Weekly Tax News – 15 November 2021

EC to unveil its Own Resources Package on 22 December

According to a provisional agenda, the European Commission is planning to unveil its Own Resources Package on 22 December 2021. The package, initially foreseen for June 2021, was supposed to introduce three new own resources for the EU budget: a carbon border adjustment mechanism (CBAM), a digital levy and an own resource based on the EU Emissions Trading System (ETS). It was postponed for several reasons, including, concerning the digital levy, to support the finalisation of the agreement on the international tax reform. It is however not clear if the package will contain a digital levy as such as it is banned by the OECD tax deal. The EC committed to present this package in the December 2020 Interinstitutional Agreement on cooperation on budgetary matters.

France pushes for EU-level revenues from global tax deal

France wants the OECD tax deal to provide new revenues at the EU level and to contribute to paying back the EU Recovery plan, the French European Affairs minister, Clément Beaune, said at the European Commission Annual Budget Conference on Monday 8 November. Clément Beaune suggested that the EU could take part of the additional revenue that the deal is expected to generate for EU countries to create a new own resource for the EU budget or an EU tax. The European Commission will unveil its proposal on the implementation of the OECD global agreement on minimum effective taxation (Pillar II) on 22 December 2021. As France will take over the presidency of the EU Council in January 2022, it will try to reach a political agreement in the Council on this proposal, Clément Beaune said.

 EP gives its final green light to public CBCR

On Thursday 11 November, MEPs gave their final green light to the directive on public country-by-country reporting (CBCR), closing a five-years legislative process. According to the new rules, multinationals and their subsidiaries with annual revenues over €750 million - and which are active in more than one EU country - will now have to publish the amount of tax they pay in each member state. This information will also need to be made publicly available on the internet, using a common template and in a machine-readable format. Member states will have 18 months to transpose the directive into their national laws. This means that businesses will need to be complying with the first provisions of the directive by mid-2024.

MEPs quiz experts on the impact of new technologies on taxation

On Tuesday 9 November, MEPs from the FISC Subcommittee of the European Parliament discussed with experts the impact of new technologies on taxation. Speakers recognise the challenges and opportunities offered by crypto assets and blockchain in taxation. The crypto assets market is growing fast, Andreas Thiemann, Researcher at the Joint Research Centre of the European Commission, recalled. The total market capitalization for all cryptocurrencies amounted to 2.2 trillion euros in October 2021, he said. Michelle Harding, Senior economist at the OECD’s Centre for Tax Policy and Administration said that the OECD is advancing its work to design a tax reporting framework for these assets and that the work will be finalized in 2022. Robert Müller from the tax consultancy & auditing firm Flick Gocke Schaumburg outlined how blockchain technology is suitable for tax functions. He said that, as a first step, it would be desirable to have an EU blockchain e-invoicing system and then, in the long term, to replace VAT tax with a native VAT cryptocurrency or token. He also said that it is necessary to create a specific framework for blockchain tax applications in the EU. The hearing will feed an upcoming INI report of the European Parliament on this subject.

 EU Council aims at an agreement on VAT rates at the December Ecofin

The EU Council is aiming to find an agreement on the European Commission’s 2018 proposal to give Member States the freedom to set reduced, super-reduced and zero VAT rates at the Ecofin meeting on 7 December, according to a provisional agenda. The EU Council Working Party on Tax Questions is due to discuss and finalize the compromise text on 25 November.

Denmark, Croatia and Lithuania asked to explain how they transposed the VAT e-commerce package

The Commission decided on Friday 12 November to open infringement proceedings against Denmark, Croatia and Lithuania for non-communication of the explanatory documents in relation to the transposition of new EU rules for VAT on e-commerce. The new rules are intended to simplify VAT for companies and consumers involved in cross-border online sales within the EU. Since Denmark, Croatia and Lithuania have failed to provide clear explanations on the way they have transposed these directives, the Commission cannot check that these Member States have completely and correctly transposed the relevant provisions into national law, it explained. The three countries now have two months to act, otherwise the Commission may decide to move on to the next stage of the infringement proceedings and send reasoned opinions.

Seven EU countries give their support to the European Payments Initiative

Seven EU Member States - Belgium, Finland, France, Germany, the Netherlands, Poland and Spain - said in a joint statement published on Tuesday 9 November that the European Payments Initiative (EPI) - a private initiative launched in July 2020 by several European banks - would help provide secure and innovative payment solutions. The seven countries state that they “firmly believe that time has come to build a genuine Europe of payments’” by removing unnecessary regulatory barriers to stimulate competition in the payments market. They call on stakeholders to work towards involving more Member States and promise to explore the possibility of converging the work of the EPI with other areas such as electronic identification and central bank digital currencies.