Weekly Tax News – 18 October 2021

EU officials and tax advisers discuss Fair Taxation

On Tuesday 12 October, EU officials and tax advisers from all over Europe discussed how to ensure a Stable Recovery through Fair Taxation during a conference organised by the European Tax Adviser Federation (ETAF) in Brussels and livestreamed it. Taking place just a few days after the OECD agreement on the reform of the international corporate taxation system, the ETAF Conference was a good opportunity for the speakers to share their initial reactions on the deal. During the debate, the Director for direct taxation at the European Commission, Benjamin Angel explained how the European Commission intends to transpose at EU level the global tax deal, announcing that it aims to present a proposal for a Directive, implementing Pillar II before the end of the year. Aurore Mons delle Roche, Tax Partner at EY and Member of the ITAA Council, welcomed the agreement but outlined that it also comes with great challenges for tax advisers and enterprises in terms of implementation. During the debate, speakers also reacted to the recent Pandora Papers investigation. MEP Paul Tang said that the FISC Subcommittee of the European Parliament – that he chairs - is still making up its mind on which actions to take following this new scandal but that it definitely wants to look at the enablers of it.

G20 Finance ministers endorse the global tax deal

Finance ministers from G20 countries endorsed on Wednesday 13 October in Washington the final political agreement reached last week between 136 countries at OECD level on a two-pillar solution to address the tax challenges arising from the digitalisation of the economy. In a statement published at the end of the meeting, they call on the OECD/G20 Inclusive Framework on BEPS to swiftly develop the model rules and multilateral instruments according to the timetable provided in the Detailed Implementation Plan, with a view to ensure that the new rules will come into effect at global level in 2023.

EC confident a minimum tax can be agreed unanimously in the EU

Speaking at an online event organized by AK Europa, OGB Europa Büro and the EU Tax Observatory on Wednesday 13 October, the Director for direct taxation at the European Commission, Benjamin Angel said he was confident that the Pillar II of the global deal on reforming corporate tax rules will get the unanimity it needs to be adopted by EU Member States and transposed within the EU. All EU members of the OECD/G20 Inclusive Framework are now on board and Cyprus has also declared its support to the deal. For Joachim Englisch, Professor at the University of Münster, the future EU legislation should be flexible enough and contain some opt-out as it will be complicated to revise with the unanimity rule. Theresa Neef, Researcher at the EU Tax Observatory, said that it is important that the EU legislation stays flexible on the minimum tax rate. But Benjamin Angel replied that the EU aims to stay as close as possible to the OECD deal. "Now is not the time to be much more ambitious, to have a different rate or whatever", he said.

EC presents tax recommendations to mitigate soaring energy prices’ impact

The European Commission published on Wednesday 13 October a toolbox to help EU Member States mitigate the negative impact of soaring energy prices on households and businesses. Among all the recommendations, it suggests to Member States to reduce taxation rates for vulnerable populations, in a time limited and targeted way. The European Commission recalls that the current Energy Taxation Directive allows Member States to exempt or to apply a reduced rate on electricity, natural gas, coal and solid fuels used by households. Member States may also decide to apply reduced VAT rates on energy products as long as they respect the minima laid down in the EU’s VAT Directive, the Commission says. It also recommends to Member States to consider shifting the financing of renewable support schemes away from levies to sources outside the electricity bill. This would have the benefit of relieving vulnerable consumers from a significant part of their energy bill, according to the Commission.

New EP study on taxing professional football in the EU

The Policy Department for Economic, Scientific and Quality of Life Policies of the European Parliament recently published a new study on taxing professional football in the EU, commissioned by the FISC Subcommittee Coordinators. The study scrutinises the tax treatment of professional football players' remuneration in Belgium, France, Germany, Italy, the Netherlands, Portugal and Spain. Despite considerable differences among the national tax regimes, the study observes a common consciousness of the impact of tax on the competitiveness of national football leagues. It also makes some recommendations such as the introduction of a uniform harmonised high-standard good governance rules for football agents and professional football clubs through an EU license system, including some anti-money laundering requirements.

Belgian government to reform tax regime for expatriates

The Belgian government is set to change its tax regime for expatriates as part of its budget for 2022, which was approved on Tuesday 12 October. The old regime allowed certain write-offs on taxable income that about 20 000 expatriates took advantage of. Under the new proposal, those deductions would be replaced with a fixed 30% deduction, capped at €90 000, on taxable income for work-related expenses. The main change is that it nearly doubles the minimum annual salary threshold to benefit from the regime, from around €40 000 to €75 000. The goal is to limit the write-off benefits to high earners so that Belgium isn’t at a competitive disadvantage compared to neighbouring countries. Expatriates who work at EU institutions will nevertheless continue to be exempt from Belgian income tax, paying instead a “community tax” of between 8 and 45%. The reform will also likely include a provision that would exclude expats living 150 km or closer to Belgium’s borders. It is estimated that the new regime would bring additional €24.5 million annually.