Weekly Tax News – 12 November 2018

ECOFIN on Digital Services Tax

On Tuesday 6 November, during the ECOFIN meeting the EU finance ministers discussed the Digital Services Tax proposed by the Commission on 21st of March 2018. Some progress has been made on definitions, tax collection and administrative cooperation. However, there are still differences between member states on the precise scope of services which would be subject to the future tax, with Germany pushing for leaving out the data sales from the scope of the directive. On the date of application, France proposed to delay the application of the proposal, meaning that the proposal should be adopted in December 2018, but the implementation date should be set for the end of 2020 instead of 1 January 2019. This would give the OECD enough time to make a fuller alternative proposal. The directive would automatically enter into force on that date unless an agreement has been reached within the OECD in the meantime. Finally, it should be noted that Ireland, Denmark and Sweden are still strongly opposing the proposal, whilst Germany remains vague.

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EU Finance ministers agrees on VAT directives on e-publication

During the ECOFIN of Tuesday 6 November, the Council adopted a directive allowing alignment of VAT rules for electronic and physical publications. From now on, member states will be able to apply reduced, super-reduced or zero VAT rates to electronic publications, as well. On the same day, the Council adopted a directive authorising certain member states to carry out reverse-charge VAT schemes in order to prevent VAT fraud.

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Namibia removed from EU list of non-cooperative countries

On 6 November, the EU Council removed Namibia from the EU's blacklist of non-cooperative jurisdictions for tax purposes, considering that the African country has made sufficient commitments to address EU concerns. Namibia has been placed on the grey list (that includes 66 countries) leaving only five countries on the blacklist: American Samoa, Guam, Samoa, Trinidad and Tobago and the US Virgin Islands.

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European Commission infringement package: illegal tax breaks for yachts

On Thursday 8 November, the Commission issued its monthly infringement package pursuing legal action against Member States for failing to comply with their obligations under EU law. A letter of formal notice and a reasoned opinion were sent to Italy to address, respectively, the reduced VAT base for the leasing of yachts set out in its tax legislation and its illegal system of exemptions for fuel used to power chartered yachts in EU waters. A letter of formal notice was also sent to the UK concerning the abusive tax practices with regard to supplies and leasing of aircraft on the Isle of Man. Letters of formal notice were also sent to Belgium (requiring to amend its legislation on tobacco excise duty and to implement the judgement of the Court of Justice on the evaluation of rental income from immovable property), Bulgaria (to transpose new transparency rules for the exchange of information), Italy (to align the VAT applied on fuel in the Lombardy region close to the Swiss border with the EU law) and Romania (to end its VAT split payment mechanism).

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