Weekly Tax News – 16 November 2020

European Parliament approves post-Brexit rules for taxable persons in Northern Ireland

On 11 November, during the plenary session of the European Parliament, MEPs have approved by a large majority (641 votes in favour, 17 against and 27 abstentions) the new rules on the identification of taxable persons in Northern Ireland after Brexit. From 1 January 2021, the EU VAT legislation will no longer apply to the UK. However, on the basis of the Protocol on Ireland/Northern Ireland, which is part of the Withdrawal Agreement, Northern Ireland will remain under the EU VAT legislation regarding goods with a view to avoiding a hard border between Ireland and Northern Ireland. On the other hand, for services Northern Ireland will be, together with the rest of the UK, considered as outside the EU. The new rules approved by the Parliament introduce a specific prefix (“IX”) to the VAT identification numbers in Northern Ireland in order to distinguish between taxable persons and non-taxable legal entities whose transactions involving goods in Northern Ireland are subject to EU VAT legislation and those carrying out other transactions for which they are identified for VAT purposes in the United Kingdom.

MEPs ask the German Presidency to relaunch public CbCR

On 6 November, MEPs Evelyn Regner (S&D, Austria) and Iban García del Blanco (S&D, Spain) sent a letter to Peter Altmaier, the German Minister for Economic Affairs, inviting him to discuss the issue of public Country-by-Country Reporting (CbCR) during the Competitiveness Council on 19 November. On 12 November, another 18 MEPs have sent a similar letter to Olaf Scholz (Minister of Finance), Christine Lambrecht (Minister of Justice and Consumer protection) and Peter Altmaier. The two letters highlight the opportunity represented by the fact that Austria is now in favour of the current proposal and remark that the required majority on a general approach could be now reached. The MEPs have also recalled that a directive on public CbCR would allow investors, trade unions and civil society to access relevant information which will help to ensure that multinationals comply with the highest corporate standards.

Agreement on MFF brings a roadmap for tax-based new own resources

On 10 November, the European Parliament and the Council agreed on the EU’s Multiannual Financial Framework (MFF) for 2021-2027 and the European Economic Recovery Plan to overcome the COVID-19 crisis. The amount of the MFF 2021-2027 is 1.74 trillion and the negotiators have agreed that the costs of repaying the debt resulting from the Recovery Plan should not be at the expense of MFF investment programmes nor by higher Member States’ contribution. The roadmap for the own resources provides for the introduction in 2021 of a tax on non-recycled plastic packaging waste and of an own resource based on the Emission Trading Scheme (ETS). In 2023, the ETS own resource should be linked to a Carbon Border adjustment mechanism, while an own resource based on digital tax should be available from 2024. From 2026, an own resource based on the financial transaction tax and a financial contribution linked to the business sector or a new common corporate tax base should be introduced.

ETAF Tax Conference 1 December 2020