Weekly Tax News - Monday 13 May 2024

May 13, 2024

One month before the European elections, the European Tax Adviser Federation (ETAF) published on Wednesday 8 May a special edition of its newsletter dedicated to this event. “The forthcoming European elections, to be held from 6 to 9 June, will undoubtedly help profile the future of democracy in Europe. This event will be an exceptional opportunity for us all to decide collectively on the future direction we want for the European Union. Democracy should never be taken for granted: it is the sum of collective efforts and a collective responsibility in which we all have a role to play”, Philippe Arraou, ETAF President said in the foreword. To mark this event, ETAF questioned MEP Lídia Pereira (EPP, Portugal), MEP Alfred Sant (S&D, Malta), MEP Dragoş Pîslaru (Renew Europe, Romania) and MEP Kira Marie Peter-Hansen (Greens/EFA, Denmark) on their vision of the future of the European Parliament and of the European tax policy, as well as on the value they place on regulating the tax advising activity in Member States. The interviews were conducted in writing and reproduced faithfully.

European Commission launches public consultation on DAC2-6 efficiency

The European Commission opened on Tuesday 7 May its long-awaited public consultation to evaluate the effectiveness, efficiency and continued relevance of the Directive on administrative cooperation in tax matters (DAC) and its successive amendments (from DAC2 to DAC6). The evaluation, which is required by the DAC itself every five years, will assess whether the DAC’s scope and purpose are still relevant. It will also assess whether the information exchange is usable in terms of completeness, quality and timeliness. A special focus will be given to potential proposals to reduce the reporting burden in the context of the DACs, in line with the Commission’s engagement to rationalise and simplify reporting requirements for companies and administrations. The evaluation will cover the years 2018 – 2022 and consequently the successive amendments to include the exchange of information on financial account information (DAC2); cross-border tax rulings and advance pricing agreements (DAC3); country-by-country reports (DAC4); certain anti-money laundering data (DAC5) and reportable (i.e. presenting an indication of a potential risk of tax avoidance) cross-border arrangements (DAC6). In particular, the evaluation will look at the hallmarks for the exchange of information on potentially harmful cross-border arrangements introduced by DAC6, the Commission specified. The results of the public consultation will feed the final evaluation report, expected for Q3 2024. Interested stakeholders have until 30 July 2024 to send their feedback to the European Commission.

2024 European Commission’s DGs Management Plans

European Commission’s Directorate-Generals published on Wednesday 8 May their management plans for 2024, which give a good overview of the work areas in the coming months. The plan for the DG for Taxation and Customs Union (TAXUD) shows that, in 2024, it will focus on supporting the negotiations of the proposals on the table (i.e., BEFIT, HOT, TP, UNSHELL, FASTER, ViDA). DG TAXUD will notably propose measures to mirror the OECD work to standardise the information and for a tax administration to perform an appropriate risk assessment (DAC9). It will also submit for adoption a proposal to amend the VAT administrative cooperation framework to further empower Eurofisc in the fight against VAT fraud and break barriers in sharing VAT information with other authorities (i.e. Europol, OLAF and EPPO). DG TAXUD will remain in close contact with Member States and other stakeholders to discuss possible ways to address or mitigate the tax implication of cross-border telework and mobile working, and will continue to study the taxation policy on the financial sector, the plan says. As for the DG for Internal Market, Industry, Entrepreneurship and SMEs (GROW), it will also focus on the implementation of ongoing initiatives. Furthermore, the DG GROW will pay particular attention to proposals aimed at reducing burdens for citizens and business, especially rationalising reporting obligations, with a strong focus on SMEs, the plan says.

EU Finance Ministers will try to reach agreements on ViDA and FASTER on 14 May

EU Finance Ministers will meet in Brussels on Tuesday 14 May, with the aim to try to reach an agreement on two tax files: the proposal to make the relief of excess withholding taxes faster and safer (FASTER) and the VAT in the digital age (ViDA) package. On FASTER, an agreement on the last compromise text is very likely as the main open issue is now the market capitalisation ratio that would allow Member States not to apply certain provisions of the proposal, with a small number of Member States still having reserves, according to a note from the Belgian Presidency of the Council of the EU. For the ViDA package, an agreement is a bit more uncertain as during their meeting on Wednesday 8 May Member States’ ambassadors to the EU reportedly did not reach a conclusion and Estonia is maintaining its concerns about the deemed supplier regime for platforms. The latest compromise proposal on the directive can be consulted here and on the regulation here. The compromise proposals are accompanied by a note from the Belgian Presidency and a statement from the European Commission. On 14 May, Ministers will also exchange views on the state of play of the implementation of the Recovery and Resilience Facility (RRF), discuss the state of play of the economic and financial impact of Russia’s aggression against Ukraine, as well as approve conclusions on the fiscal sustainability challenges arising from ageing and conclusions on financial literacy that aim to contribute to delivering the capital markets union.

EU Member States’ ambassadors to the EU have reportedly reached on Wednesday 8 May an agreement in principle on the legislative proposal to mobilise the profits generated by the Central Bank of Russia’s asset frozen in the EU since the start of Russia’s military aggression against Ukraine. In practical terms, Member States with central securities depositories holding more than one million assets of the Bank of Russia will have to allocate these profits, estimated at a total of around €3 billion per year, as follows: 90% of the amounts collected will go to the ‘European Peace Facility’ (EPF) and 10% to the ‘Ukraine Facility’ via the EU budget. The agreement must now be formally approved at the Ecofin meeting on 14 May.

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

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