Weekly Tax News – 14 September 2020

Informal ECOFIN discussed new own resources and fair taxation

On 11 and 12 September, the EU Finance Ministers held an informal meeting in Berlin to discuss the economic recovery and several tax-related topics. During the meeting the Finance Ministers have discussed the possible introduction of new own resources in the context of the European Recovery Plan. On Saturday, the Ministers have exchanged views about the tax reform currently discussed at OECD level, that includes the implementation of a digital tax and the application of a minimum corporate tax rate. During the press conference, Executive Vice-President Dombrovskis remarked the need for tax fairness and for a global minimum taxation. He confirmed that the European Commission will present an Action Plan on business taxation for the 21st century this autumn.

COVID-19 pushes the EU VAT Gap up

On 10 September, the European Commission has released its “Study and Reports on the VAT Gap in the EU-28 Member States”. The report shows that the EU VAT Gap has improved marginally in recent years (from €162 billion in 2014 to €140 billion in 2018). However, the forecast for 2020 highlights a reversal of this trend, with a potential loss of €164 billion due to the effects of the pandemics on the economy. The Commissioner for Economy Paolo Gentiloni commented the data and remarked that the EU needs “to do more to step up the fight against VAT fraud with renewed determination, while also simplifying procedures and improving cross-border cooperation”.

The OECD agreement on international tax reform does not look easy

On 9 September, the French Finance Minister Bruno Le Maire called on EU countries to be ready to act if the United States will keep blocking the agreement on the international tax reform at OECD level. Ahead of the informal ECOFIN of 11-12 September, he confirmed his expectations for a Commission’s proposal in early 2021 if no agreement is reached by the end of the year at the OECD. According to him, the U.S are creating obstacles, such as the “safe harbor” scheme, to hinder the negotiations. The issue of digital taxation has been raised also at European Parliament level: MEP Stéphanie Yon-Courtin (Renew Europe, Franca) has sent a letter asking the Chair of the ECON Committee Irene Tinagli (S&D, Italy) to invite the CEO of Google, Amazon, Facebook and Apple to appear before a joint hearing of the ECON and FISC Committees to discuss their taxation practices.