Weekly Tax News – 24 February 2020

ECOFIN adopts new VAT legislative acts

On 18 February, the ECOFIN has adopted three tax-related acts in the area of VAT. Two legislative texts concern the detection of tax fraud in cross-border e-commerce transactions:

  • The first text amends the VAT directive putting in place requirements on payment service providers to keep records of cross-border payments related to e-commerce. This data will then be made available to national tax authorities under strict conditions, including those related to data protection.
  • The second text includes amendments to a regulation on administrative cooperation in the area of VAT. These amendments set out the details of how national tax authorities will cooperate in this area to detect VAT fraud and control compliance with VAT obligations.

A third legislative text is a Council Directive relating to simplified VAT rules applicable to small businesses. The purpose of the new measures is to reduce the administrative burden and compliance costs for small enterprises and create a fiscal environment which will help small enterprises grow and trade across borders more efficiently. The proposal  foresees that small enterprises will be able to qualify for simplified VAT compliance rules where their annual turnover remains below a threshold set by a Member State concerned, which cannot be higher than 85.000 EUR. Under certain conditions, small enterprises from other Member States, which do not exceed this threshold, will also be able to benefit from the simplified scheme, if their total annual turnover in the whole of the EU does not exceed 100.000 EUR.  


Four new countries in the EU tax blacklist

On 18 February, the ECOFIN has adopted revised conclusions on the EU list of non-cooperative jurisdictions for tax purposes. In addition to the 8 jurisdictions that were already listed, the EU has decided to include the following jurisdictions in its list of non-cooperative tax jurisdictions: Cayman Islands, Palau, Panama, Seychelles. However, the day before the ECOFIN, during an event in Brussels, the Polish Finance Minister Tadeusz Kościński had suggested that that the EU should start including low-tax Member States in its tax blacklist. According to a statement released by Oxfam, Cyprus, Malta, Ireland, Luxembourg and the Netherlands would be blacklisted if the EU applied the same criteria to its own Member States.


Paul Tang wishes to chair the subcommittee on Taxation

On 19 February, MEP Paul Tang (S&D, the Netherlands) confirmed his interest in chairing the European Parliament’s standing subcommittee on tax. The mandate and composition of the subcommittee are still unclear and the political groups are negotiating some of these details. However, the political group coordinators for the ECON Committee have already approved the creation of this subcommittee. The European Parliament Conference of Presidents is expected to confirm the subcommittee in March.


European Commission’s new idea for ordinary legislative procedure in taxation

On 19 February, Benjamin Angel (Director of Direct taxation, Tax Coordination, Economic Analysis and Evaluation at the European Commission's DG TAXUD) has confirmed that the European Commission is planning to explore the possibilities of using Article 116 TFEU (Treaty on the Functioning of the European Union) to move to the ordinary legislative procedure in the field of taxation. Mr. Angel explained that Article 116 allows the Commission to present a legislative proposal under qualified majority if it finds that a Member State is distorting the competition in the internal market.