Weekly Tax News – 16 December 2019

Von der Leyen presents the European Green Deal

On 11 December, Ursula von der Leyen has unveiled the European Green Deal to the European Parliament in the course of an extraordinary plenary session. The Communication includes a roadmap setting up the specific initiatives to be undertaken. It is planned to review the Energy Taxation Directive in order to end fossil-fuel subsidies and tax exemptions for aviation and maritime fuels. It is likely that the Commission will propose the application of the passerelle clause to allow the European Parliament and the Council to act in this area through the ordinary legislative procedure by qualified majority voting. Furthermore, the text points out that the European Green Deal will impact the national level by creating the context for broad-based tax reforms, removing subsidies for fossil fuels and shifting the tax burden from labour to pollution. Finally, the Commission pushes towards a rapid adoption by the Council of the Commission’s proposal on VAT, in order to allow Member States to make a targeted use of VAT rates to reflect increased environmental ambitions.

Germany proposes FTT under enhanced cooperation

On 9 December, Olaf Scholz (German Finance Minister) sent a proposal for a Financial Transaction Tax (FTT) to the Finance Ministers of 9 EU Member States (France, Belgium, Portugal, Austria, Slovenia, Greece, Spain, Italy and Slovakia). Germany proposes a rate of 0,2% to be levied on the purchase of shares of listed companies with a market capitalization of more than € 1 billion and seeks the participation of the ten countries involved in the enhanced cooperation. The tax should impact about 500 businesses within the 10 involved countries. The French Finance Minister, Bruno Le Maire, welcomed the proposal and highlighted the cooperation between France and Germany in drafting this text, with particular reference to the principle of mutualization. Indeed, the text includes a proposal for mutualizing the tax revenues in order to provide support to countries with small financial markets which would not be able to cover the costs of collecting the tax using their own resources.

Recapping the tax actions of the Finnish Presidency

On 9 December, the ECOFIN presented a report that summarized the progress achieved in the area of taxation during the term of the Finnish Presidency. The document highlights that progress has been made in the area of VAT with particular reference to the mandatory transmission and exchange of VAT-relevant payment information as well as to the special scheme for SMEs. It also mentions the implementation of the VAT for e-commerce. Furthermore, the report refers to the conclusions adopted by the Council on the EU energy taxation framework and on the ECOFIN discussions regarding the OECD negotiations on solutions to tax the digital economy.

The VAT Committee updates its VAT Guidelines

On 12 December, the VAT Committee has published an updated version of its VAT Guidelines. The VAT Committee was set as an advisory committee to promote the uniform application of the VAT Directive. It does not have any legislative power and cannot take legally binding decisions, but it gives some guidance on the application of the Directive. Therefore, the Guidelines do not constitute an official interpretation of EU law and do not bind the European Commission or the Member States who are free not to follow them.