Weekly Tax News – 20 September 2021

Ursula von der Leyen unveils its priorities for 2022

The President of the European Commission, Ursula von der Leyen, gave its second State of the Union speech in Strasbourg on Wednesday 15 September, outlining the European Commission’s priorities for the upcoming year. On taxation, she confirmed that the Commission will put forward a new initiative to go after shell companies and assured that the Commission will do everything in its power to seal the global deal on corporate taxation. In her letter of intent published on the same day, she indicated that the EU will implement the OECD tax agreement in two separate Directives, one on the reallocation of taxing rights and the other on minimum tax. Ms von der Leyen also said that the Commission will consider waiving VAT when buying defence equipment developed and produced in Europe to decrease the dependencies of the EU.

Member States discuss Turkey’s inclusion on the EU black list of tax havens

The inclusion of Turkey on the European black list of non-cooperative jurisdictions for tax purposes is back on the EU Council table. Tax officials gathered this week to discuss whether Ankara has done enough to put in order its system of automatic exchange of information on bank accounts. Turkey already escaped the black list in February 2021. France, Denmark, Austria, Greece and Cyprus are expected to push for its inclusion at the next revision of the list, expected to be adopted at the Ecofin Council meeting on 5 October.

EP adopts its first implementation report on tax information exchange

On Thursday 16 September, the European Parliament adopted by 561 votes in favor, 12 against and 116 abstentions the report drafted by MEP Sven Giegold (Greens/EFA, Germany) on the implementation of EU rules on tax information exchange during the last 10 years. This exercise was perilous because the European Commission and all Member States, except Finland and Sweden, refused to grant Parliament access to the relevant data, MEPs criticized. The report concluded that numerous shortcomings are down to insufficient implementation of the existing provisions and that the Commission should use the next update of the Directive on administrative cooperation in the field of taxation (DAC 8) for a comprehensive overhaul, contrary to the piecemeal approach it has adopted over the last decade. They recommended to make obligatory to exchange more types of information on income and assets, coupled with a further requirement for the beneficial owners to be divulged.

European Commission right to say that Belgian Tax Rulings are aid scheme

In a judgment released on Thursday 16 September, the European Court of Justice concluded that the European Commission was right to say that a series of tax exemptions granted by Belgium to multinational companies by way of rulings were an aid scheme. In 2016, the Commission found that the Belgian system of excess profit exemptions constituted a State aid scheme that was unlawful and incompatible with the internal market and ordered the recovery of the aid (for an amount of about 800 million euros) granted from 55 beneficiaries. In 2019, the General Court annulled this Commission’s decision but on Thursday the Court of Justice found that the General Court made several errors of law and therefore decided to set aside its 2019 judgment and refers the case back to it for a ruling on other aspects of the case, including the classification of the Belgian tax rulings as State Aid.

OECD boss pleads for a global solution on carbon pricing

Efforts to price carbon should be elevated to the international level, the head of the Organization for Economic Cooperation and Development (OECD), Mathias Cormann, argued in the press on Tuesday 24 September. According to him, the recent success in agreeing to a global digital tax at OECD could inspire policy makers in developing a common approach to pricing carbon. The OECD boss would have also reportedly made this pitch behind closed doors in Slovenia, during the Informal Ecofin Council meeting on 10-11 September. The call comes as the EU is working on its own Carbon Border Adjustment Mechanism (CBAM), a tax that targets foreign imports of carbon-heavy products.

Six countries offer to host the new EU AML Authority

France, Germany, Italy, Latvia, Lithuania and Austria have shown interest to host the new EU anti-money laundering Authority (AMLA), proposed by the European Commission in July. According to the Commission’s plan, AMLA should be set up within the next three years and begin direct supervision of the riskiest entities by 2026. Its location is likely to be the subject of a harsh battle as it is traditionally the case for all new EU agencies.