Weekly Tax News – 27 April 2020

Financial sector requires DAC6 tax reporting obligation to be postponed

On 20 April, ten financial industry associations have sent a letter to the tax Commissioner Paolo Gentiloni to require the deferral of tax information reporting obligations to 2021. The DAC6 was approved in March 2018 requiring tax intermediaries to report any aggressive cross-border tax planning schemes they design to the tax authorities. The Directive is due to come into force on 1 July 2020 (the start of reporting is set on 31 August). However, the financial industry argues that many Member States had not yet finalized their transposition measures and refer to the letter of formal notice sent to Belgium, Cyprus, Czech Republic, Estonia, Greece, Spain, France, Italy, Luxemburg, Latvia, Poland, Portugal, Romania and Sweden.

France, Denmark and Poland ban companies registered in tax havens from State Aid programmes

On 23 April, the French Finance Minister Bruno Le Maire announced that France will follow the path taken by Poland and Denmark of excluding companies based in, or with subsidiaries in tax havens from economic aid. “If a business has its tax base or subsidiaries in a tax haven — and I want to say this with a lot of force — it cannot benefit from the state’s financial help” Le Maire stated. He also confirmed that companies that received State Aid could not pay dividends or buy back their own shares.

EU Council validates Charles Michel Roadmap for Recovery

On 23 April, the 27 Heads of State or Government of the European Union validated the roadmap set out by the President of the European Council, Charles Michel for reviving the European economy from the COVID-19 crisis. They have endorsed the package worth 540 billion euros that includes the safety nets identified for States (ESM credit lines), people affected by temporary unemployment (SURE instrument) and enterprises (EIB pan-European guarantee fund). Furthermore, they have agreed to work towards establishing a recovery fund linked to the MFF. The Commission is now tasked to elaborate a proposal that will raise the own resources ceiling of the EU budget to 2% of GNI instead of the current 1,2% and allocate the resources raised through “innovative financing instruments” to business sectors and territories most affected by the pandemic. The European Commission is expected to use a public guarantee from the EU budget to leverage money on the capital markets. The funds raised would be low cost, thanks to the Commission’s AAA financial rating. Some of the main political groups in the European Parliament have already presented strategies to finance the recovery plan over the period. The proposals of the Greens/EFA and Renew Europe include new own resources such as Digital tax, CCCTB and plastic tax.