Weekly Tax News – 22 November 2021

Agreement reached on 2022 EU budget

The EU Council and the European Parliament reached an agreement on the 2022 EU budget in the evening of Monday 15 November, setting total commitments at €169 515,8 million and payments at €170 603,3 million. The budget gives the priority to economic recovery, fighting climate change and the green and digital transitions. It also leaves enough resources under the expenditure ceilings of the 2021-2027 multiannual financial framework to allow the EU to react to unforeseeable needs. The full breakdown per heading is available here. The EU Council and the European Parliament now need to separately approve the joint text. The Council is expected to approve it on 23 November and the Parliament on 25-26 November.

Tax transparency remains a top priority for the EU

Speaking during the opening session of the plenary meeting of the OECD Global Forum on transparency and exchange of information for tax purposes on Wednesday 17 November, Benjamin Angel, the Director for direct taxation and tax coordination at the European Commission, assured that tax transparency remains a top priority for the EU. He recalled that 2021 is the first year for implementation of the sixth amendment of the Directive on Administrative Cooperation in the field of taxation (DAC6) and that in the first months, 32 000 reports of potential aggressive tax practices were registered. He said the recent Pandora Papers scandal showed the need to do more and said the Commission is working on a DAC8 proposal to include crypto assets in scope and to cover the exchange of tax rulings concerning natural persons.

OECD countries foster majority of tax evasion, according to the Tax Justice Network

Countries are losing a total of $483 billion in tax a year to global tax abuse, according to the 2021 edition of the State of Tax Justice, published on Tuesday 16 November by the Tax Justice Network. Of the $483 billion lost a year, $312 billion of this tax loss is due to cross-border corporate tax abuse by multinational corporations and $171 billion is due to offshore tax abuse by wealthy individuals. According to the report, OECD countries foster 78% of the annual tax evasion. The authors attribute 55% of the losses to the United Kingdom, the Netherlands, Luxembourg and Switzerland. The United Kingdom and its dependent territories are responsible for a third of the corporate tax losses, according to the report. The Tax Justice Network recommends to governments to introduce an excess profit tax on multinational corporations making excess profits during the pandemic, such as global digital companies, in order to cut through profit shifting abuses. It also urges them to introduce a wealth tax to fund the Covid-19 response, with punitive rates for opaquely owned offshore assets.

EP is preparing recommendations on Golden Visas

The LIBE committee of the European Parliament is preparing an own-initiative report on citizenship and residence by investment schemes (so called Golden Visas). MEP Sophie in’t Veld (Renew Europe, Netherlands) recently published her draft report, which asks for a Union-wide gradual phasing out of citizenship by investment schemes by 2025 and argues for a regulation of intermediaries involved in these activities. MEPs are addressing the topic under different angles, ranging from residency requirements to money laundering and security checks, spelled out in a series of working documents available here.

ECB updates MEPs on its digital euro plan

On Thursday 18 November, Fabio Panetta, a European Central Bank (ECB) Executive Board member updated MEPs from the ECON committee of the European Parliament on the ECB’s plan for the creation of a digital euro by 2026 that could be used for all types of payments. As arguments, he cited the need to adapt to the new reality of payments in Europe, the search for greater European independence when third country providers carry out 70% of card transactions in the EU, the launch of innovative services, and respect for the privacy of users. Mr Panetta stressed the importance of providing a digital currency that meets a requirement in terms of security and minimal transaction costs and said that the goal was not to eliminate cash or the commercial money provided by banks. Even if the European Commission is still far away from proposing a bill on this, he called on the MEPs to do their part by helping, when the time will come, to transform the digital euro plan into law.