News from the EU – from Accountancy Europe – November 2021
DG TAXUD’s Benjamin Angel clarifies Commission’s plans for OECD agreement implementation
Speaking at various conferences in the past weeks, DG TAXUD’s Benjamin Angel has provided further details on how the European Commission (EC) would go about implementing the OECD agreement on Pillars 1 and 2.
On Pillar 2, if OECD finalises its model rules on time, the EC would seek to propose a Directive on 22 December. Mr. Angel says he is confident that an agreement will be found quickly, and implementation can start in 2023.
The Directive would be accompanied by another proposal on public disclosure of effective tax rates in the EU. The legal base (tax or non-tax) used for it has not yet been confirmed publicly (for a similar tax information disclosure measure, public CBCR, non-tax/Accounting Directive was used).
On Pillar 1, no EU Directive should be expected before Q3 2022, given that the OECD will only agree on multilateral instruments in summer 2022. The EC has not yet decided whether a Directive for Pillar 1 would be at all needed, as the OECD agreement might be directly binding for the signatory countries.
A lot of question marks remain about the EU digital levy. Mr. Angel re-iterated EC’s promise to the European Parliament (EP) to propose it in 2021 still, but EC will have to assess if this is feasible.
The OECD agreement does establish a ban on unilateral digital taxes, but OECD’s tax Director Pascal Saint-Amans appears to leave the door open for a sort of ‘VAT top-up’ for online services and goods.
Commission publishes Work Programme for 2022
The Work Programme, published on 19 October, outlines the main areas of work for the Commission’s different priority areas for 2022. On tax, it mentions the following:
- Proposal on re-allocation of taxing rights. This will probably be published in Q3 2022, and aims to implement OECD Pillar 1 into EU law
- Proposal on VAT in the digital age, scheduled for Q3 2022. It will cover VAT reporting obligations and e-invoicing, VAT treatment of the platform economy and a single place of EU VAT registration
EP publishes draft report on fair and simple taxation
The non-binding draft report welcomes EC’s initiative for cooperative compliance and includes strong calls for simplifying SMEs’ tax compliance burdens and costs. It also calls for “the formalisation” of the Charter of taxpayers’ rights. Other recommendations include a call for a single EU VAT registration procedure and number, a definition of tax residency and a harmonised EU e-invoicing standard.
An ECON Committee vote is currently scheduled for 13 January 2022, and the Plenary vote for 14 February.
FISC hearing on the implementation of the 6th VAT Directive
During his introductory remarks, Mr. Chastel remarked that the study on which his report was based held that the current VAT system across Europe is complex, costly, and allowed for a great deal of fraud to take place. In this regard, a definitive and simplified VAT system was needed which tended towards the implementation of one standard VAT rate. He also noted that compliance costs were around 2.5% of company turnover and thus were a heavy burden on taxpayers.
ECON Committee is scheduled to vote on this non-binding report on 1 December, followed by a Plenary vote on 17 January 2022.
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