Weekly Tax News – 7 December 2020

ETAF Tax Conference on the role of tax advisers in strengthening tax compliance

On 1 December, the European Tax Adviser Federation (ETAF) hosted its second Tax Conference of 2020. Gerassimos Thomas (General-Director at DG TAXUD, European Commission) and Paul Tang (MEP Chair of the FISC Committee) discussed with the President of ETAF, Philippe Arraou, on the role of tax advisers in strengthening tax compliance. Philippe Arraou opened the conference stressed the importance of tax compliance in this moment of economic crisis and how tax compliance is the very first step towards fair taxation. Mr Thomas highlighted the efforts of the European Commission in providing a simplified tax framework to provide taxpayers with easier tools to comply with their respective tax systems. Mr Tang remarked the role that taxpayers play in facilitating tax compliance, with particular reference to regulated tax professionals such as the members of ETAF. The conversation touched many topics, including the possible use of digital technologies for supporting tax compliance and the next EU initiative regarding business taxation (including taxation of the digital economy). The three panellists have also discussed the possibility of a future shift towards qualified majority voting in the Council when it comes to approving tax policy measures and the growing responsibilities of the European Parliament in this field.

You can watch the registration of the Conference on the ETAF website.

Greens/EFA calls the Portuguese Presidency to prioritise public CbCR

On 27 November, the Greens/EFA Members of the European Parliament have sent a letter to the Portuguese Prime Minister, Finance Minister and Economic Minister to require prioritise the proposal on the public country-by-country reporting (CbCR) in the Council. According to the letter, “there should be now a qualified majority of Member States in support of adopting a general approach”. The MEPs also hope that the Portuguese Presidency of the Council, that starts on 1 January 2021, will be able to achieve progresses on other files such as money laundering, environmental taxation, a minimum effective tax rate, stronger criteria for the EU list of non-cooperative jurisdictions, and a comprehensive reform of the EU code of conduct on business taxation.

EU Finance Ministers are satisfied from DAC7

On 1 December, the EU Finance Ministers expressed their satisfaction on the agreement regarding the proposal to amend the Directive on Administrative Cooperation in the field of taxation (DAC 7). The proposal provides for an obligation for digital platforms to submit to the respective tax authority all the revenues generated by services providers or sellers that use the platform. German Minister Olaf Scholz stated that “with these new rules the EU makes an important step in addressing tax challenges arising from digitalisation of the economy”. During the meeting, France remarked that this was an important step forward and demonstrated that tackling tax evasion was not restricted to the digital giants.

Coreper agrees on VAT exemption for VAT vaccines and test kits

On 2 December, Member States’ ambassadors to the EU (Coreper) approved the amendment to the VAT Directive to temporarily grant covid-19 vaccines, test kits and related services from VAT. The text approved does not include any relevant change to the Commission’s proposal and will allow Member States to apply zero or reduced VAT rates to COVID-19 in vitro diagnostic medical devices that are in conformity with the applicable requirements set out in Directive 98/79/EC.

FISC subcommittee discuss harmful tax practices

On 1 December, the FISC subcommittee of the European Parliament held a hearing to discuss how to combat harmful tax practices in the EU. Mario Monti (former Tax Commissioner) highlighted that there is a certain momentum for updating the EU tax framework, also thanks to Brexit a (the UK has always been reluctant to coordinate its tax policy with the one of the other EU countries) and to a renewed link between taxation and the EU own resources. Martijn Nouwen (Director of the Institute for Tax Transparency at the University of Amsterdam) supported the use of article 116 of the TFEU to allow the Commission to present tax proposals based on qualified majority if it finds a distortion of competition in the single market. However, he believes that there is no room to its actual implementation due to the fear of EU Member States that such instruments could be used against themselves in the future.