According to Mr. Angel, the European Commission will enact a prospective OECD agreement on international tax reform (on the taxation of the digitalized economy) into EU law. If no such agreement is reached this year, the Commission will proceed with EU only action…
Accountancy Europe’s Tax Day: European Commission provides further details on its plans for months ahead
At Accountancy Europe’s Tax Day on 19 February, the European Commission DG TAXUD’s new Director, Benjamin Angel, provided an update on the Commission’s tax priorities.
According to Mr. Angel, the European Commission will enact a prospective OECD agreement on international tax reform (on the taxation of the digitalized economy) into EU law. If no such agreement is reached this year, the Commission will proceed with EU only action.
He also noted that the CCCTB proposal of the Commission is currently on hold due to the OECD’s international tax reform work. The implication (not explicitly stated by Mr. Angel) is that the Commission might adjust its CCCTB proposal to adapt it to new OECD tax rules.
The Commission also plans to launch a proposal in June to amend the directive on administrative cooperation on tax (DAC) to enable the exchange of information on data (in relation to all taxes) from online platforms. The Commission launched a consultation on this a few days ago (see article below).
Mr. Angel confirmed, moreover, that the Commission is reflecting on the possibility of an EU framework on cooperative compliance. Accountancy Europe has worked extensively on this topic, and for example already in 2018 published a paper on the role of accountants and tax assurance in cooperative compliance.
And finally, Mr. Angel underlined that the Commission is strongly considering to use Article 116 of the EU Treaty (TFEU) for tax proposals in the future. That Article allows the Commission to use the ordinary legislative procedure (co-decision by the Council and the Parliament, Council decides by qualified majority) for tax proposals if they address potential distortions in the EU internal market
European Commission
Commission mulls changes to tax admin cooperation to address digital economy
The European Commission has launched a public consultation to review the directive on administrative cooperation for tax (DAC). The consultation was accompanied by a Roadmap that provides rationale and insights into the Commission’s intentions.
Essentially, the Commission aims to address some identified shortcomings in DAC and to provide tax administrations with information on taxpayers who generate income (revenues) through digital platforms.
The consultation runs until 6 April 2020.
Commission considers revising VAT invoicing rules, including e-reporting
The European Commission has published a report on VAT invoicing rules, accompanied by a staff working document based upon the report produced by Economisti Associati last year – into which the IVA provided a lot of input.
The report provides an assessment on the functioning of VAT invoicing rules in the EU and gives indications on possible future initiatives from the Commission in this area.
Interestingly, according to the report the Commission is aware of potential administrative burdens stemming from different e-reporting rules across the EU and the BCAT. It will, therefore, begin a “reflection on the e-reporting requirements and in particular regarding the impact on the internal market caused by the different rules applicable in Member States”.
European Commission publishes further details on upcoming anti-tax fraud measures
On 4 March, the European Commission published a Roadmap that indicated its plans for tax policy reforms in the upcoming months and years.
In June, the Commission will publish an Action Plan to fight tax evasion and simplify taxation. This Action Plan will be accompanied by two legislative proposals:
- To amend the Directive on administrative cooperation in tax (DAC) to enable exchange of data from digital platforms to tax authorities (public consultation currently open on this)
- To authorise the Commission to open negotiations on an agreement between EU and “a major economic player” on administrative cooperation, combating fraud (in particular in ecommerce) and recovery of VAT claims
The Action Plan itself will include indications of additional future legislation and measures. The Roadmap confirms that the Commission will look into the following:
- “Encouraging” cooperative compliance
- Procedures for withholding taxes on cross-border investment
- New digital solutions to improve tax admins’ data analysis
- Digital solutions to levy tax at source in real time
- Switch from exchange of information to sharing of tax data real-time
- Mechanisms to solve cross-border tax disputes in both direct & indirect taxes
- Simplification of VAT rules (without specifying what measures)
- Follow-up to EU tax haven list (including defensive measures, technical help for third countries)
Public consultations will be launched ahead of each legislative initiative in due course.
New Commission Single Market barrier report finds tax a major obstacle for SMEs
The European Commission has published a report that identified remaining Single Market barriers for companies.
Interestingly, the report finds that the lack of tax harmonisation remains one of the main obstacles faced by business when operating cross-border. It therefore calls for further efforts to reduce tax divergences and to reconsider the unanimity requirement in the Council.
The report also underlines that these tax divergencies are even greater for SMEs than other companies, and constitute a major barrier for SMEs’ operations across borders.
The report’s recommendations are not legally binding, but will inform the Commission’s future actions.
Commission publishes circular economy action plan calling for greener VAT
The European Commission has published its circular economy Action Plan, which outlines the Commission’s views for what measures are needed to foster a more sustainable economy in Europe.
One of the measures that the Commission highlights in the Action Plan is green VAT. More specifically, the Commission wants to enable Member States to use VAT rates to promote circular economy activities that target final consumers, notably repair services.
Commission clarifies timeline for upcoming tax initiatives
The European Commission has clarified the timeline for its upcoming major tax initiatives. On 10 June, the Commission will publish its Action Plan on the fight against tax fraud. And on 24 June, the Commission will publish its Communication for business taxation in the 21st century.
For further indications of what should be expected from these initiatives, see the previous Tax Policy Update and this article from Tax Journal.
Commission launches survey on transmission and exchange of payment data to fight VAT fraud
The European Commission has launched a survey for actors in the payment industry in order to gather their views on the implementation of the legislative package on the transmission and exchange of payment data in order to fight VAT fraud. The survey is open until 17 April.
Council
ECOFIN: EU finance ministers formally adopt two VAT files
At the 18 February ECOFIN, the finance ministers adopted new rules for exchange of VAT payment data to fight VAT fraud (here and here), and simplified VAT rules for SMEs.
The VAT simplifications for SMEs will apply from 1 January 2025. The anti-VAT fraud measures in cross-border e-commerce transactions will apply from 1 January 2024.
CJEU
C405/18: Transfer of tax residency to another EU Member State
C-75/18 & C-323/18: The special taxes levied in Hungary on the turnover of telecommunications operators’ undertakings in the retail trade sector are compatible with EU law
C-482/18: The system of penalties relating to the Hungarian tax on advertising is not compatible with EU law
Others
The VAT Expert Group – Upgrading the EU VAT System
The VAT Expert Group had a call on 4th March 2020 discussing the upgrading of the EU VAT system. A paper was prepared by the VAT Expert Group (VEG), aiming at giving VEG input to the EU Commission´s document “VEG No 086: Upgrading the EU VAT system – A reflection on possible ways forward” (VEG No 086).
The paper can be found here: https://www.vatassociation.org/images/documents/VEG-Initiative.pdf
The CFE Fiscal Committee prepared an Opinion statement FC 1/2020 on the harmonization of VAT penalties in the EU
This was submitted to the EU institutions on 6th March 2020. The Opinion statement discusses issues surrounding the need for harmonization of VAT penalties in the EU.
The Opinion statement can be found here: https://www.vatassociation.org/images/documents/CFE-procedures.pdf
European Commission – Commission publishes updated tax data from across Europe
European Commission – OECD seeks input on Reporting for Platform Operators in the Sharing and Gig Economy
European Commission – Commissioner Gentiloni delivers speech outlining tax priorities for the new term
International – European Economic Advisory Group publishes report on international and EU tax reforms
International – Think-tank Bruegel argues carbon border tax could be counter-productive
National – Austria launches task force on environmental tax reform
National – UK to consider opposition to digital tax in pursuit of U.S. trade deal
