Weekly Tax News - Monday 24 April 2023

April 24, 2023

European Commission extends customs duty and VAT waiver on imports of life-saving goods for Ukrainians

On Monday 17 April, the European Commission adopted a decision which extends for ten Member States the current possibility to temporarily waive customs duties and VAT on the importation from non-EU countries of food, blankets, tents, electric generators and other life-saving equipment destined for Ukrainians affected by the war. The measure will apply in Estonia, France, Latvia, Lithuania, Luxembourg, the Netherlands, Austria, Poland, Romania and Slovakia. The extension of this measure will apply retroactively from 1 January 2023 and remains in place until 31 December 2023. The exemption applies to goods imported by charities and State organisations, notably hospitals.

European Commission brings Belgium to the Court for incorrect transposition of the ATAD

The European Commission decided on Wednesday 19 April to refer Belgium to the Court of Justice of the European Union for failing to correctly transpose the Anti-Tax Avoidance Directive (ATAD). The ATAD allows a Member State where a parent company of a multinational is located to tax profits made by a ‘controlled foreign company' in another Member State. This is allowed when the tax paid by the controlled foreign company is less than half of what would be paid in the Member State of the parent company. The company should be granted a tax credit for all taxes that it has paid abroad. Contrary to the Directive, Belgian law does not allow a taxpayer to deduct from its tax liability the tax already paid by a controlled foreign company in the state of tax residence, the Commission explained. In 2020, the European Commission sent a letter of formal notice to the Belgian authorities, followed by a reasoned opinion in 2021, requesting them to amend their legislation within two months. As from the Commission’s view, Belgium's reply to its reasoned opinion was not satisfactory, it has now decided to refer the country to the Court of Justice of the European Union.

European Parliament ready to start interinstitutional negotiations on the AML package

The European Parliament has approved during its April Plenary Session its negotiating mandates for the proposals reforming the EU’s policies on anti-money laundering and countering the financing of terrorism (AML/CFT). The draft negotiating mandates were announced at the opening of the session on Monday 17 April. Since there were no objections to starting negotiations with the Council – which set its own negotiation position in December 2022 – the talks on the final form of the legislation can now start. The draft laws foresee new due diligence rules for businesses to verify customers’ identity, what they own and who controls them, and grant people with a legitimate interest access to beneficial ownership registers, among other provisions. The package would also create a European Anti-Money Laundering Authority (AMLA) with supervisory and investigative powers. The first meeting to start negotiations with the representatives of Member States will take place at the beginning of May.

Italy, Latvia and Portugal asked to correctly transpose the AMLD5

The European Commission decided on Wednesday 19 April to open an infringement procedure by sending letters of formal notice to ItalyLatvia, and Portugal on the grounds of their incorrect transposition of the 5th Anti-Money Laundering Directive (AMLD5). Although these Member States have notified a complete transposition of the Directive, the Commission said it has identified several instances of incorrect transposition of the Directive into national law, which affect, among others, the obligation to register, license or regulate services providers (Italy and Latvia), the obligation to establish a payment and bank accounts register (Latvia) and guaranteeing the Financial Intelligence Unit proper access to AML information (Portugal). The three countries now have two months to reply to the European Commission and take the necessary measures to comply with the AMLD5, otherwise the Commission may decide to refer these cases to the Court of Justice of the European Union.

MEPs issue recommendations for the next basket of EU own resources

Ahead of a Commission proposal, expected later this year, on further EU sources of revenues, MEPs from the Budget committee of the European Parliament advocated for several new own resources, in a draft resolution adopted on Monday 17 April. In particular,  MEPs are worried that the amounts generated by the new own resources will not be sufficient to cover all the Next Generation EU recovery repayments and borrowing costs, estimated to at least €15 billion per year until 2058 on average. The economic and social shock of Russia’s invasion of Ukraine and the heavy impact of inflation on the EU budget reinforce the need to reassess the EU system of own resources, they argue. MEPs also propose an array of new sources of income for the EU budget, including corporate tax-based own resources, the Financial Transaction Tax (FTT), a new fair border mechanism, a tax on crypto-assets, green own resources and national contributions based on statistics. MEPs call on the Commission to come forward with the next batch of proposals as soon as possible and no later than the third quarter of 2023. They also consider that the European Parliament should play an enhanced role in the decision-making process for own resources. The resolution will be voted by the full house during the May plenary session.

European Commission proposes authorizing Hungary to apply a derogation from the VAT Directive

The European Commission proposed on Thursday 20 April to authorize Hungary to apply a derogation from the VAT Directive. Hungary is currently authorised to apply a special measure derogating the VAT Directive to exempt from VAT taxable persons whose annual turnover is no higher than the equivalent in national currency of EUR 48 000 at the conversion rate on the day of its accession to the EU until 31 December 2024.  By letter registered with the Commission on 15 December 2022, Hungary requested an authorisation to increase this threshold to EUR 71 500 until 31 December 2024. The higher threshold requested by Hungary would be consistent with a threshold used in a Hungarian tax on income tax (specific tax on small companies: “kata”), therefore simplifying the compliance for eligible businesses, the country argued. Moreover, Hungary stated that the exemption threshold should follow the increase in revenue among taxable persons created by the economic growth and that a valorization of that threshold would be justified in view of the inflationary pressures. Hungary said that the threshold increase of the special measure could potentially affect around 35 000 taxable persons. The decision still needs to be formally approved by Member States.

Mongolia commits to start automatic exchange of financial account information by 2026

On Tuesday 18 April, Mongolia committed to implement the International Standard for Automatic Exchange of Financial Account Information in Tax Matters (AEOI) by 2026. The AEOI standard is being implemented on a global scale, with 123 of the 167 members of the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes now committed to start automatic exchanges by a specific date and the vast majority having commenced exchanges. “The Global Forum will monitor Mongolia’s progress in delivering its commitment to start exchanging automatically by 2026 and updates will be provided to Global Forum members and the G20. Our Secretariat will assist Mongolian tax authorities in implementing the standard and in addressing any challenges that may arise”, Gaël Perraud, the Chair of the Global Forum, reacted.


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.  

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