Weekly Tax News – 2 July 2018

July 2, 2018

Improving efficiency and fairness in taxation is among the priorities of the Austrian Presidency of the Council, commencing on the 1st of July

On July 1 2018, Austria takes over the Presidency of the Council of the European Union until 31 December 2018. As holder of the Presidency, Austria will contribute significantly to the legislative and political work of the Council. The programme of the Austrian Presidency of the Council highlights three priority areas: (i) security and the fight against illegal migration; (ii) securing prosperity and competitiveness through digitalisation; and (iii) stability in the European neighbourhood. The second priority includes a commitment of the Austrian Presidency “at continuing the EU’s work on the taxation of the digital economy in order to ensure that profits are taxed in the country in which they are generated”.

The central role of an efficient and fair taxation is further highlighted in the programme of the Austrian Presidency, by stressing the need of protecting public budgets against harmful tax competition, tax fraud and tax evasion and to modernise tax rules in view of globalisation and new technologies. Furthermore, the commitment of the Austrian Presidency is “to continue to work on the European Commission’s proposal for the introduction of a common corporate tax base” and to achieve progress on the numerous European Commission proposals for modernising VAT in order to continue strengthening the Single Market.

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TAX3 exchange with Commissioner Jourová and public hearing on VAT fraud

On 25 June, the TAX3 committee had an exchange of views with the Commissioner Věra Jourová, (responsible for Justice, Consumers and Gender Equality) on the follow-up given by the Commission to the PANA recommendations concerning the fight against money laundering. Commissioner Jourová expressed her disappointment on the missing transposition of the 4th Anti-Money Laundering Directive by several Member States. The chair of the committee, MEP Ježek, seized the chance to express regret at the repeated refusals of the Bulgarian Presidency of the Council to cooperate.

On 28 June, the Committee held a public hearing on “VAT fraud”, which was attended by Mr Neven Mates (Member of the European Court of Auditors), Ms Maite Fabregas Fernandez (Director at DG TAXUD), Ms Alma Olofsdottir (Eurofisc) and Mr Richard Murhpy (Tax Justice Network). The panel discussed the role of cooperation between Member States in combating VAT fraud, using Eurofisc (a mechanism provided for the Member States to enhance their administrative cooperation in combating organised VAT fraud) to exchange targeted information and promoting joint audits. Furthermore, Mr Murphy stressed the importance of looking at the domestic dimension of VAT fraud, in particular in those countries where shadow economies are of a certain dimension. Finally, Ms Maite underlined the main points of the European Commission’s proposal on the VAT system presented by the Commission on 25 May.

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Ecommerce Europe against the interim tax proposed by the Commission

On 25 June, the organisation representing the digital commerce sector (Ecommerce Europe) wrote to the European leaders asking them to withdraw the proposal of taxing the gross revenue of the activities of digital platforms proposed by the European Commission on 21 March 2018. Ecommerce Europe considers that the OECD is the appropriate forum for the discussion and is concerned that although it is designed to be temporary, the measure will actually become permanent, because the proposal does not include an end date. Furthermore, the organisation highlighted that the actual costs related to the tax will be passed down in the supply chain and will be ultimately borne by small businesses and consumers.

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