Weekly Tax News – 7 May 2018

New own resources for the multiannual financial framework

On 2 May, the European Commission adopted its proposals for the multiannual financial framework (MFF) of the EU for the seven-year period between 2021 and 2027. Overall, the Commission proposes a budget of €1.135 billion in commitments. Amongst others, the Commissions is proposing to simplify the current VAT based own resources and to introduce a basket of new own resources that is linked to a 3% call rate applied to the new Common Consolidated Corporate Tax Base (CCCTB) to be phased in once the necessary legislation has been adopted. Furthermore, the Commission proposal includes the elimination of all rebates and the reduction from 20% to 10% of the amount Member States keep when collecting customs revenues (being one of the own resources) for the EU budget. These proposals from the Commission were welcomed by the Members of the European Parliament with particular reference to the determination to provide the EU with new own resources. In the weeks to come the Commission will present detailed proposals for sector-specific financial programmes and the decision on the long-term EU budget will then fall to the Council, acting by unanimity, with the consent of the European Parliament.

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ECOFIN meeting in Sofia: finance ministers on the digital tax and on strengthening administrative cooperation

The second day of the informal meeting of EU economy and finance ministers, held in Sofia on 28 April, was devoted to tax issues. Among other topics, the agenda addressed the need to launch a technical discussion about the taxation of the digital economy in a structured and result-oriented manner by taking account of the international developments. However, the Member States’ positions are still taking shape: the ministers of Malta, Luxembourg and Ireland urged the EU to work towards a global agreement through the OECD. Denmark, Lithuania, Finland, Sweden and the United Kingdom are converging on this position. In the meantime, France, who is a determined sponsor of this proposal, can count on Portugal, Poland, Spain and Italy, whilst the position of Germany is still awaited.

Furthermore, during the meeting the ministers discussed issues related to improving revenue and fighting tax fraud, underlining the importance of taking additional measures to improve the administrative cooperation among tax administrations and address practical aspects to enhance the use of the data received in the exchange of tax information.

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New proposals by the Commission aim at letterbox companies

On 25 April the Commission published new proposals to harmonize rules that would prevent companies from moving their headquarters and registered offices to letterbox companies located in other EU countries in order to avoid taxes. This new proposal is part of a package of company law rules, supposed to help companies move, merge and divide across borders within the Single Market. The Commission also intends to introduce a fully online registration for companies in all Member States in order to make the process of registering cost efficient and more effective. 

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ECON publishes an opinion statement on vehicle taxation

In the framework of the long-term strategy to modernise European transport networks, the European Commission proposed initiatives to help the transition towards clean energy, fairer road pricing, reduced congestion and digitalization. ECON-Rapporteur MEP Markus Ferber supports phasing out annual vehicle charges and facilitating the transition towards distance-based road charging which would be in line with the polluter-pays-principle. The European Parliament has no co-legislator-rights in this matter; it can nevertheless form an opinion that will be taken into consideration by the Council.

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Trade agreement between EU and New Zealand

On 1 May, a new customs agreement between the EU and New Zealand has officially entered into force. The agreement will enable both partners to work together to combat breaches of customs rules. It is a step forward in the direction of cooperation on customs security and a safer environment for businesses and consumers. The entry into force of the agreement follows its signature in July 2017.

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