Ursula von der Leyen unveils her proposed new College of Commissioners
On Tuesday 17 September, Ursula von der Leyen unveiled the structure of the proposed new College of Commissioners for 2024-2029. During a press conference, she explained that this structure is the result of intense negotiations with the Member States to achieve agenda, geographical and gender balance. The core priorities are prosperity, security, democracy and competitiveness. The new college is “more cross-cutting”, following the recommendation of the Draghi Report, she said. There will be six Executive Vice-Presidents, who will coordinate their work with other commissioners, and no more “simple” Vice-Presidents. The proposed college counts 11 women, amounting to 40%. Wopke Hoekstra (The Netherlands) is proposed as the new European Commissioner for Taxation. He will also be in charge of Climate, Net-Zero and Clean growth. Mr Hoekstra will work in close cooperation with the proposed Executive Vice-President for Clean, Just and Competitive Transition, Teresa Ribera Rodríguez (Spain), who would guide work to ensure that taxation measures support a just transition and decarbonisation. The Customs portfolio would be transferred to Maroš Šefčovič (Slovakia), who would also be in charge of Trade and Economic Security, and of Interinstitutional Relations and Transparency. The Single Market portfolio would go to Stéphane Séjourné (France), who is proposed as Executive Vice-President for Prosperity and Industrial Strategy. Under this portfolio, he should be responsible for the Industry, SMEs and the Single Market, including for considering the need for a Single Market Barriers Prevention Act and exploring the feasibility of a dedicated SME passport to reduce administrative burden and costs. Valdis Dombrovskis (Latvia) would have a double role as Commissioner for Economy and Productivity and Commissioner for Implementation and Simplification. Although each Commissioner is asked to contribute to the objective of a reduction of 25% of reporting obligations in his/her portfolio, Mr Dombrovskis would then be the main responsible for decluttering, making concrete proposals and would report directly to Ursula von der Leyen on this issue. These nominations aren’t confirmed yet and will have to be approved by the European Parliament, after hearings in relevant parliamentary committees.
ETAF appointed as a member of the European Commission Platform for Tax Good Governance
The Director General of the Directorate-General for Taxation and Customs Union (TAXUD) of the European Commission has appointed the European Tax Adviser Federation (ETAF) as a member of its Platform for Tax Good Governance. Our main representative in the Platfrom is Andreas Mitterlehner, an Austrian tax adviser and active and committed member of our Austrian member’s (KSW) Professional Expert Committee for Tax and Social Law. He will be seconded by Csaba Magyar from our Hungarian member MOKLASZ and Christian Rech from our German member DStV. Welcoming the news, ETAF President Philippe Arraou commented: “ETAF has already been a member of the Platform from 2016 to 2019 and is absolutely delighted to contribute again to this important forum. In addition to our tax expertise, we do believe that our federation’s strong focus on professional law and the regulation of tax advisers will provide valuable and different insights to the Platform’s work. We fully rely on the local and international experience and knowledge of Mr Mitterlehner, Mr Magyar and Mr Rech to represent ETAF members position”. The Platform for Tax Good Governance brings together non-government and government stakeholders to exchange views on issues concerning tax transparency, exchange of information for tax purposes, fair and efficient taxation, cross-border taxation, fight against aggressive tax planning, double taxation and double non-taxation. It has the important task to advise the European Commission on the priorities for action as well as the appropriate means and instruments to achieve progress in these areas. The mandate of the Platform will run until June 2029. Its first meeting took place on Friday 13 September 2024.
EU Member States discuss options for a new EU Transfer Pricing Forum
EU Member States are reportedly discussing three options proposed by the Hungarian Presidency of the Council of the EU for establishing a new Transfer Pricing forum, likely to replace the adoption of the draft Transfer Pricing Directive, proposed by the European Commission in December 2023. It appeared that Member States don’t support the proposal in its current form, with some concerns about the risk of creating a transfer pricing double standard and the loss of flexibility that Member States have in negotiating and applying the OECD's transfer pricing guidelines. Several Member States however reportedly support the idea of a forum similar to the Joint Transfer Pricing Forum (JTPF), which ceased to exist in 2019. The first option discussed would reportedly be a platform set up by a European Commission decision that would resemble the Platform for Tax Good Governance or other Commission’s expert groups. The second option would also be set up by a European Commission decision and would include discussions with stakeholders but also discussions in Council format. The third option would be modelled on the intergovernmental Code of Conduct on business taxation and established through a Council decision. Member States also need to decide on the exact mandate of such a Platform, its decision-making procedures and how to ensure the respect of its decisions.
ECJ annuls European Commission’s decision finding UK CFC tax regime to be illegal State Aid
On Thursday 19 September, the European Court of Justice (ECJ) decided to annul the Commission decision finding certain United Kingdom rules on the taxation of controlled foreign companies (CFCs) to be State Aid incompatible with the Internal Market. In 2019, the European Commission decided that between 2013 and 2018 the United Kingdom had granted State Aid which was illegal and incompatible with the internal market to certain multinational groups by granting selective tax advantages by way of exemptions from the ‘CFC charge’, namely the tax due by companies established in the United Kingdom on profits of their controlled foreign companies (CFCs). It found in particular that the relevant reference framework for examining whether there was a selective advantage consisted of the rules applicable to CFCs and that the exemptions from the CFC charge were a derogation from that framework. With this new judgment, the Court set aside the judgment of the General Court confirming the Commission’s decision finding certain United Kingdom rules on the taxation of CFC’s profit to be incompatible State Aid and annulled that decision. The Court recalled that the Commission, when determining the reference framework, which is the first step in examining the condition of selectivity, is in principle required to accept the Member State’s interpretation of the relevant provisions of its national law, unless it is able to establish that another interpretation prevails in the caselaw or the administrative practice of that Member State. In that context, it stated that, when, in the light of information provided by the Member State concerned, the Commission does not have, in relation to an aid scheme, case-law or an administrative practice of the Member State concerned which substantiates its own interpretation of the national law, that interpretation can prevail over that advocated by that Member State only if the Commission is able to demonstrate that the Member State’s interpretation is incompatible with the wording of the relevant provisions. The Court held that the General Court erred in law in confirming that the reference framework for the purpose of examining the selectivity of the exemptions at issue consisted solely of the rules applicable to CFCs.
OECD hosts first signing ceremony of Pillar Two Subject to Tax Rule Multilateral Convention
The OECD hosted on Thursday 19 September a signing ceremony of the Multilateral Convention to Facilitate Implementation of the Subject to Tax Rule (STTR MLI). Barbados, Belize, Benin, Cabo Verde, the Democratic Republic of Congo, Indonesia, San Marino and Türkiye signed the new multilateral treaty. Belgium, Bulgaria, Costa Rica, Mongolia, Portugal, Senegal, Seychelles, Thailand, Ukraine and Uzbekistan have expressed their intent to sign the Convention. The Subject to Tax Rule is a key component of the Two Pillar Solution agreement from October 21, particularly important for developing countries. Members of the Inclusive Framework that apply nominal corporate income tax rates below 9% to income covered by the STTR have committed to incorporate the STTR into bilateral tax agreements with members of the Inclusive Framework that are developing countries when requested to do so. The STTR allows jurisdictions to “tax back” where defined categories of income are subject to nominal tax rates below the STTR minimum rate of 9%, and domestic taxing rights over that income have been ceded under a treaty. The STTR complements and takes priority over other rules agreed in the Pillar Two package and is designed to help developing country Inclusive Framework members to protect their tax base. More than 70 developing country members of the Inclusive Framework are eligible to request inclusion of the STTR in their agreements with other members of the Inclusive Framework in accordance with the commitment on the STTR. The first signing ceremony marked a major milestone in the work of the OECD/G20 Inclusive Framework on BEPS, as it delivers upon its objective of reforming international tax rules to deliver a stronger, fairer, global tax system, the OECD said in a press release. The signing ceremony brought together ministers, senior government officials and delegates from the Inclusive Framework on BEPS.
