On 20 November, the Member States’ ambassadors to the EU (Coreper) discussed the inclusion of the Country-by-Country reporting in the agenda of the Competitiveness Council on 28 of November. The Finnish Presidency of the Council has decided to keep the subject on the agenda despite the tense different positions of the Member States. Ten countries (France, Spain, Belgium, Denmark, the Netherlands, Italy, Romania, Bulgaria, Greece and Slovakia) reiterated their support. Other countries have clearly stated their opposition to the proposal. They claim that the file should be discussed in the ECOFIN with a simple consultation of the European Parliament. The position of three countries, including Germany, remains uncertain. For the proposal to be adopted, it must be approved by a qualified majority, i.e. 55% of the Member States representing at least 65% of the EU population. It remains to be seen whether or not a blocking minority will be formed.
On 15 November, the European Commission has opened an in-depth investigation into tax exemptions for Italian ports. In January 2019, the Commission invited Italy and Spain to modify their legislation in order to ensure that ports would pay corporate tax in the same way as other companies. In fact, in Italy port authorities are fully exempt from corporate tax whilst in Spain the exemption only concerns their main source of revenues (e.g. port fees, income from rental or concession contracts). Italy has not agreed to change its legislation; thus, the Commission has decided to open an in-depth investigation to assess the compatibility of the Italian exemption with the EU state aid rules. On the same date, the Commission accepted the commitment of Spain to amend its corporate income tax legislation to bring it in line with the EU state aid rules. In particular, the Spanish authorities have agreed to subject Spanish ports to the normal corporate tax rules as from 2020.
On 19 November, the French Council of Economic Analysis (Conseil d’Analyse Économique - CAE) published a report which includes an initial assessment of five scenarios regarding the international tax reform discussed at OECD level. The simulations show the impact of these scenarios on six countries: France, Germany, the United States, Ireland, China and India. Based on the evaluation, the impact of the Pillar 1 approach proposed by the OECD on tax revenues would be negligible. In particular, France's tax revenues would increase by only 0.1%, Germany would see a slight decline (-0.1%) and the results would be broadly the same for the other countries in the study. The effect of pillar 2, i.e. the adoption of a minimum effective tax rate, would be much more significant: France's tax revenues would increase by 9,4% and Germany’s would increase by 5,7%.
Until a global solution on OECD-level is found, the Czech government decided to approve a proposal to tax digital giants by 7% on the revenue derived from targeted advertising and providing digital market places. This tax would apply to companies that make over € 750 million annually and have over 200,000 users. The proposal still has to be approved by the Czech parliament but with this legislation the Czech Republic would join countries like France and Italy who have already introduced a similar tax.
Don’t miss out the opportunity to join the ETAF Conference on “Future dynamics of EU tax policy” on 5 December 2019 in Brussels. Take a look at our programme and send an email to [email protected] to register; there are still few seats available!
