Polish Presidency of the Council unveils its programme and priorities
On Tuesday 10 December, representatives of the Polish government presented the priorities of the Polish Presidency of the Council of the EU from 1 January to 30 June 2025 as well as its logo - the Polish flag merged with the letters EU - and motto. "Security, Europe! This is our motto, which reflects the current challenges facing our continent", said Adam Szłapkam, Minister for European Union Affairs. Its official website was subsequently launched, together with the publication of Poland's programme and priorities. As the motto indicates, the central theme of the Polish Presidency will be security, in all its dimensions: external, internal, information, economic, energy, food and health. In a detailed programme, it states that, in the area of taxation, Poland will take action to support EU competitiveness by tackling harmful tax competition. In particular, the Presidency will continue the work on the ninth Directive on administrative cooperation in the field of taxation (DAC9). “Steps will be taken to ensure that the DAC9 Directive is fully compliant with the OECD standard, helping to maintain the competitiveness of the European economy”, it says. The Polish Presidency also intends to continue efforts to close the VAT gap and to further tighten up VAT in the e-commerce sector, in particular to counter irregularities in the case of distance sales of imported goods via electronic interfaces. Moreover, it does not exclude working on a possible legislative proposal on the structure of taxation and excise rates applicable to tobacco products and substitute products, should the Commission present one, and commit to continue working on the revision of the Directive on the taxation of energy products and electricity. Poland will form, together with Denmark and Cyprus, the so-called trio of presidencies, which common programme has also been unveiled.
Approval of the electronic VAT exemption certificate
EU Finance Ministers reached a political agreement on the Directive paving the way for the introduction of an electronic tax certificate for VAT exemptions and the corresponding Implementing regulation when they met on Tuesday 10 December. The directive will provide for an electronic certificate to replace the existing paper certificate that is used when goods are to be exempt from VAT, for example because they are imported for embassies, international organisations or armed forces. Member States brought a number of amendments to the Commission’s initial proposal. In particular, they decided to limit the scope of the mandatory use of the electronic VAT exemption certificate to situations where two Member States are involved and the exemption is not granted by way of a refund. The exact electronic format, including the necessary IT specifications, will be discussed in expert groups and determined in Commission implementing acts. The Council added a number of elements to be taken into account when designing the format. Furthermore, the Council shortened the transition period where Member States will be able to use both electronic and paper versions, originally planned to last 4 years (2026-2030), to just 1 year (2031-2032). The 2031 delayed starting date should help tax authorities spread in time the necessary IT developments, which will coincide with the significant investments needed to implement the ViDA package, the Council said. The agreement will now go through technical and linguistic check before being presented to the Council for formal adoption early next year. The text will then be published in the EU’s Official Journal and enter into force.
Formal adoption of the FASTER Directive
On Tuesday 10 December, the ECOFIN Council formally adopted the Directive on faster and safer relief of excess withholding taxes (FASTER), following the re-issuance of the European Parliament’s opinion on 14 November. The directive will allow Member States to have two fast-track procedures complementing the existing standard refund procedure for withholding taxes and introduces a standardised reporting obligation for financial intermediaries like banks or investment platforms. The directive will also introduce a common EU digital tax residence certificate (eTRC) that tax paying investors would be able to use in order to benefit from the fast-track procedures to obtain relief from withholding taxes. Member States will provide an automated process to issue digital tax residence certificates (eTRC) to a natural person or entity deemed resident in their jurisdiction for tax purposes. Member States will have to transpose the directive into national legislation by 31 December 2028, and the national rules will have to apply from 1 January 2030. The text will now be published in the EU’s Official Journal and enter into force.
Further work needed on the recast of the Energy Taxation Directive
Despite earlier hopes of reaching an agreement during the December ECOFIN meeting, the Hungarian Presidency finally decided to only ask Finance Ministers if they share the view that the negotiations on the Energy Taxation Directive (ETD) are taking the right direction when they met in Brussels on Tuesday 10 December. In particular, since this issue played a major role in blocking the progresses on the whole proposal, the Presidency proposed to maintain the text of the currently applicable ETD on aviation and maritime sectors, with the addition of a review clause in 2035 to tackle the issue. The public debate confirmed that the discussions are generally going in the right direction for striking a balance between the climate ambition and the specificities of the Member States, as well as the competitiveness of the EU. The current compromise proposal on the table was viewed as a real improvement compared to the currently applicable ETD by the majority of Member States. However, some countries would like the file to have a stronger environmental ambition and are opposing the current exemption for the aviation and maritime sectors, while others recalled the importance of the Member States’ specific economic, geopolitical, geographical and social circumstances in particular for the most sensitives sectors. No other conclusion was reached during the meeting and the work on the recast of the ETD will continue under the Polish Presidency. The new EU Tax Commissioner, Wopke Hoekstra, took the floor to regret that the current compromise waters down the provisions proposed by the European Commission on the aviation and maritime sectors, recalling that the EU has serious emission reduction obligations for all sectors.
16 Member States speak out for a modernisation of EU rules on tobacco taxation
In a letter published on Monday 9 December, the Finance Ministries of 16 EU Member States (Belgium, Bulgaria, Croatia, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Ireland, Latvia, Portugal, Slovakia, Slovenia, Spain, the Netherlands) urged the European Commission to modernise the EU tobacco taxation legislation. They emphasised that a revision should be treated as a key priority of its next term and called for its presentation by spring 2025 at the latest. The 16 Member States highlighted that the European tobacco market has evolved significantly since the last update of the Tobacco Taxation Directive in 2011. “New products have emerged that compete with and are comparable to traditional tobacco products, particularly in terms of use and health risks”, they stated. Under the current directive, many of these products cannot be taxed in the same manner as traditional tobacco products, as its provisions are insufficient or too narrow to address the challenges faced by Member State administrations given the ever-changing offerings of the tobacco industry, they further explained. “Decisive and swift action is needed to modernise the Tobacco Taxation Directive and the relevant sections of the Horizontal Excise Directive (2020/262) in order to ensure the proper functioning of our internal market whilst at the same time addressing the harmful effects to health of both traditional tobacco products and non-traditional tobacco alternatives”, they concluded. The Directive's revision has been discussed for years, with an initiative originally announced for 2022, but never tabled.
Draft EP report on DAC9 published
The European Parliament's Committee on Economic and Monetary Affairs (ECON) has published on Thursday 12 December its draft report regarding the proposed ninth amendment to Directive 2011/16/EU to simplify the information exchange process and improve administrative tax cooperation (DAC9), urging the EU Council to adopt the proposal prior to the 30 June 2026 reporting deadline. The proposal aims at simplifying the filing process and reduce the administrative burden for MNEs with a view to their reporting obligations under the Pillar Two Directive. For this purpose, it sets up a system for authorities to exchange information with each other and introduces a standard form, in line with that developed by the OECD/G20 Inclusive Framework, which MNEs and large-scale domestic groups (LSDGs) will have to use to report certain tax-related information. These two elements are pre-requisites under Article 44 of the Pillar Two Directive to apply the simplified rules for reporting obligations, which allows for a central filing by a designated entity on behalf of the entire group as opposed to individual filings by each constituent entity. “A swift adoption by the Council of this proposal is essential in order to ensure that the simplified rules for reporting obligations apply in time for the first reporting, which is due to take place by 30 June 2026. The Directive is expected to bring significant reductions of administrative burden, given that the central filing will only concern approximately 4,000 entities, as opposed to around 180,000 who would be required to do an individual filing in the absence of the Directive. DAC9 is also a tool to guarantee a smoother implementation of Pillar Two but will require time to be implemented. Further delays would not help in delivering Pillar Two on time”, the rapporteur, MEP Aurore Lalucq (S&D, France) explained in the report. In view of the urgency of adopting the proposal, the EP has decided to use the simplified procedure and to approve the proposal without amendments. The text is scheduled to be adopted in Plenary on 11 February 2025.
FISC Subcommittee January hearings schedule
The FISC Subcommittee of the European Parliament published its hearings schedule for the beginning of 2025. On 13 January 2025, from 15:00 to 16:15, the FISC Subcommittee will host a public hearing on the taxation of Ultra-high-net-worth individuals. Speakers include Mr Gabriel Zucman (Director of European Tax Observatory), Mr Sean Bray (Director of European Policy at the Tax Foundation) and Ms Sarah Perret (Head of Unit, OECD). The hearing will address public concerns about fairness and the need for tax policies that promote equitable economic growth. Speakers will examine key methods used by ultra-high-net-worth individuals to minimize tax liabilities, including the exploitation of loopholes, offshore structures, and aggressive tax planning strategies. The discussion will also evaluate the role of transparency measures, such as public registers and global reporting standards, and propose tools and resources for tax authorities to enhance compliance enforcement. Additionally, the panel will explore strategies for improving cross-border cooperation to close gaps in the global tax system that enable tax avoidance and financial opacity. On the same day, from 16:15 to 17:30, it will host a second public hearing on the impact of taxation on gender equality in the European Union. The hearing will look at how tax measures in EU Member States affect gender equality, either in a positive or a negative way. It will examine what tax policies can currently be seen as obstacles to promoting gender equality and look at how these obstacles can be addressed. Moreover, the hearing will examine tax measures that can serve as a best practice or which could be considered to advance gender equality. Finally, it will consider whether EU-level tax policies can contribute to achieving this aim.
EU leaders meet in Brussels on 19 December
EU leaders will meet in Brussels on Thursday 19 December to discuss Ukraine, the EU in the world, the Middle East, resilience and preparedness, migration and foreign policy issues. In presence of Volodymyr Zelenskyy, President of Ukraine, EU leaders will discuss Russia's war of aggression against Ukraine in all its dimensions, including the latest developments on the ground, and continued comprehensive support for Ukraine and its people. In terms of military support, the leaders will review progress on the delivery of air defence systems, ammunition and missiles as well as the provision of necessary training and equipment to Ukrainian soldiers. To help Ukraine prepare for the winter and beyond, the leaders will discuss how to strengthen Ukraine's energy sector and other civilian infrastructure which Russia has deliberately and increasingly been targeting. EU leaders will also discuss the fast-evolving situation in the Middle East, including how the EU can best contribute to de-escalation efforts, the ceasefire agreement between Israel and Lebanon and the latest developments in Syria. Furthermore, EU leaders will hold a strategic discussion on how the EU can consolidate its role on the international stage and defend our interests and promote our positions. The discussion should focus on the way forward in a multipolar landscape and how to ensure mutually beneficial strategic relationships. In this context, the leaders will discuss: - how to foster a wider and deeper network of partners at global level; - EU-US relations; - EU-UK relations. In another agenda item, EU leaders will discuss how to strengthen the EU's resilience, preparedness, crisis prevention and response capacities, based on the report prepared by Sauli Niinistö for the European Commission. They will discuss in particular the impact of an evolving threat landscape and the increasing number of natural disasters due to climate change. Finally, EU leaders will take stock of progress in implementing past conclusions on migration.
