Worth re-iterating is the Commission’s intention to publish in January – February 2019 a non-legislative initiative to identify areas on tax to move to qualified majority voting – rather than the current unanimity decision making on all tax files. Such a move is in theory permitted under the Lisbon Treaty (using the so-called “passerelle clause”), but it would require a unanimity of member states’ parliaments to pass. Needless to say, at this stage it appears unlikely…
European Commission unveils Work Programme 2019 – 23 October 2018
Worth re-iterating is the Commission’s intention to publish in January – February 2019 a non-legislative initiative to identify areas on tax to move to qualified majority voting – rather than the current unanimity decision making on all tax files. Such a move is in theory permitted under the Lisbon Treaty (using the so-called “passerelle clause”), but it would require a unanimity of member states’ parliaments to pass. Needless to say, at this stage it appears unlikely.
ECON Committee discusses generalised reverse charge mechanism – 22 October 2018
ECON Committee of the European Parliament has held a brief exchange of views on the generalised reverse charge mechanism (GRCM), on the basis of the draft report prepared by the MEP Gabriel Mato (EPP/SPA).
At the meeting, Mr. Mato presented the main proposals in his draft report and called for support from the other political Groups, some of which are opposed to the GRCM overall. Pervenche Beres (S&D/FRA) was not able to confirm what would be the position of her centre-Left Group, but emphasized that moving to a definitive VAT system would be the most effective means of fighting against VAT fraud.
Bernd Lucke (ECR/GER) called for greater flexibility for member states to choose whether or not they use the GRCM. Petr Jezek (ALDE/CZE) welcomed the progress reached in the Council, and called for the European Parliament to finalise its opinion by December. And finally, Molly Scott Cato (Greens-EFA/UK) provided an overview of reasons for which her Group opposes the GRCM altogether.
In terms of next steps, ECON Committee will vote on the draft report probably sometime in November or December. This will be followed by a final vote in Plenary, after which the Parliament’s option is finalised.
Worth remebering that the Parliament only provides its non-binding opinion, but this opinion is nonetheless needed before the Commission proposal can become EU law. As a reminder, member states already reached a political agreement on GRCM earlier in October, but will now have to wait for the Parliament to finish its own work.
Court of Justice of the EU – Rulings
C‑504/17: Energy taxation – 17 October 2018
The Eighth Chamber of the CJEU has ruled that by not ensuring that the minimum levels of taxation applicable to motor fuels laid down by Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity were applied to gas oil used as fuel for propelling private pleasure craft, and by permitting the use of marked fuel for propelling private pleasure craft, even where that fuel is not subject to any exemption from, or reduction in, excise duty, Ireland has failed to fulfil its obligations under Articles 4 and 7 of Directive 2003/96 and Council Directive 95/60/EC of 27 November 1995 on fiscal marking of gas oils and kerosene respectively.
C‑249/17: VAT on consultancy services (Ryanair – see above “No 2nd Class Taxable Person – Holding Companies entitled to Input VAT Deduction” – for a detailed commentary- 17 October 2018
The First Chamber of the CJEU has ruled that a company which intends to acquire all the shares of another company in order to pursue an economic activity consisting in the provision of management services subject to VAT to that other company, the right to deduct, in full, input VAT paid on expenditure relating to consultancy services provided in the context of a takeover bid, even if ultimately that economic activity was not carried out, provided that the exclusive reason for that expenditure is to be found in the intended economic activity.
C‑153/17: Origin and scope of the right to deduct VAT – 18 October 2018
The Sixth Chamber of CJEU has ruled that even where the general costs relating to supplies of moveable goods by hire purchase are passed on not in the amount due by the customer in respect of the supply of the goods concerned, that is to say the taxable part of the transaction, but in the amount of the interest due in respect of the “finance” part of the transaction, that is to say the exempt part thereof, those general costs must nonetheless be considered, for the purposes of VAT, to be a component of the price of that supply and, second, member states may not apply a method of apportionment which does not take account of the initial value of the goods concerned when they are supplied, since that method is not capable of ensuring a more precise apportionment than that which would arise from the application of the turnover-based allocation key.
Opinion piece: Europe needs tax system overhaul for digital age – 24 October 2018
Nicolas Colin, a former French civil servant, argues in his opinion piece published in Politico that taxing corporations should be scrapped altogether, in order to ensure that the tax system is better suited for an increasingly digitalising economy.
Instead, the focus should be in taxing personal income on one hand (personal income tax and payroll tax, for example), and individual transactions on the other (such as with VAT or sales taxes). However, Mr. Colin acknowledges that this is an unlikely reform to take place due to a variety of economic and political reasons.
On the same theme see also « La numérisation de l’économie – quelques
réflexions sur les conséquences pour les régimes de taxation et leur administration »
Stephen Dale – ERA Forum
Journal of the Academy of European