Weekly Tax News – 11 February 2019

EESC debates on the taxation of the digital economy

On 29 January, the European Economic and Social Committee organised a hearing titled “Taxation in the digitalised economy – Which way forward?” in order to debate about major tax challenges and possible solutions. Stefano Palmieri, President of the Economic section of the EESC, highlighted that a solution at global level would be the most effective, both in terms of regulation and governance. With regard to the recent flourishing of unilateral actions, William Sample from the US Council for International Business, warned about the administrative complexity that this kind of initiatives could imply. David Bradbury (OECD) stressed the work that has been taken on BEPS at OECD level and made a commitment to reach global consensus by 2020 on concrete solutions.

TAX3 hearings on Deutsche Bank and the impact of tax evasion on real estate

On 4 February, the TAX3 committee held a public hearing on "Deutsche Bank" where Stephan Wilken (Head of Anti-Financial Crime and Deutsche Bank's Group Anti-Money Laundering Officer) and Dr. Ing. Jens Fürhoff (Head of money laundering prevention at the German Federal Financial Supervisory Authority) faced multiple questions about Deutsche Bank’s involvement in money laundering and tax evasion scandals. MEPs Sven Giegold (Greens) and José Ignacio Salafranca (EPP) asked Mr Wilken how many employees had been investigated for involvement in financial crimes, without getting specific answers. On the other hand, Peter Simon (S&D) tried to understand why such scandals had not been uncovered by the Supervisory Authority: Dr Fürhoff explained that the Tax Authority was responsible to uncover these scandals, not the Financial Supervisory Authority.

On 5 February, a second hearing of the week in TAX3 was about the “Impact of tax evasion and money laundering on local real estate markets, in particular European cities”. During the first panel, Ms Ilse Verker of the Amsterdam City Council highlighted the devastating effect of the flow of illicit money into the real estate market, in terms of increased building prices. The Vice-Mayor of Barcelona, Janet Sanz, pointed out the issue of taxing revenues from services like Airbnb in cities of the scale of Barcelona. Mr. Christoph Trautvetter (Public policy expert at Netzwerk Steuergerechtigkeit) explained that a huge amount of money with opaque origin flows from shell companies located in tax heavens in the real estate market of cities like Berlin, Paris and London.

New chair appointed at Code of Conduct of Business Taxation

On 5 February, the Code of Conduct Group on Business Taxation appointed Lyudmila Petkova (Bulgaria) as new chairperson for a period of two years. She replaces Fabrizia Lapecorella (Italy), who had chaired the group since 2017. Ms Petkova is Director of the Tax Policy Directorate at the Bulgarian Ministry of Finance. The code of conduct on business taxation was established in December 1997 to set out criteria for assessing tax measures that potentially encourage harmful tax competition.