Weekly Tax News - 2 May 2022

May 2, 2022

European Commission announces its plan to regulate tax advice in the EU

On 25 April 2022, the subcommittee on tax matters (FISC) of the European Parliament held a hearing on "how to reinforce the regulation of intermediaries to create an intermediary sector that ensures a fair and user-friendly tax system". On this occasion, the European Commission publicly announced that it is working on a legislative proposal to regulate tax advice in the EU and that it will launch a public consultation on 11-12 May running until 20 July 2022 on this initiative. During the hearing, the Commission explained that it does not want to go after a specific profession and will rather focus on the action of providing tax advice. It also said that it does not intend to regulate the tax advising profession as such but rather to put a threshold of what behaviour is acceptable and what is not. The Commission promised to target the “rotten apples” and not to overburden the whole tax profession. In a press release, ETAF assessed the outcomes of the hearing and welcomed the announcement of the Commission as well as the growing attention given to this topic by European decision-makers.

Commission issues guidance on energy tax cuts

On Monday 25 April, EU tax commissioner Paolo Gentiloni wrote to EU Finance ministers to remind them of what they are allowed to do under the EU tax rules to cushion the impact of the rising energy prices. In the last months, a majority of Member States have lowered taxation on energy, introducing reduced VAT rates or reduced excise duties on energy products and electricity. “A coordinated EU response is of the essence to safeguard the Single Market and avoid further divergences across Member States”, he wrote. The guidance highlights in particular the possibilities for reduced rates applicable under the EU’s VAT rules (the VAT Directive) and excise duty framework (the Energy Taxation Directive). In his letter, Mr Gentiloni said that the Commission does not envisage for the moment further revisions of the EU taxation framework to respond to the current crisis.

MEPs adopt their opinion on Pillar II

MEPs broadly approved on Thursday 28 April the Commission proposal implementing into law the international agreement on a global minimum corporate tax rate of 15%. The report, drafted by MEP Aurore Lalucq (S&D, French), approves the key elements of the Commission proposal, notably sticking to the proposed implementation timeline and the implementation deadline of 31 December 2022 with an aim to having the law apply swiftly. The report also introduces a review clause which provides for the revision of the annual revenue threshold above which a multinational corporation would be subject to the minimum tax rate and calls on assessing the impact of the legislation on developing countries. The report will now be tabled for a plenary vote, after which it will constitute the official Parliament’s opinion.

European Commission’s seminar on tax compliance costs for SMEs

On Thursday 28 April, the European Commission organized a seminar to present its final report on tax compliance costs for SMEs, on the basis of a study which was conducted in 28 European countries (EU27+UK) among more than 3,500 enterprises in 2019. Astrid Bartels, Head of Unit access to Finance, Directorate Investment, Directorate General Internal Market, Industry, Entrepreneurship and SMEs of the European Commission, explained that one of the main conclusions of the report is that SMEs are disproportionately affected by tax compliance costs. Marcell Németh, Manager Strategy and Assessment at KPMG, who co-authored the study, said that companies in the EU spend an estimated annual total amount of 204 billion € to comply with the most burdensome tax obligations. The majority of compliance costs occur at micro (87%) and small (10%) companies level and most of them are related to the corporate income tax and VAT. Data collection and preparation costs make up more than 60% of total compliance costs, he added. However, the study also shows that the burden of tax compliance seems to be decreasing in the EU. An estimated 59% of company representatives in the 28 countries covered perceive the tax compliance costs to have decreased or remained unchanged between 2015 and 2019.

European Commission’s recommendation to strengthen the VAT cooperation with Norway

The European Commission published on Tuesday 26 April a recommendation to step up cooperation between the EU and Norway in the fight against VAT fraud and recovery of claims. The recommendation seeks the green light from Member States to re-open negotiations with Norway in order to strengthen cooperation, in particular through new information exchange tools and joint enquiries. EU and Norway already have an agreement on administrative cooperation, fight against fraud and assistance on recovery of claims in the field of VAT, which entered into force in 2018. The agreement enables the tax authorities of the EU and Norway to exchange information and to carry out joint activities to fight VAT fraud similar to those in place within the EU. The Commission estimates this agreement alerted Member States to potential VAT fraud losses of around 5 billion € since 2020.

ECJ rejects Airbnb plea on Belgian information for tax authorities

Belgian regional legislation obliging property intermediation services to transmit to the tax authorities certain data relating to tourist accommodation transactions is not contrary to European Union law, the Court of Justice of the European Union (ECJ) ruled on Wednesday 27 April (Case C-674/20). In this case, Airbnb Ireland had argued that the requirement contravened the principle of the freedom to provide services. Referred by the Belgian Constitutional Court, the ECJ is of the opinion that the order on the tax on tourist accommodation falls within the field of taxation which is expressly excluded from the scope of the directive governing electronic commerce. The Court notes that the order concerns all providers of property intermediation services, regardless of their place of establishment and the way in which they provide these services. It concluded that the contested order was not discriminatory.

ETAF annual report 2021

The European Tax Adviser Federation (ETAF) published on Monday 25 April its annual report presenting its main activities in 2021. In this edition, we particularly focus on our continuous engagement on the OECD two-pillar solution to address the tax challenges arising from the digitalisation of the economy, our work on the legislative package to combat money laundering and the financing of terrorism (AML/CFT) and on the EP initiative draft report on “Tackling non-tariff and non-tax barriers in the Single Market” as well as on the consequences of the Pandora Papers revelations. “ETAF will not shy away from speaking up when it comes to the value of our profession to raise acknowledgement of regulations that are useful and beneficial”, wrote Philippe Arraou, ETAF president.

ETAF is a registered organisation in the EU Transparency Register, with the register identification number 760084520382-92.

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