Weekly Tax News – 4 March 2019

TAX3 Committee adopted its draft final report

On Wednesday 27 February, the ‘TAX 3’ special committee on financial crime, tax evasion and tax avoidance of the European Parliament approved the draft final report. The report stresses the importance of effective enforcement of the rules, including through the imposition of dissuasive sanctions, as well as increased cooperation between Member States to effectively combat money laundering and tax evasion and fraud. The co-rapporteur Luděk Niedermayer (EPP, Czech Republic) admitted that some issues were not compromised, like the principle of free and undistorted tax competition, the setting of minimum rates, the triggering of enhanced cooperation in the tax field, the administrative burden on honest taxpayers. The S&D group called for a "minimum effective tax rate" to stop the downward trend in corporate taxation, said Jeppe Kofod (S&D, Denmark). Philippe Lamberts (Greens/EFA Group Co-Chairman) stated that it was "very regrettable that the Conservatives and Liberals prevented a clear demand for a clear minimum tax rate for large EU companies".

The Commission approves Danish tax scheme but opens a new investigation

On Friday 22 February, the European Commission approved the extension to new types of vessels of a scheme supporting the maritime transport sector in Denmark. Through this amended regime, certain shipping companies and employing certain types of ships can benefit from an exemption from income taxes for their seafarers. The European Commission has considered that this measure is in line with Guidelines on State aid to maritime transport.

On the other hand, on 28 February, The European Commission has opened an in-depth investigation to assess whether Danish and Swedish public support for the Øresund fixed rail-road link is in line with EU State aid rules. In particular, the investigation relates to the guarantees on the consortium's loans by Denmark and Sweden and the tax support measures implemented by Denmark.

Negotiations continue on Whistleblowers Directive

On Tuesday 26 February, the negotiators from the EU Council and the European Parliament met to discuss the Whistleblowers Directive. However, no major progress was made regarding the two main political points of the legislative act, namely the legal basis and the prioritisation of reports. Regarding the report mechanism, the Council is divided into two main groups: a first group wanting a three-step reporting approach, including France and Germany, and a second group rather pushing for a two-step reporting approach (as the Parliament wants), that includes the United Kingdom, Ireland, Portugal, Luxembourg, Bulgaria, and Belgium. Spain could take on the role of “kingmaker”. The next trilogue will be held on Monday 4 March and could potentially be conclusive, although a meeting is already planned for 11 March.

Progresses have been made on the taxation of the digital economy

On Friday 22 February, the French Minister of Finance, Bruno Le Maire, was in Warsaw to meet his Polish counterpart, Teresa Czerwińska. On the same day, the two ministers signed a joint declaration agreeing on the Franco-German proposal for a European tax on digital services that would only apply to online advertising. The declaration recalls that both countries are still waiting for the OECD to reach agreement by the end of 2020 on proposals to address the challenges of digitising the economy, but it acknowledges that the EU must provide "an effective and harmonized solution in case the conclusion of an international agreement takes longer than expected". On 28 February, in an interview on the French Public Sénat channel Le Maire seemed positive on the possibility that an international agreement at OECD level can be reached by the end of 2019.

The tax regime applied to Spanish professional football clubs was legal

On Tuesday 26 February, the General Court of the European Union annulled the decision of the European Commission to classify the tax regime that applied to four Spanish professional football clubs – Fútbol Club Barcelona (Barcelona), Club Atlético Osasuna (Pamplona), Athletic Club (Bilbao) and Real Madrid Club de Fútbol (Madrid) – from 1990 to 2015 as illegal State aid. The Court argued that the Commission had not been able to demonstrate that the scheme, that resulted in a tax exemption for the clubs, had given them an advantage over the scheme applied to other Spanish professional teams.