On Tuesday 14 June, EU officials and tax advisers from all over Europe discussed how the regulation of the tax adviser profession can help to curb down abusive tax avoidance during a conference organised by the European Tax Adviser Federation (ETAF) in Brussels. MEP Markus Ferber, Sarah Godar, Researcher at the EU Tax Observatory, Philippe Vanclooster, former partner at PwC and Board member of the Belgian Institute for Tax Advisors and Accountants (ITAA), discussed the plan of the European Commission to regulate tax advice. The Director for direct taxation, tax coordination, economic analysis and evaluation at the European Commission, Benjamin Angel, reiterated that the Commission does not intend to regulate the tax profession as such but that it will put forward a set of rules that fit for all the people providing tax advice for creating structures in third countries. The Directive, which is being prepared, will cover aggressive tax planning practices, that without being purely tax evasion, are nevertheless clearly circumventing the law, Mr Angel explained. When designing this new law for tax advisers, it is highly important not to pass on the responsibility for loopholes in the legislation to those who are subject to the law, ETAF president Philippe Arraou warned. The European Commission will launch a public consultation on this initiative at the beginning of July, with a view to present a concrete proposal still this year.
EU Member States once again failed to find a unanimous agreement on the Implementing Directive for Pillar II (minimum taxation) at an Ecofin meeting on Friday 17 June, in Luxembourg. Thanks to new concessions in the text, including a statement that, by June 2023, the Commission will submit a report to the Council of the EU assessing the situation regarding the implementation of Pillar I of the OECD agreement (reallocation of taxing rights) and, if appropriate, submit a legislative proposal, Poland finally lifted its veto. But it is Hungary who opposed the deal this time, citing the worsening economic situation in Europe due to the war in Ukraine. “Under such circumstances, introducing the global minimum tax at such an early stage would cause serious damages to European economies”, Hungarian Finance Minister Mihály Varga explained. France, who holds the Presidency of the Council of the EU, criticized this argument recalling that Hungary gave its support to Pillar II while the war in Ukraine had already started and that Pillar II will be beneficial to European economies. The French Finance Minister, Bruno Le Maire, promised that he will work until the last minute of the French Presidency - which ends on 30 June - to try to get an agreement. Mr Le Maire concluded by saying that on fundamental texts on tax matters, there is an urgency to move from unanimity to qualified majority voting.
The EU Tax Observatory held on Monday 13 June its inaugural annual conference in Brussels on “Tax Avoidance and EU Offshore Wealth: Policies for Tomorrow”. During a panel on the global minimum tax, Pascal Saint-Amans, Director of the Center for Tax Policy and Administration at the OECD, recalled that Pillar I and Pillar II of the OECD agreement are a package. On the implementation of Pillar II, he said that you need a first mover to start the domino effect and hoped it will be the European Union. Mr Saint-Amans said that when there will be an agreement at EU level, the United States will probably move immediately after. All G7 countries announced that they will move by year end, he recalled. On Pillar I, he recognized that an impossible deadline has been set for political reason and that now intensive negotiations are taking place in order to finalize the multilateral convention and be able to implement Pillar I in 2024.
MEPs of the European Parliament’s Committee on the Environment, Public Health and Food Safety (ENVI) reportedly approved by a large majority, on Tuesday 14 June, the referral back to the mini-plenary session on 22 and 23 June of the revision of the EU Emissions Trading System (ETS) and the establishment of a ‘Carbon Border Adjustment Mechanism’ (CBAM). Following the Parliament’s vote to reject the draft report on the ETS review on 8 June, MEPs chose to refer both dossiers back to the ENVI Committee. On 15 June, the three main political groups - EPP, S&D and Renew Europe – reportedly reached an agreement on the controversial provisions that had prevented the two texts from being voted: - the exit from free emission allowances; - the scope of the CBAM; - export rebates; - the level of ambition of the ETS.
On Thursday 16 June, MEPs from the subcommittee on tax matters (FISC) of the European Parliament discussed Ireland’s tax rules with Professor Frank Barry from Trinity College Dublin and Seamus Coffey from the University College Cork. The FISC subcommittee had also invited Apple to address the hearing but no representative was sent. Both experts were generally supportive of Ireland’s tax architecture, arguing that the companies attracted to Ireland are to a large extent from the United States and have a tangible footprint in Ireland, contributing about 13% of Ireland’s national income. According to them, these elements indicate that most of the foreign companies present were not in Ireland for aggressive tax planning. During the meeting, many MEPs were reportedly of a different opinion suggesting that Ireland’s tax system has eroded the tax base of other EU countries. A delegation of MEPs from the subcommittee will be travelling to Ireland in the third week of September.
American fast-food giant McDonald’s will pay more than 1 billion € to settle a dispute with the French tax authorities over tax avoidance. A French tribunal reportedly validated on Thursday 16 June an agreement between McDonald’s and French tax authorities under which the U.S. restaurant chain will have to pay back 737 € million in unpaid taxes and a 508 € million fine. The agreement covers unpaid taxes between 2009 and 2020. McDonald’s has been under fire for many years for reducing the amount of profits taxed in France by transferring part of the gains from its French subsidiaries to its headquarter in Luxembourg.
