Indicative timeline for Commission’s pending tax proposals
At the time of writing, European Commission (EC) has indicated its intention to launch the withholding taxation (FASTER) proposal on 28 June. The Business in Europe: Framework for Income Taxation (BEFIT) is scheduled for 12 September. For its part, the tax enablers proposal (SAFE) has disappeared from the EC’s indicative planning. However, the initiative is still ‘on track’ for the time being.
Once these proposals are out, stakeholders will have a 1-month period to provide feedback.
German Chancellor Olaf Scholz re-iterates call for qualified majority on tax
EP gathered in plenary for a debate titled This is Europe, with the attendance of Germany’s Olaf Scholz on 9 May. In his speech, the Chancellor focused on key challenges for the future of the EU, including the war in Ukraine and the need for strengthened defence cooperation, more openness to the world, more honest enlargement policy and treaties’ reform. Mr Scholz announced a push to extend qualified majority decision-making to more foreign policy and taxation decisions.
VAT in the digital age draft reports published, first disagreements emerge
European Parliament’s draft reports on VAT in the digital age (VIDA) proposals have been published. MEP Olivier Chastel (RE/Belgium) prepared the draft reports. See here for the draft report on the directive and here for the regulation.
Accountancy Europe supported EP’s work on the file, having joined a rapporteurs’ meeting in mid-April to share some insights on the impact on SMEs and what tax administrations need for the system to function well.
EP’s ECON Committee held a first exchange of views on the draft reports on 25 May. Several MEPs underlined the new rules should not present additional burdens for companies. They called for an ambitious use of digital tools. However, a major disagreement is emerging over the deadline for e-invoicing, with the right insisting a 10-day period is needed, especially for SMEs. S&D Group, by contrast, maintains that longer periods would undermine the objective of real-time reporting.
ECON vote is scheduled for 24 October.
FISC hearing on tax policies in a time of inflation
FISC Subcommittee held a public hearing on the “role of tax policy in controlling inflation and promoting sustainable growth in the context of economic recovery” on 23 May. They discussed possibilities for new rules of VAT rates, inflation adjustments of tax brackets and other tax measures, such as tax incentives for renewable energy and taxes on environmentally harmful activities.
The expert speakers explained that taxation is not the best tool for inflation. Still, it can be used to mitigate its negative impacts. On promoting sustainability, there was a general feeling that tax policy has a role in changing behaviour. One speaker noted that, at the moment, the majority of public support is for carbon-intensive industries and comes in the form of tax credits. She called for more transparency and a radical shift in support for the transition. Another speaker discussed carbon pricing, noting that the carbon border adjustment mechanism (CBAM) could positively reduce carbon leakage.
EU finance ministers reach agreement on DAC 8
The Council reached an agreement on its position regarding amendments to the directive on administrative cooperation in the area of taxation (DAC 8) on 16 May. The amendments mainly concern the reporting and automatic exchange of information on revenues from transactions in crypto-assets and information on advance tax rulings for the wealthiest (high-net-worth) individuals.
With the new rules, reporting crypto-asset service providers must provide a mandatory automatic exchange between tax authorities of information. The directive covers a broad scope of crypto-assets, building on the definitions set out in the regulation on markets in crypto-assets (MiCA) which the Council adopted on the same day. Those crypto-assets that have been issued in a decentralised manner, as well as stablecoins, including e-money tokens and specific non-fungible tokens (NFTs), are included in the scope.