EC confirms plans for EU regulation of tax advice
Directorate General Taxation and Customs Union’s (DG TAXUD) Jasna Voje confirmed on 25 April that the European Commission (EC) is working on a regulation of tax advice provision in the EU. Speaking at a hearing of the European Parliament’s (EP) Subcommittee on Tax Matters (FISC), she explained that this is a reaction to the Pandora Papers which emerged in October 2021.
EC is still mulling over the details of the plan, with a lot of internal decisions to be taken. However, Ms. Voje explained at the hearing that, for the moment, the intention is to regulate the activity of providing tax advice rather than tax advisory professions. The idea would be to set up a set of criteria for what constitutes ‘acceptable’ tax planning, and for tax advice providers to apply these criteria when devising tax arrangements or face penalties in case of non-compliance. In other words, this puts the responsibility over compliance on the advisor, rather than the taxpayer being advised.
One of the question marks for now remains the potential legal base. It is imaginable that EC could use either tax or non-tax legal base for its proposal depending on its chosen approach, although there has been no confirmation one way or the other for now. Naturally, should non-tax be chosen, this would mean equal legislative powers to the Council and the Parliament, and no need for Council unanimity for it to be approved. On the other hand, choosing non-tax could also provoke some Member States who are sensitive about EC legislating on what they see as tax proposals via non-tax legal base.
A public consultation was initially scheduled to run from 12 May until 20 July, but this is now reportedly scheduled for later.
Accountancy Europe responds to public consultation on VAT in the digital age
The consultation aims to inform EC’s decision-making ahead of a proposal expected in autumn 2022. It seeks stakeholders’ views on whether the current VAT rules are adapted to the digital age, and how digital technology can be used to help Member States fight VAT fraud and benefit businesses.
Views are sought on VAT reporting obligations and e-invoicing, the VAT treatment of the platform economy, and the use of a single EU VAT registration.
Accountancy Europe’s response provides input on all these areas.
EC publishes report on VAT registration, collection and control procedures
EP approves extension of optional RCM
The EP adopted, without amendments, its report on the Common system of value added tax (VAT): extension of the application period of the optional reverse charge mechanism (RCM) in relation to supplies of certain goods and services susceptible to fraud and of the Quick Reaction Mechanism against VAT fraud.
The report was adopted with 605 votes in favour, 2 against and 27 abstentions. It was led by MEP Markus Ferber (EPP/Germany).
EU finance ministers give final approval for VAT rates reform proposal
EU finance ministers managed to formally adopt the compromise reached earlier on EU VAT rates reform at their 5 April ECOFIN meeting, despite the setback on the Pillar 2 Directive. The reforms will grant EU Member States greater flexibility in setting up their national VAT rates, whilst trying to align the VAT system with the EU’s climate ambitions. Accountancy Europe provided a comprehensive overview of how the EU VAT rates system will change as a result.