Weekly Tax News – 13 May 2019

EU Tax Policy in the political programmes of the main EU parties

Almost every programme or manifesto of the main political parties running for the European elections includes a reference to the issue of “fair taxation”. Possibly the most significant U-turn on this topic is the one made by EPP, compared to the 2014 electoral campaign when the issue of taxation was not mentioned.

European People’s Party – EPP: The main points raised in the EPP’s Manifesto are the ones linked with the needs of a European solution with regard to the taxation of the Digital economy. Furthermore, the programme highlights that big corporations should not be allowed to get tax breaks or similar tax advantages that are not available to the rest of the business environment. Finally, it stresses the importance of the leading role that should be played by the EU at OECD level in order to fight tax evasion and eliminating tax havens.

Socialists & Democrats – S&D: The Manifesto of S&D goes even further, promoting the fight against tax evasion, tax avoidance and aggressive tax planning. Furthermore, S&D supports a common European approach to ensure a proper level of effective taxation and stop downward corporate tax competition.

GREENS/EFA: The programme of the Greens/EFA is even more specific, addressing the needs of harmonization at EU level supporting the common consolidated corporate tax base (CCCTB) for large companies along with a minimum corporate tax rate. Furthermore, the Manifesto proposes the introduction of a financial transaction tax, “a fair and functional way to tax digital services and manage cryptocurrencies” and the introduction of a European flight tax, European VAT on tickets as well as ending the kerosene tax exemption for airplanes.

ALDE:  Contrary to the majority of the main EU political parties, the Manifesto of the ALDE group is silent on the subject of taxation except for a reference made to the needs of ending the fuel tax exemptions for international aviation. Even the proposition of doing more to fight tax evasion which was included in the Manifesto of 2014 is not there anymore.

The Committee of the Regions adopted the draft report on QMV in tax

On 7 May, the Commission for Economic Policy (ECON) of the European Committee of the Regions (CoR) assembled over 60 elected politicians from across the EU in Lithuania. The members adopted the report drafted by the Mayor of Coulaines, Christophe Rouillon (FR/PES) “Towards a more efficient and democratic decision making in EU tax policy”. The rapporteur highlighted the risk that tax policy would become “the weak link of European integration” if the EU does not ensure that tax competition is aligned with the single market. The report is to be adopted during the next plenary session 26-27 June 2019.

End-of-term assessment of the Juncker’s Commission ten priorities

On 3 May, the European Parliament Research Service has published an end-of-term assessment of the Juncker’s Commission ten priorities. Amongst others, it lists the tax proposals that have been put forward and adopted from September 2014. In particular, the report points out the work carried out in connection with the Directive on Administrative Cooperation (which has been amended five times), the legislative proposals put forward in the area of Corporate taxation and the ones covering the four pillars of the Action Plan on VAT.

France and Germany pushing for a Financial Transaction Tax

France and Germany are continuing their work to relaunch the Financial Transaction Tax (FTT) based on the French model. Since 2013, discussions have been taking place between ten Member States participating in enhanced cooperation, namely France, Germany, Belgium, Portugal, Austria, Slovenia, Greece, Spain, Italy and Slovakia.  Now, France and Germany want to have a discussion at Twenty-eight in order to invite other countries to join the enhanced cooperation, possibly at the June Ecofin Council. The proposed FTT would be levied on acquisitions of shares of listed companies whose head offices are located in the member states and whose market capitalisation exceeds €1 billion. The tax rate would not be lower than 0.2% of a security’s purchase price at the time of acquisition.

A single European voice on digital taxation at the OECD negotiations is not looking easy

While a European solution on digital taxation was officially rejected at the March ‘Ecofin’ Council, Member States must now coordinate to try to speak with one voice in international negotiations on this subject at the OECD. This task, on which the European Finance Ministers will be working on Friday 17 May, does not look easy.  Currently two opinions already stand out. On the one hand, the southern and eastern Member States want a proactive approach and the EU to assert its leadership in international negotiations. On the other hand, the Nordic countries, including the strong opponents of a European digital services tax (Ireland, Denmark, Sweden and Finland), believe that it is only after an agreement has been sealed at the OECD that the European position will have to be coordinated, particularly in implementation. In a letter sent to Finance Ministers on Monday 6 May, the European Commissioner for Taxation, Pierre Moscovici, reiterated the importance of speaking with a single voice in international negotiations.

‘Grand Theft Europe': a media consortium estimates annual VAT fraud carousels in EU at €50 billion

On 7 May, the German non-profit Correctiv editorial team published the 'Grand Theft Europe' project, revealing that 50 billion euros are misappropriated each year by criminals who commit value-added tax (VAT) fraud. Carousel fraud is VAT fraud involving multiple companies established in at least two EU Member States. The fraud consists in improperly obtaining the deduction or refund of VAT relating to an intra-Community delivery of goods when this VAT has not been paid to the Treasury. Reacting to the investigation on Twitter, the European Commissioner for Taxation, Pierre Moscovici, was not surprised. “The European Commission has had the solution to put an end to this type of VAT fraud on the finance ministers’ agenda for two years. The loss of revenue for our public treasuries is huge, and it is high time to move forward”, he said.