On 12 October, the OECD released the blueprints adopted by the 137 members of the Inclusive Framework on Pillar 1 and on Pillar 2 of the international tax reform (along with the economic impact assessment). On the same day, the Inclusive Framework issued a statement clarifying that the remaining issues to be agreed on the reform of international taxation need further discussions. The members of the Inclusive Framework highlighted that they agree to “bringing the process to a successful conclusion by mid-2021 and to resolve technical issues, develop model draft legislation, guidelines, and international rules and processes as necessary”. On 14 October, the G20 Finance Ministers agreed with the new deadline of mid-2021. However, France reacted promptly to this postponement by confirming that it will begin to collect tax on digital companies already this year. The French Finance Minister, Bruno Le Maire, remarked that with the U.S. it has always been clear that if there was no agreement at the OECD by 2020, France would levy its national digital tax. The European Commission was a bit more flexible highlighting that this new deadline of mid-2021 should be the final one.
On 15 October, Advocate General Juliane Kokott delivered an opinion on the Cases C-562/19 and C-596/1, regarding the Hungarian advertising tax and the Polish turnover tax. According to the opinion, there was no evidence in either tax regime of any selective advantage and therefore the Advocate General proposes that the Court of Justice dismiss the Commission’s appeals. In July 2016, Poland adopted the law on the tax on the retail sector according to which retailers were required to pay tax on their monthly turnover from the sale of goods to consumers where turnover exceeds 17 million Polish złoty (approximately EUR 4 million), at the rate of 0,8% on turnover between PLN 17 million and 170 million and at the rate of 1,4% for the portion of monthly turnover above that. In June 2014, Hungary enacted the Law on advertisement tax, pursuant to which broadcasters or publishers of advertisements were required to pay tax at a progressive rate on annual net turnover generated by the broadcasting or publication of advertisements in Hungary. In 2016 and 2017, the European Commission declared both taxes incompatible with the common market since they grant smaller undertakings, which are “taxed at too low a level”, an impermissible advantage and therefore constitute State aid. Poland and Hungary challenged the Commission’s decisions before the General Court of the European Union. In 2019, the General Court annulled the Commission’s decisions since there was no evidence in either tax regime of any selective advantage and therefore State aid in favour of undertakings with lower turnover. The Commission brought an appeal against both judgments before the Court of Justice and the opinions of Advocate General Kokott propose that the Court of Justice dismiss the Commission’s appeals confirming the General Court’s judgments.
On 6 October 2020, the Court of Justice of the European Union (CJEU) published its judgement in Joined Cases C-245/19 and C-246/19 in the context of the exchange of information in tax matters. The CJEU ruled that a person who hold information that is requested by the national administration, in the context of a cooperation procedure between Member States, must be able to bring a direct action against such a request (based on the right to an effective remedy guaranteed by the Charter of Fundamental Rights of the European Union). However, Member States may deny that person subject to the tax investigation and the third parties concerned by the information in question the right to bring such action, provided that there are other remedies enabling them to obtain an incidental review of that request.
On 12 October, the OECD released a report on “Taxing Virtual Currencies: an Overview of Tax Treatments and Emerging Tax Policy Issues”, which provides an analysis of the approaches and policy gaps across the main tax types for over 50 jurisdictions. The report includes the definitions of blockchain and crypto-assets, looking at the characterisation, legality and valuation of virtual currencies and analysing the tax consequences across the different stages of their lifecycle, from creation to disposal. It also identifies key tax policy considerations and provides an overview across countries of the tax treatment of virtual currencies from the perspective of income, consumption and property taxation.
