Weekly Tax News – 7 October 2019

Gentiloni commits on a new Action Plan on Taxation

On 3 October, in the course of his hearing before the ECON Committee of the European Parliament, the Commissioner-designated for Economic and Financial Affairs, Taxation and Customs Paolo Gentiloni has confirmed his personal political commitment on a possible new Tax Action Plan tackling “environment, corporate, digital and tax fraud”. Questioned by various MEPs on possible key actions to be undertaken by the next Commission he pointed out to a Carbon Border Tax in line with WTO rules. Furthermore, he has defined the absolute priority of delivering the CCCTB to alleviate the internal competition between Member States based on different corporate taxation. With regards to the taxation of the digital economy, he seemed positive on a possible OECD solution to be finalized by the end of 2020, ensuring that if no agreement is reached, “the Commission will be ready with its own proposal by end of 2020”. When MEPs Sved Giegold (Greens/EFA, Germany) and Gilles Boyer (Renew Europe, France) separately asked him about the possible shift to qualified majority voting, Gentiloni was in favor of applying Art. 116 TFEU (dealing with the distortions of the internal market), rather than the passerelle clause, where the implementation is harder due to the need of a unanimous vote at Council level.

EESC supports qualified majority voting on energy tax

During the plenary session of 25-26 September, the European Economic and Social Committee (EESC) has adopted its opinion on the Commission’s proposal to move from unanimity to qualified majority on energy tax matters. The opinion drafted by Baiba Miltoviča and Dumitru Fornea supports the position of the Commission, requiring that decisions on energy-related tax matters should use the “passerelle” clause allowing the Council to switch from unanimity voting to qualified majority and to introduce a co-decision arrangement with the European Parliament. According to the EESC, this shift is key to amend the Energy Taxation Framework Directive and to complete the energy transition and achieving the 2030 energy and climate targets.

OECD request for feedbacks on transfer pricing toolkit for developing countries

On 27 September, the Platform for Collaboration on Tax issued an invite for feedback on a draft toolkit designed to help developing countries in the implementation of effective transfer pricing documentation requirements. The draft toolkit considers measures concerning documentation of all stages of a taxpayer's transfer pricing analysis that governments could put in place, taking into account current international approaches and country practices for transfer pricing documentation. The Platform, which is a joint initiative of the IMF, OECD, UN and World Bank Group, is seeking comments by 8 November 2019 from interested stakeholders.

German draft law implementing DAC6

On 26 September, the German Finance Ministry published a draft law to implement EU Directive 2011/16/EU (DAC 6), which requires tax advisers and their clients to disclose to the tax administration information on cross-border transactions and structures. The Directive must be transposed into law by 31 December 2019 and should apply from 1 July 2020, though it must include a provision for retroactively reporting cross-border tax arrangements put in place on or after 25 June 2018. The German draft law is mostly a direct implementation of the EU DAC 6 that introduces the mandatory report to the tax authority of cross-border tax structures fulfilling one of the so-called “hallmarks”. The draft law introduces sanctions up to €25.000 in case of failure to report information on arrangements implemented after 25 June 2020.