European Commission: Communication on business taxation for 21st century to be published 28 October 2020..
Communication on business taxation for 21st century to be published 28 October 2020
According to the latest timetable information from the College of Commissioners, the much-anticipated Commission Communication on Business taxation for the 21st century is scheduled to be published on 28 October. As a reminder, the Communication will set out the Commission’s thinking and possible timelines on digital taxation.
European Commission publishes new VAT gap report, EUR 164 billion in revenue could be lost in 2020 due to COVID
On 10 September, the European Commission published its latest VAT gap report. According to the report, EU countries lost an estimated EUR 140 billion in VAT revenues in 2018. The report also notes that although the VAT gap has “improved marginally” in past years, figures for 2020 forecast a reversal of this trend with a potential loss of EUR 164 billion in 2020 due to the effects of the COVID pandemic on the economy.
Informal ECOFIN on 11-12 September had tax high on its agenda
On 11-12 September, EU finance ministers gathered in Berlin for an informal ECOFIN chaired by the German Council Presidency.
According to preparatory documents for the meeting seen by Accountancy Europe, tax featured high on the agenda of the ministers. The dedicated tax session focused on the following:
How the EU should deal with a prospective OECD agreement on Pillar 1
How to reach a common EU approach to minimum taxation
How to reform the EU Code of Conduct Group on business taxation
Which VAT measures from the Commission’s 15 July tax package should be prioritized.
More discussions on the financial transaction tax (FTT), “digital levy” and a Common Consolidated Tax Base as EU budget contributions by” stakeholders who benefit most from the EU Single Market” (at a separate session)
Finance ministers discuss tax at informal ECOFIN
At an informal ECOFIN meeting on 11-12 September, EU finance ministers discussed EU tax policy.
The discussion reportedly revealed that EU countries are somewhat divided on the question of using certain taxes as EU own resources. According to Agence Europe, at least Luxembourg, the Netherlands, Sweden, Estonia, Bulgaria and the Czech Republic do not believe that there is a need to change the current own resources system. But they would be open to analysing proposals for new own resources.
France re-iterated the importance of digital taxation and frustration with the US’s blocking of the OECD’s negotiations, but reportedly did not get echo from the other countries. Bruno Lemaire (French Finance Minister) asked the Commission to draw up a roadmap on how to implement the elements discussed at the OECD at EU level.
For the other tax topics on the agenda (VAT, DAC 7, Code of Conduct reform), the ministers did not dwell on the details.
FISC Committee holds first hearing with Commissioner Gentiloni
Commissioner Gentiloni said that the Commission is considering tying access to the EU recovery funds to certain member states addressing “aggressive tax planning” concerns raised against them.
In response to a question by MEP Sven Giegold (Greens-EFA/Germany), the Commissioner referred to Article 116 and confirmed that DG TAXUD and DG COMP are working on this, although they are not on the finish line yet. The Commission needs to build a legally very solid case demonstrating Single Market distortions resulting from national tax policies, in order to avoid missteps, the first time they will use the Article – probably in 2021. He also underlined that Article 116 is not a way to address systematic aggressive tax planning, but it is a tool to address single, evident and legally proven competition distortions.
MEP Questions and Replies
Energy Tax Directive review to be completed by mid-2021
Question by MEP Carmen Avram (S&D/Romania)
Reply by Commissioner Gentiloni
The Commission is assessing the Apple state aid judgment, its potential scope and impact on other state aid cases before deciding on possible next steps
Question by MEP Gunnar Beck (ID/Germany)
Reply by Commissioner
Commission will put forward proposals for potential additional own resources, for a digital levy, in first semester of 2021
Question by MEP Helene Laporte (ID/France)
Reply by Commissioner Gentiloni
We wait to meet you all virtually at the IVA Virtual Conference in October!