Weekly Tax News – 28 September 2020

Gentiloni reaffirms his tax projects before the new FISC Subcommittee

On 23 September, during the constituency meeting of the FISC Subcommittee, MEPs have appointed Paul Tang (S&D, the Netherlands) as Chair of the Committee. The four Vice-Chairs are Markus Ferber (EPP, Germany), Martin Hlaváček (Renew Europe, Czech Republic), Kira Marie Peter-Hansen (Greens/EFA, Denmark), Othmar Karas (EPP, Austria). On 24 September, during the first meeting of FISC, MEPs have exchanged with Commissioner Paolo Gentiloni on tax topics. Mr. Gentiloni confirmed his commitment to propose an EU solution on digital taxation if the OECD negotiations will not reach an agreement by the end of 2020. He explained that though digital taxation would not bring billions in the coffers of the EU Member States, it is a political duty to create a fairer tax system. When asked about the new own resources, the Commissioner explained that they are not meant to increase the tax pressure on EU citizens, but to render the tax system fairer and more sustainable. He added that the revision of the Energy Taxation Directive and the introduction of the Carbon Border Adjustment Mechanism (proposals are expected in June 2021) will not harm competitivity of European companies.

Public CbCR soon back to the Council agenda

On 21 September, during an online event organized by the European Commission, the German Finance Minister Olaf Scholz has confirmed that the German EU Council Presidency is ready to support the decision-making process for the public country-by-country reporting (CbCR). Mr Scholz explained that a large majority of Member States are in favour of the proposal which has been blocked in the Council for years. However, he highlighted that Germany itself is not yet fully supportive of the proposal since there is not a common vision at German government level.

ESMA publishes its Report on Cum/Ex tax practices

On 24 September, The European Securities and Markets Authority (ESMA) has published the Final Report on its inquiry into Cum/Ex, Cum/Cum and withholding tax (WHT) reclaim schemes. ESMA’s inquiry has highlighted that WHT schemes are primarily a tax related issue and so a response should be mainly sought within the boundaries of the tax legislative and supervisory framework. ESMA has identified a number of measures adopted by various Member States to limit the risk of WHT reclaims schemes being pursued. ESMA’s key proposal is that national competent authorities for securities markets should be empowered to share information with the tax authorities, to assist in detecting WHT reclaim schemes.

Apple case: Vestager decides to appeal against the General Court’s decision

On 25 September, European Competition Commissioner Margrethe Vestager confirmed the Commission’s decision to appeal before the European Court of Justice against the Apple case judgement of the General Court’s of July 2020. In 2016, Vestager ordered Ireland to recover €13.1 billion in allegedly unpaid taxes plus €1.2 billion in interest from Apple due to selective tax benefits provided by Ireland. The General Court annulled the decision in July, but the Commission considers that the judgment of the General Court contains “a number of errors of law”.

Commissioner Breton ready to launch the Digital Services Act

The European Commission is expected to come up with a new legislative proposal on the Digital Services Act (DSA) in early December 2020. It is a highly anticipated piece of legislation to reform the legal framework for the platform economy and improve market access for European companies. It will focus on keeping users safe from illegal goods, content or services and to protect their fundamental rights online. Measures should also provide for transparency and greater regulatory oversight over online platforms. In an interview with the Financial Times, Internal Market Commissioner Thierry Breton implied that digital giants from the Silicon Valley that dominate our online life pose a threat to competition. The DSA would give the Commission the power to stop digital companies from operation in certain regions, if that deemed necessary to maintain competition. Breton is aiming at defining “clear rules to define the responsibilities of platforms in protecting our citizens and values, without making them liable for all content”.