European Commission unveils its 2024 Work Programme
The European Commission unveiled on Tuesday 17 October its 2024 Work Programme, which strongly focuses on the rationalisation of EU reporting requirements. In line with its March announcement to reduce reporting requirements for companies by 25%, the Commission will present 26 additional proposals to further “rationalise and streamline” the reporting requirements weighing on businesses, and notably SMEs. Additional proposals include a postponement of the deadline for adoption of the European sustainability reporting standards to allow stakeholders time to adopt to new requirements and an adjustment of the thresholds of the accounting Directive so that “more than a million companies will benefit from reduced reporting requirements”. Furthermore, the Commission intends to proceed to the evaluation of the Directive on administrative cooperation in tax matters (DAC) in 2024. To help prepare further concrete rationalisation plans, the Commission launched, on the same day, a public consultation to gather views of stakeholders on areas where inefficient reporting requirements originating from EU law are particularly problematic, with concrete examples on the burden induced. The Commission is also looking for concrete ideas for rationalisation, such as eliminating redundant requirements, adjusting the frequency of reporting or proposing options for digitalisation. The public consultation runs until 28 November 2023.
Council updates the EU Blacklist of tax havens
During its meeting on Tuesday 17 October, the Economic and Financial Affairs (ECOFIN) Council decided to add three jurisdictions - Antigua and Barbuda, Belize and Seychelles - to the EU list of non-cooperative jurisdictions for tax purposes. All three jurisdictions were inserted into Annex I (so called "EU blacklist") because they have failed to properly enforce tax transparency standards, as assessed by the Global Forum on tax transparency and exchange of information. Moreover, Finance Ministers consented to the removal of British Virgin Islands, Costa Rica, and the Marshall Islands from Annex I. Those three jurisdictions were added in February 2023. The EU Blacklist now includes 16 countries: American Samoa, Antigua and Barbuda, Anguilla, Bahamas, Belize, Fiji, Guam, Palau, Panama, Russia, Samoa, Seychelles, Trinidad and Tobago, Turks and Caicos Islands, US Virgin Islands and Vanuatu. The conclusions also include a state-of-play document (Annex II – so called “grey list”) identifying jurisdictions with tax risks but which have committed themselves to take corrective measures. Four jurisdictions were removed from it: Jordan, Qatar, Montserrat and Thailand. The next revision of the list is scheduled for February 2024.
DAC8 formally adopted
At the Ecofin Council in Luxembourg on Tuesday 17 October, the EU Finance Ministers formally adopted the eighth revision of the Directive on administrative cooperation in the area of taxation (DAC8). This revision was agreed upon at a previous Council meeting in May. The amendments mainly concern the reporting and automatic exchange of information on revenues from transactions in crypto-assets and information on advance tax rulings for the wealthiest individuals. Among the changes brought by Member States compared to the initial proposal is the deletion from the text of the minimum penalties proposed by the European Commission in case of a breach of the reporting obligations of the DAC. Formal adoption was made possible after the European Parliament adopted its opinion on the Directive in September.
US not yet ready to sign Pillar One Multilateral Convention
The US Treasury Janet Yellen reportedly said on Tuesday 17 October during a press conference with Eurogroup President Paschal Donohoe that processes to resolve the remaining issues on the text of the Multilateral Convention published on 11 October will run into 2024. “There are some matters that are important to the United States and other countries that remain unresolved, open issues that still must be resolved before the treaty can be signed. So processes will take into next year”, she said. It is critically important to show the draft MLC text to the American public, Congress, businesses, and other stakeholders to gauge reactions and ensure there is solid support for the treaty in the United States, she added. The time of the US ratification is particularly important regarding the moratorium on new DSTs or similar measures. The Inclusive Framework indeed decided in July to extend it for one year, until 31 December 2024. However, this extension is subject to the condition that at least 30 jurisdictions accounting for at least 60 % of the Ultimate Parent Entities (UPEs) of in-scope MNEs have signed the MLC before the end of 2023.
Draft UN resolution tax convention now published
Talks on how the United Nations (UN) could play a bigger role in international tax negotiations have gone one step further with the recent publication of a draft resolution, tabled on 11 October by Nigeria on behalf of the African Group. The draft resolution sets the direction towards a legally binding comprehensive UN convention on international tax cooperation. According to the draft, an ad hoc intergovernmental committee would have to be set up for the purpose of elaborating this convention by June 2025. The committee would comprise 10 members — two from each of the five regional groups — from a balanced geographic and gender background. The draft resolution asks the committee to prepare a progress report for the UN General Assembly to consider at its 79th session in September 2024. The UN draft resolution will be submitted to a vote during the UN General Assembly in November.
New steps in infringement proceedings on the implementation of the Proportionality Test Directive
On Wednesday 18 October, the European Commission took new steps in the framework of ongoing infringement proceedings regarding the implementation of the Directive on a Proportionality test (EU 2018/958). This Directive requires Member States to evaluate if the introduced requirements for professions are “necessary and balanced”.In particular, the European Commission decided to move to the next step of the proceeding by sending a “reasoned opinion” to 8 EU Member States, including among ETAF members: Hungary and Croatia. The Commission says that it has identified several issues in the transposition of the Directive by these countries, such as excluding rules that originate in national parliaments or in professional associations or bodies from the scope of the proportionality test obligation. Hungary and Croatia now have two months to remedy the issues identified by the Commission or it may decide to refer the cases to the Court of Justice of the European Union. For Franceand Austria, the Commission decided to close the cases as the countries took measures to remedy the issues identified in the letters of formal notice they received last February.
ETAF speaks at the EU Tax Symposium
On Tuesday 24 October and Wednesday 25 October 2023, the European Parliament and the European Commission will co-host the second EU Tax Symposium, with the theme "The future of taxation in the EU: challenges ahead & changes needed". Finance ministers, Members of the European and National Parliaments, high-level policy makers, academics and civil society representatives will come together in Brussels to discuss the future of the EU tax systems. On Tuesday 24 October starting from 14h40, Stefanie Becker, the ETAF representative in the VAT expert group of the European Commission, will speak in a panel about VAT in a digital world. Other speakers in the panel include Ferenc Vágujhelyi (Commissioner, National Tax and Customs Administration, Hungary), Ondřej Kovařík (Member of the European Parliament & ECON Committee), Helena Alves Borges (Director-General, Portuguese Tax and Customs Authority) and Sophie Claessens (Director Amazon Public Policy EU - Leading Amazon’s Fiscal and Customs policy engagement in Brussels and across EU). The panel will be moderated by Mario Nava, Director General DG for Structural Reform Support at the European Commission. This session will look into how the current transitional VAT system can be adapted to the digitised economy, with real time flow of information and exchange and fast-paced development. It will also delve into how evolving technologies could be used, as well as best practices in implementation. The full programme of the EU Tax Symposium can be consulted here.