Weekly Tax News – 8 February 2021

MEP of the ECON Committee support DAC 7

On 4 February, the MEPs of the ECON Committee have adopted by a broad majority the draft report for opinion on the revision proposed by the European Commission to the Directive on administrative cooperation in the field of taxation (DAC 7). The draft report prepared by the rapporteur Sven Giegold (Greens/EFA, Germany) supports the overall objective of DAC 7: an automatic exchange of information between EU tax authorities on revenues earned by seller and services providers operating on digital platforms. The draft opinion pushes for introducing a harmonized system of sanctions against platforms that do not comply with these new requirements.

US back into negotiation on the international tax reform

According to several sources, the new US Secretary of the Treasury Janet Yellen has confirmed to Bruno Le Maire (the French Minister of the Economy and Finance) that the US is ready to negotiate an agreement on the international tax reform under discussion at OECD/G20 level by mid-2021. The Biden’s administration would therefore break a deadlock in the negotiations which has lasted since June 2020. In the meantime, the European Commission is working on a possible proposal for an EU Digital Levy which, according to the rumors, should be different from the one launched in 2018. The idea would be to issue a proposal that build on the work done by at OECD level and the target is to start collecting digital tax revenues in 2023.

EC’s public consultation on tax rules on tobacco and alcoholic beverages

On 29 January, the European Commission has launched a public consultation regarding the tax rules on cross-border purchases of tobacco and alcoholic beverages by private individuals (deadline 23 April 2021). Under current rules, excise duty on alcohol and tobacco bought by a private individual for their own use and transported to another EU country is only paid in the country where the goods were bought. This is the case even if they bring these goods into another Member State. The Commission aims at reviewing these rules to ensure that they remain fit for purpose to balance the objectives of public revenues and health protection, in the context of the European Action Plan against Cancer.

ECON adopts an opinion on future relationship with the UK

On 1 February, the ECON Committee of the European Parliament has adopted its opinion on the Trade and Cooperation Agreement between the EU and the UK. The opinion invites the EU to integrate robust commitments preventing tax evasion and tax avoidance, and aggressive tax planning, including tax and financial transparency, especially with regard to different tax jurisdictions found within the United Kingdom and its overseas territories, in order to ensure a level playing field. It also regrets the absence of tax measures in any dispute resolution mechanism or rebalancing mechanism, including a non-regression clause in corporate taxation. The MEPs have once again expressed their fear towards the impact of differing legislation concerning corporate income taxation and tax transparency on tax avoidance.