to a question from Ludek Niedermayer (EPP/Czech Republic), Gentiloni also re-iterated the importance of continuing VAT reforms in the upcoming term.

He further elaborates on his tax programme in his letter to MEPs.

 

European Parliament

Simplified procedure proposed to speed up adoption of VAT distance sales of goods proposals

On 7 October, ECON MEPs met to discuss MEP Ondrej Kovarik’s (RE/Czech Republic) draft report on the Commission’s proposal on VAT on distance sales of goods.

At the meeting, Mr. Kovarik underlined the urgency for the Parliament to adopt its opinion as the Council already approved its own position earlier this year. He proposed, therefore, to adopt the opinion through a speedier simplified procedure. This would mean that the opinion is automatically adopted in ECON if no objections are raised by 18 October, and the Plenary can then directly adopt it in early-November.

At the 7 October hearing, MEPs across political Groups supported the proposed use of the simplified procedure. 

European Parliament publishes draft position on VAT for defense sector

The European Parliament has published its draft position on the Commission’s proposal for VAT and excise exemptions for the defence sector. The draft position was prepared by the MEP Paul Tang.

Overall, Mr. Tang supports the Commission’s proposal but he proposes to amend the definition of defense effort within the EU framework to expand the scope of the proposal’s provisions.

European Parliament to set up a permanent tax Committee

On 16 September, the coordinators of European Parliament’s ECON Committee agreed to set up a permanent tax sub-Committee.

This Committee would replace the several ad-hoc tax Committees we have seen in past years. It will keep tax prominently on the European Parliament’s agenda for the whole of the new term.

The Committee’s exact mandate is yet to be decided, but the Greens at least would like it to also include AML. Moreover, the Coordinators will need to decide whether the Committee takes up actual legislative work or just own-initiative reports.

The setting up of the Committee will have to be approved by the Parliament’s Conference of Presidents, but they are unlikely to turn down the Coordinators’ decision.

Even though the European Parliament has little formal powers on tax, it demonstrated during the last term its ability to set the agenda and harness public opinion and pressure.

A few measures, including the tax intermediaries Directive, public country by country reporting (CBCR) and the whistleblower protection Directive can be traced back to the Parliament’s advocacy.

European Parliament publishes draft position on VAT distance sales of goods 

The MEP Ondrej Kovarik (RE/Czech Republic) has published his draft report on the Commission’s proposal on VAT for distance sales of goods. This paves the way for the proposal to finally become EU law. 

ECON Committee will vote on the draft report in the upcoming weeks, with a final vote in Plenary to take place another few weeks after that. 

The European Parliament only provides its non-binding opinion on the Commission proposal. EU member states make the actual decision by unanimity, which they already did on 12 March 2019. Once the Parliament has adopted its final position, the Council decision can become EU law.

 

International

OECD publishes report on fuel taxation

The OECD has published a new report which argues that taxes on polluting fuels are too low to encourage a shift to low-carbon alternatives.

The report maintains that taxing polluting sources of energy is an effective way to curb emissions, and the income generated can be used to ease the low-carbon transition for vulnerable households. Yet 70% of energy-related CO2 emissions from advanced and emerging economies are entirely untaxed, offering little incentive to move to cleaner energy, according to a new OECD report.

 

Link: https://www.oecd.org/tax/taxing-energy-use-efde7a25-en.htm?_cldee=c3RlcGhlbi5oLmRhbGUuZnJhbmNlQGdtYWlsLmNvbQ%3d%3d&recipientid=contact-5a992cc1bc6ee61180e1c4346bad508c-502a5cb11b1d4d058b14780874ace743&esid=98154f19-0be1-e911-a97b-000d3ab6d727

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News from EC

News from the EU - October 2019

The European Commission decided today to send a reasoned opinion to Italy following its failure to communicate national transposition measures around the place of supply ofservices and on rules governing invoices for VAT purposes as required by EU law...

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Disclaimer:  The information contained in the present page is general and does not constitute legal advice. Before taking any decision or action on the above information you should take the appropriate professional advice.