Weekly Tax News – 20 May 2019

EU tax policy at the core of the spitzenkandidat debate

On Wednesday 16 May, the candidates of the main EU political groups participated to a political debate in Brussels concerning the main topics on the EU agenda. Among others, they have been asked about EU tax policy. With regard to the taxation of the digital economy, Margrethe Vestager (ALDE), Ska Keller (Greens), Manfred Weber (EPP) and Frans Timmermans (S&D), agreed on the need to find a common EU solution to fairly tax the digital giants. In relation to corporate tax, Vestager and Timmermans went further, renewing their support for a common minimum corporate tax rate at EU level. On the other hand, Jan Zahradi (ECR) refused any pan-European tax that violated the legitimacy of states to raise taxes. Mr Weber, relaunched the support of the EPP family for the proposal of the European Commission to shift away from unanimity principle in the Council in favour of a qualified majority voting process in certain tax areas.

ECOFIN removed 3 countries from the EU blacklist and did not coordinate on digital taxation

On Friday 17 May, the ECOFIN approved to remove Aruba, Barbados and Bermuda from the EU list of non-cooperative tax jurisdictions. The list was established in December 2017 and now includes 12 countries: American Samoa, Belize, Dominica, Fiji, Guam, Marshall Islands, Oman, Samoa, Trinidad and Tobago, United Arab Emirates, US Virgin Islands and Vanuatu.

Furthermore, the ECOFIN discussed current international tax reforms in order to prepare the OECD and G20 debates to be held in June in Japan. The ministers assessed the possibility to prepare negotiations on the long-term comprehensive solutions that include both the taxation of the digital economy and broader issues related to the allocation of taxing rights and tax competition.

Finally, the finance ministers did not reach a final agreement on three measures under discussion on excise duties on alcohol and alcoholic beverages. The Council will continue to work in order to reach a compromise on the package as soon as possible.

Directive on simplified VAT for SMEs is not ready for discussion at ECOFIN

A couple of days before the ECOFIN meeting of 17 May, the proposed Directive on the simplification of VAT for small and medium-sized enterprises (SMEs) was removed from the agenda. Several countries (Germany, the United Kingdom, the Netherlands and Ireland) considered that the text was not ready for a ministerial discussion. The main points under discussion regard two thresholds: the annual turnover threshold up to which supplies of goods and services by small businesses in their home Member State may be exempt from VAT; the allowance for SMEs that occasionally exceed the annual turnover threshold by a certain maximum. Furthermore, despite the Commission proposal to apply the new rules from 1 July 2022, certain Member States have required more time to adapt their national law and computer systems to conform to the new rules.

European Commission launches a new tool to help fighting VAT frauds

On 15 May, the European Commission has launched the Transaction Network Analysis (TNA) tool to combat VAT frauds. The TNA is set to increase the speed at which tax administration can uncover and act on suspicious activities, by allowing tax authorities a fast and easy access to cross-border transaction information, leading to quick action when potential VAT fraud is flagged.  The tool was developed through a close collaboration between Member States and the European Commission and will allow a closer collaboration between the EU’s network of anti-fraud experts to detect and intercept VAT carousel fraud as fast and effectively as possible. 

The ten-point agenda on tax justice of the Greens/EFA group

On Tuesday 14 May, the Greens/EFA group in the European Parliament published its ten key justice priorities for 2019-2024. Sven Giegold (MEP, Germany) highlighted that these priorities will also guide the Green’s negotiations for the appointment of the next President of the European Commission. The main point raised is the fight against money laundering via the establishment of a European financial police force. Furthermore, they want to stop the programmes of golden visas in the EU and to consolidate the list of tax havens by sanctioning the countries that are on the list. Finally, with regard to corporate tax, the Greens advocate for a minimum effective tax rate for companies across the EU, for a public Country-by-Country Reporting and to modernize the tax system to ensure a fair taxation of the digital economy.