Weekly Tax News – 11 June 2018

TAX3 workshop on cryptocurrencies and digitalisation

On 7 June, the TAX3 committee held a workshop on “taxation and fight against money laundering: cryptocurrencies, digitalisation and the European semester”. The first panel was attended by Prof. Robby Houben (Antwerp University) who examined the implications of virtual currencies for financial crimes. “The key problem is the total anonymity provided by the transactions undertaken in virtual currencies” he said, proposing as a possible solution the set-up of a compulsory license to carry out transactions in cryptocurrencies. Answering to MEP Kofod (S&D, co-chair of TAX3), he highlighted that banning cryptocurrencies was not easy due to the high number of cryptocurrencies on the market. Furthermore, in his view, these kinds of initiatives would risk hampering the development of the important technology which is at the basis of cryptocurrencies: the blockchain technology. The second panel focused on the “impact of digitalisation on international tax matters”. Ms Eli Hadzhieva (Dialogue for Europe) and Prof. John Vella (Oxford University) presented the state of play, key issues and challenges of the taxation of the digital economy. Ms. Hadzhieva underlined the different positions of the Member States over the proposals that the European Commission has delivered on 21 March 2018, whilst Prof. Vella suggested tackling the issue by moving towards a system which seeks to tax companies where their consumers are located (i.e. introducing a destination-basis principle). In the course of the third panel, Mr. Valère Moutarlier (Director at DG TAXUD) reported on the Country-specific recommendations against aggressive tax planning within the Member States published by the European Commission on 23 May 2018.

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Directive on Tax Intermediaries published

On 5 June 2018, the EU Directive 2018/822 amending Directive 2011/16/EU with respect to mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements was published in the Official Journal of the European Union.  The Directive will enter into force on 25 June 2018, giving the Member States until October 2020 to start exchanging cross-border reportable arrangements. 

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Nordic states against European Commission’s digital tax proposals

On 1 June, a joint statement of the finance ministers of Sweden, Denmark and Finland was released to clarify the position of the three Nordic Member States in relation to the proposals of the European Commission for taxing the digital economy. The finance ministers highlighted that the proposals deviate from the internationally established principles and that in particular the digital services tax deviates from “fundamental principles of income taxation by applying the tax on gross income, i.e. without regard to whether the taxpayer is making a profit or not.” Furthermore, they stated that there are no reasons to deviate from internationally established principles without a thorough analysis that should be carried out at OECD level.

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EU reactions to American tariffs on on steel and aluminium

On Wednesday 6 June, the European Commission (EC) decided to apply additional duties to selected imports from the United States. The Commission is planning to conclude the relevant procedure in coordination with Member States before the end of June so that the new duties start applying in July. According to the EC, the application of the rebalancing duties is fully in line with WTO rules. It corresponds to a list of products notified to the WTO on 18 May. According to the European Trade Commissioner Cecilia Malmström “this is a measured and proportionate response to the unilateral and illegal decision taken by the United States to impose tariffs on European steel and aluminium exports”.

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European blacklist of non-cooperative jurisdictions: discussions on new criteria

The code of conduct group of the Council of the EU started working on a possible modification and renewal of the criteria of the European blacklist of non-cooperative jurisdictions. These changes were already anticipated in the list of criteria to define tax havens set out by the ECOFIN in November 2016. The criteria on the exchange of information on beneficial owners and on the implementation of the OECD’s measures to tackle BEPS are carefully discussed.