European Commission adopts new Temporary Crisis and Transition Framework
The European Commission adopted on Thursday 9 March a new Temporary Crisis and Transition Framework to encourage support measures in key sectors for the transition to a ‘net-zero’ economy, in line with the ‘Green Deal Industrial Plan’. The new rules, adopted after consultation with EU countries, are intended to counter the effects of the US Inflation Reduction Act. In addition, the new framework extends the temporary crisis framework of 23 March 2022 allowing Member States to support the economy in the context of the war in Ukraine. The new framework introduces new measures, applicable until 31 December 2025, to further accelerate investment in key sectors for the transition to a ‘net-zero’ economy, namely batteries, solar panels, wind turbines, heat pumps, electrolysers and carbon capture usage and storage, as well as for the production of key components and for the production and recycling of related critical raw materials.
Joint IFAC/ICAEW event “Is trust enough to fight money laundering?”
On Tuesday 7 March, the International Federation of Accountants (IFAC) and the Institute of Chartered Accountants in England and Wales (ICAEW) organized a joint conference in Brussels addressing the need to improve financial intelligence information sharing to combat money-laundering. During the event, Viktor Ivanov, Policy Officer at the DG FISMA of the European Commission, outlined that the anti-money laundering (AML) package, which was presented in July 2021 and which is currently being negotiated, will be a real game changer. Turning to the future, he recognized that one area of improvement would be the confiscation of criminal proceeds as the EU only confiscates 1% of criminal proceeds, according to Europol’s latest data. Kris Meskens, Secretary General of the Belgian Financial Intelligence Processing Unit (CTIF-CFI), said that AML has become a professional activity and that is less easy to detect it today. For Inês Oliveira, Policy Analyst at the Financial Action Task Force (FATF), the use of new technologies by criminals is a further risk but at the same time, it can also be an efficient tool to combat AML if the staff is well trained. Speakers also discussed the recent European Court of Justice’s ruling on the access to beneficial ownership registries and the ongoing work in the AMLD6 to define who will have a legitimate interest to access those registries. Roland Papp, Transparency International’s Senior Policy Officer on Illicit Financial Flows, particularly regretted the Court’s ruling and said that it was a real “setback”. The conference was also the occasion to display the ICAEW anti-money laundering training film “All too familiar”, which pointed out several challenges for accountants, such as familiarity with the client and the lack of professional scepticism, the conduct of customer due diligence, the necessity to have good quality suspicious activity report as well as how to detect the red flags of modern slavery.
European Commission to propose Pillar 1 Directive when OECD work will be “sufficiently mature”
In an answer to a written question from MEP Olivier Chastel (Renew Europe, Belgium) published on Friday 3 March, EU Commissioner for taxation, Paolo Gentiloni, reassured that the implementation of the OECD Pillar 1 agreement on the reallocation of taxing rights remains a key priority for the Commission and that it will propose a Directive as soon as the work at the OECD is “sufficiently mature”. According to the new timeline agreed by the OECD Inclusive Framework members, a signing ceremony of the Multilateral Convention should be held in June 2023 with the objective of enabling it to enter into force in 2024 once a critical mass of jurisdictions - as defined by the Multilateral Convention- have ratified it. The Commission will regularly reassess the situation and if appropriate, it will consider submitting a legislative proposal to address the tax challenges arising from the digitalisation of the economy in the absence of the implementation of the Pillar 1 solution, Paolo Gentiloni added. In its question, MEP Olivier Chastel particularly asked the Commission if it will revert to a unilateral proposal if the United States does not take part in Pillar 1 given the strong opposition of American Republicans.
European Parliament prepares its work on VAT in the digital age
The European Parliament started to prepare its work for an opinion on the VAT in the digital age package. MEP Olivier Chastel (Renew Europe, Belgium) has been appointed as rapporteur on this file. The shadow rapporteurs are Lidia Pereira (EPP, Portugal), Aurore Lalucq (S&D, France), Mikuláš Peksa (Greens/EFA, Czechia), Andżelika Anna Możdżanowska (ECR,Poland) and Chris Macmanus (The Left, Ireland). To support their work, the European Parliamentary Research Service (EPRS) published on Tuesday 28 February a briefing on the VAT in the digital age package outlining the existing situation, the changes that the proposals would bring as well as the legislative process.
EDPS opinion on the VAT in the digital age package
The European Data Protection Supervisor (EDPS) sent on Friday 3 March its opinion on the VAT in the digital age package to the Council of the EU. Having regard to the proposed rules on digital reporting, the EDPS recalled that any processing of personal data must fully comply with the EU rules on data protection, including the principles of purpose limitation and data minimisation. To ensure compliance with the principle of purpose limitation, the EDPS recommended explicitly specifying in the enacting terms of the proposal that the information collected may only be processed for the purpose of fighting VAT fraud by the competent tax administration. As information contained in invoices may reveal sensitive information concerning specific natural persons, the EDPS welcomed that the information to be provided to the tax administration under the digital reporting requirements are an extract of the information from the invoice and not the whole invoice as such. This is a key safeguard to ensure compliance with the principle of data minimisation under EU law, it said. In this regard, the EDPS welcomed that the proposal excludes the name and address of the customer and the taxable person from the information to be transmitted.
OECD public consultation meeting on compliance and tax certainty aspects of global minimum tax
As part of the ongoing work to implement the Two-Pillar solution to address the tax challenges arising from the digitalisation of the economy, the OECD will hold on Thursday 16 March a virtual meeting with stakeholders to discuss the 750 pages of comments received on the public consultation it launched in December 2022 on the compliance and tax certainty aspects of global minimum tax (so-called Pillar 2). The OECD sought inputs on the amount and type of information that MNE Groups should be expected to collect, retain and/or report for the application of the GloBE rules and possible simplifications that could be incorporated in the GloBE Information Return. In a second public consultation document, the OECD outlined various mechanisms for achieving tax certainty under the GloBE rules, including dispute prevention and dispute resolution mechanisms. The agenda of the meeting can be consulted here. The event will be recorded and the replay will be made available on the OECD’s website.
Angola joins the OECD Global Forum on transparency and exchange of information
On Wednesday 8 March 2023, Angola joined the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) and became its 166th member. Members of the Global Forum include all G20 countries, all OECD members, all international financial centres and a large number of developing countries. Like all other members, Angola will participate on an equal footing and is committed to combatting offshore tax evasion through the implementation of the internationally agreed standards of exchange of information on request (EOIR) and automatic exchange of financial account information (AEOI). Angola will also join the Africa Initiative, a programme of work launched in 2014 to support domestic revenue mobilisation and the fight against illicit financial flows in Africa through enhanced tax transparency and exchange of information.
This newsletter contains information about European tax policies and developments gathered from official documents, hearings, conferences and the press. It does not reflect the official position of ETAF nor should it be taken as a written statement on behalf of ETAF.