Weekly Tax News – 4 November 2019

MEP Lídia Pereira calls for improving VAT collection and exchange of information

On Monday 4 November, the ECON Committee of the European Parliament will discuss the two draft reports for opinion of MEP Lídia Pereira (EPP, Portugal) on the new tools proposed by the European Commission to fight VAT fraud in the e-commerce sector. The two opinions are the Draft report on the proposal for a Council regulation amending Regulation (EU) No 904/2010 as regards measures to strengthen administrative cooperation in order to combat VAT fraud and the Draft report on the proposal for a Council directive amending Directive 2006/112/EC as regards introducing certain requirements for payment service providers. Pereira recommends investing in new digital technologies to strengthen the collection systems of the Member States, including the use of blockchain technology to improve the exchange of information between tax authorities. The proposals include the creation of a Central Electronic System of Payment Information (CESOP) to allow the Eurofisc network to exchange data on cross-border transactions. The Commission’s initial proposal states that payment service providers should keep information on such transactions for a period of 2 years, while Pereira’s reports suggest the extensions to 3 years. Finally, Ms Pereira suggests postponing the application of the directive to 2024, two years after the date originally proposed by the European Commission.

Coreper agreed on VAT exemption for supplies to armed forces

On Wednesday 30 October, the Member States’ ambassadors to the European Union found an agreement on the Proposal for a Council Directive amending Directive 2006/112/EC to exempt the supplies to armed forces from VAT and excise duties, when these forces are deployed outside of their own Member State and take part in a European defense effort. The proposed directive was stuck in the Council since October, when Romania blocked the agreement in order to negotiate the exemption on its home-made alcohols. The Council is expected to formally adopt the text without discussion at the ECOFIN of 8 November. The transposition deadline is set for 30 June 2022.

Belize is expected to leave the EU tax blacklist

On 30 October, the Member States’ ambassadors to the European Union endorsed the removal of Belize from the European blacklist of non-cooperative jurisdictions for tax purposes. The formal decision should be adopted during the ECOFIN of 8 November and will leave eight jurisdictions on the blacklist: American Samoa, Fiji, Guam, Oman, Samoa, Trinidad and Tobago, the American Virgin Islands and Vanuatu.

ECOFIN might finally adopt the package on excise duty

On 8 November, the Finance Ministers of the EU Member States should discuss at ECOFIN level the legislative package on excise duty. The package was blocked by Romania earlier this year because of a disagreement on the annual quantitative limit to be set in order to benefit from an exemption from excise duty or reduced rates for ethyl alcohol distilled from fruit by individuals for personal use. The new compromised text sets a limit of 50 liters per year for all Member States, but Romania and the Czech Republic are still hesitant because they require a higher threshold.