Weekly Tax News – 9 April 2018

Commissioner Moscovici at the TAX3 Committee hearing

On 27 March, Commissioner Moscovici had an exchange of views with the members of the ECON and TAX3 Parliamentary Committees on digital taxation, aggressive tax planning and the VAT package proposal.

Moscovici highlighted that multinationals are taking advantage of the tax fragmentation at European and international level and that Europe should exercise fiscal sovereignty collectively in order to avoid the risk of a race to the bottom of tax rates. He was optimistic on the possible unanimous agreement to be reached in the Council regarding the taxation of the digital sector. Furthermore, he noted that an agreement at international level still looks very far away, since the last OECD report revealed the existence of insufficient taxation of digital companies but also a lack of agreement on how to proceed on this issue. He also urged the Member States to agree by the end of 2018 on harmonising the CCCTB and to bring the tax regime in line with the digital age.

On the fight against tax fraud and tax evasion, the Commissioner stated that there are no tax havens by international standards in the EU. However, he stated that it was impossible to deny that there were aggressive taxation practices. For this reason, the Commission is working together with the Member States (i.e. Belgium, Cyprus, Luxembourg, Malta, Ireland, the Netherlands and Hungary) whose practices were reported in the European Semester budgetary process.

On VAT, Moscovici said that the Commission would present new proposals in May 2018 to move towards a definitive value-added tax regime.

 

EU still divided over tax on web giants

On 23 March, during a European summit, Leo Varadkar (Irish Taoiseach) told that at least ten EU Member States have questions and reservations about the proposal to tax the activities of the internet giants. On the other hand, the Commission announced that more than half of the Member States have replied positively to the proposal. In particular, France is ready to use a great deal of leverage to push the proposal through. However, in general, the small countries consider that the tax will affect them, since it is designed to be divided up on a pro rata basis relating to the number of users. Furthermore, it would be Ireland in particular that would collect a great share of tax from companies on its soil (e.g. Apple) and redistribute it between the other countries in which it is payable. 

 

The uncertain future of the services e-card

After the European Parliament’s internal market committee rejection of the services e-card, the Internal Market and Industry Commissioner Elżbieta Bieńkowska looks forward to relaunch this project. She tweeted “we still need progress on ecard, to provide true Single Market for companies, especially SMEs”. The European Parliament itself published a press release after the abovementioned rejection, leaving open the possibility of relaunching the legislative process. On 5 April, the Bulgarian presidency of the Council expressed its wishes to continue with the legislative work on the services e-card. On the other hand, several national delegations of western Europe, such as France and Germany, are not in favour of the proposal.

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