On 12 October, EU officials and tax advisers from all over Europe discussed how to ensure a Stable Recovery through Fair Taxation during a conference organised by the European Tax Adviser Federation (ETAF) in Brussels.
In his welcome address, ETAF President Philippe Arraou recalled that a stable recovery after the COVID-19 pandemic can only be done through a fair taxation. “This is important for tax acceptance. This is even more crucial for tax compliance”, he stressed.
As the G20 Finance Ministers are meeting in Washington on 13 October to endorse the agreement on the reform of the international corporate taxation system reached at the OECD level on 8 October, the ETAF Conference was a good opportunity for the speakers to share their initial reactions on the deal.
“15% is a starting point but I hope there will be further rounds where we will have the opportunity to update that rate”, MEP Paul Tang, Chair of the FISC Subcommittee of the European Parliament, said.
Aurore Mons delle Roche, Tax Partner at EY and Member of the ITAA Council, welcomed the agreement as a “revolution” but outlined that it also comes with great challenges for tax advisers and enterprises in terms of implementation. “For the whole Pillar II there is a data challenge that needs to be managed by the taxpayer. I think it is good to have carve outs in the deal, but it is not simplifying things”, she said.
The Director for direct taxation, tax coordination, economic analysis and evaluation at the European Commission, Benjamin Angel explained how the European Commission intends to transpose at EU level the global tax deal.
On Pillar II, the European Commission hopes to be able to present a proposal for a Directive before the end of the year. “Implementing it without a Directive would mean to take a very high risk of fragmentations and discrepancies”, he said stressing that under EU law, we cannot distinguish between a domestic and a cross border situation.
For Pillar I, the calendar will be different because there is still much to be agreed on. The European Commission needs to see the fine print of the OECD Multilateral Convention before taking a decision on whether a Directive is needed or not, he explained.
Mr Angel also spoke about the future proposal for a new Framework for Income Taxation (BEFIT). As soon as the OECD work is over, the European Commission will try a different process and co-design it with Member States, not to have a repetition of what happened with the Common Consolidated Corporate Tax Base (CCCTB), he said.
During the debate, speakers also reacted to the recent Pandora Papers investigation, which is “another reminder that the EU still has to do more to fight tax avoidance”, according to Philippe Arraou.
An EU-wide legal obligation of tax compliance for tax advisers could make a significant contribution towards avoiding tax evasion, he said.
Already before this scandal, the European Commission announced its intention to present in December a proposal for a Directive to tackle the misuse of shell companies in the EU. “But with the Pandora Papers, it is clear that we need to go beyond”, Benjamin Angel admitted.
The idea is to have a set of tests – including an economic substance test – to companies that, if not met, could lead a Member State where a company is located to conclude that the entity is a shell company and to revoke its residence certificate, he explained.
On the European Parliament´s side, Paul Tang said that the FISC Subcommittee is still making up its mind on which actions to take following the Pandora Papers. “We want to look at the enablers of it”, he announced.
Representing the tax profession in the debate, Aurore Mons delle Roche said that she noticed a shift over the last 10 years and that today tax advisers are working more and more on tax compliance and less on tax optimization.
At the end of the debate, Paul Tang welcomed how ETAF manages to find the “right balance” between the protection of private interests and the protection of the public interest in its work.
Notes to editors:
The event can be watched again online here: https://www.etaf.tax/index.php/events/conferences
For media enquiries, please contact: Marion Fontana, EU Policy Officer, [email protected], Phone: +32 2 2350 105 | Mobile: +32 471 78 90 64
The European Tax Adviser Federation is a European umbrella organisation for tax professionals whose activities are regulated by law. It is set as an international not-for-profit organisation (AISBL) governed by Belgian law, based in Brussels and was launched on 15th December 2015. ETAF represents more than 280,000 tax professionals from France, Germany, Italy, Belgium, Romania, Hungary and Austria.