Weekly Tax News – 31 January 2022

Bruno Le Maire presents the French priorities to MEPs

French Minister for Economy, Bruno Le Maire, presented on Tuesday 25 January to the Committee on Economic and Monetary Affairs (ECON) of the European Parliament the priorities of the French presidency of the EU Council for the next months to come. The Carbon Border Adjustment Mechanism (CBAM) will be “one of the highest priorities” of the French Presidency, he recalled. A discussion on this subject is foreseen for the Ecofin of 15 March. Minimum taxation is another big priority for France, which aims at an agreement on the implementing Directive for Pillar II before June. "Without France, there would have been no agreement at all”, he replied to some criticisms from French MEPs about the ambition of the text. During the hearing, the French Minister als said that he is in favour of qualified majority voting on tax decisions at EU level instead of unanimity. Moreover, Bruno Le Maire promised he is ready to carry out the “most ambitious work possible” on the reform of the Code of Conduct on Business Taxation.

EU Code of Conduct Group on Business Taxation planning its work

The Code of Conduct Group (CoG) on Business Taxation of the EU Council published on Tuesday 25 January its Work programme under the French Presidency of the EU Council. During the next months, the CoG will start discussing possible impacts of the OECD tax deal that was reached on a minimum effective taxation (Pillar 2) on its work, including on the EU listing criteria. It will also work on “follow-up actions to the Pandora Papers”, it says but without giving more details. A new update of the EU blacklist of tax havens is also foreseen in February although no formal meeting of the EU Finance ministers is scheduled before March. There is however no mention in the Work Programme of the revision of the Code of conduct on Business Taxation, which was blocked by Hungary and Estonia last December.

MEPs ask for an EU-wide framework for withholding tax

On Tuesday 25 January, MEPs from the Economic and Monetary Affairs (ECON) of the European Parliament adopted a resolution, drafted by Portuguese MEP Pedro Marques (S&D), asking for an EU-wide withholding tax in order to ensure that all payments (dividends, interest, royalties, capital gains, etc.) made within the EU are taxed at least once before leaving it. This proposal could contain a minimum effective tax rate, MEPs say. The resolution also urges the European Commission to come forward with a common and standardised EU procedure for refunds of withholding tax for all Member States. This resolution comes at the right time as the European Commission intends to present a legislative proposal focused on withholding tax procedures in the EU during the fourth quarter of 2022. The resolution will be put to a vote in the European Parliament’s March plenary session.

Paul Tang re-elected as Chair of the FISC subcommittee of the EP

On Wednesday 26 January, the Dutch MEP Paul Tang (S&D) was re-elected as Chair of the Subcommittee on Tax matters (FISC) of the European Parliament. Markus Ferber (EPP, Germany) was re-elected as first vice-president, Martin Hlávaček (Renew Europe, Czech Republic) as second vice-president, Kira Peter-Hansen (Greens/EFA, Denmark) as third vice-president and Othmar Karas (EPP, Austria) as fourth vice-president. On Monday 24 January, the Committee on Economic and Monetary Affairs (ECON) of the EP also renewed its governing body. The Chair of the ECON Commission, Italian MEP Irene Tinagli (S&D), was re-elected by acclamation.

Spanish fines for undisclosed assets abroad violate EU Law, CJEU says

The Court of Justice of the European Union (CJEU) ruled on Thursday 27 January that a Spanish law sanctioning residents who fail to make timely or accurate disclosures of assets and rights held abroad was contrary to EU law, more specifically to the principle of free movement of capital. The Spanish law provides for a flat-rate fine of 150% of the amount of tax evaded and specific fixed fines for failure to comply or partial or late compliance with the information obligation. These fines, the CJEU points out in a press release, can sometimes bring the amount owed by the taxpayer to more than 100% of the value of their assets and rights located abroad and establish a difference in treatment between Spanish residents according to the location of their assets. “By attaching such serious consequences to the failure to comply with a declaratory obligation, the Spanish legislature went beyond what is necessary to guarantee the effectiveness of fiscal supervision and to prevent tax evasion and avoidance”, the CJEU concluded.