ETAF feedback on the FASTER proposal
On Monday 18 September, ETAF sent its feedback to the European Commission on the proposal for a Directive on Faster and Safer Relief of Excess Withholding Taxes (FASTER). We agree with the need of an EU initiative to simplify and standardize the relief of withholding taxes and therefore welcomed this proposal. We notably advocated for an extension of the scope to all payments which are subject to withholding taxes and not just to excess withholding taxes on dividends from publicly traded shares and interest from publicly traded bonds. ETAF also acknowledged the two new fast-track procedures proposed by the European Commission. However, as the relief at source system would provide the best results i.e., early relief for investors and a limited burden on intermediaries, we believe that it should be the mandatory system by default and that the quick refund system should only be used as a back-up solution when relief at source is not possible. Finally, we supported the proposed introduction of an EU-wide digital tax residence certificate (eTRC), which will allow investors to submit their withholding tax refund request digitally via an online portal but warned that only strictly necessary information should be included. The FASTER proposal was also discussed by MEPs and experts during a hearing organised by the FISC subcommittee of the European Parliament on Tuesday 19 September. The speakers exchanged views on the potential effect of this initiative on cum-cum and cum-ex scandals; the definition of beneficial ownership, the interaction with third countries and the cost of registers, among other topics.
MEPs quiz EU Tax Commissioner on the latest tax proposals
On Tuesday 19 September, MEPs of the FISC subcommittee of the European Parliament held an exchange of views with EU Tax Commissioner, Paolo Gentiloni. The Commissioner introduced the various actions being currently taken by the Commission concerning tax policy, including the recent FASTER and BEFIT proposals. Concerning the implementation of the Pillar 1 of the OECD Two-Pillar solution, he said that the finalisation of the multilateral Convention by the end of the year is “achievable”. With regard to Pillar 2, he said that Member States should keep working hard to transpose the directive by the end of this year and that the Commission is providing all the support it can to meet this deadline. Asked about the progress on the UNSHELL directive, the Commissioner said he is confident that an agreement can be reached on this file, with the help of the Spanish Presidency who made it one of its top priorities. Finally, on capital income taxation, Mr Gentiloni said that the Commission is open to discuss it, in particular as a European Citizen Initiative has been registered on this topic, however he said that it remains a competence of Member States.
Tax Justice Network recommends an EU wealth tax based on Spain model
A study conducted by the Tax Justice Network and commissioned by the Greens/EFA group in the European Parliament concluded that it is necessary to introduce a tax on large fortunes in order to finance the ecological and social transition. The study, published on Wednesday 20 September, explores the possibility of introducing an EU-wide progressive wealth tax modelled on the solidarity tax adopted in Spain in early 2023. The authors recommend the implementation of a moderate and progressive wealth tax and full transparency of beneficial ownership for all types of companies and assets. The tax would aim to obtain a contribution from the 0.5% of the richest people in the European Union. It would be between 1.7% and 3.5% of the total capital of these individuals. The study estimates that with such a tax EU Member States could generate up to 213.3 billion € of revenues.
Belgian excess profits regime infringes EU state aid rules, EU General Court says
The EU General Court ruled on Wednesday 20 September that the Commission was right to find, in 2016, that the Belgian tax scheme relating to excess profit infringes EU state aid rules. Since 2005, Belgium has indeed applied a tax scheme that exempts certain ‘excess’ profits of Belgian entities which form part of multinational corporate groups. Those entities can obtain an advance ruling from the Belgian tax administration, in particular if they centralise activities, create employment or make investments in Belgium. In that context, ‘excess’ profits, that is, profits exceeding the profit that would have been made by comparable standalone entities operating in similar circumstances, are exempted from corporate income tax. According to the General Court, the Commission did demonstrate that the scheme at issue granted tax advantages to its beneficiaries. It also considered that the Commission correctly concluded that that scheme was selective in that it differentiated between operators who were in a comparable factual and legal situation. The General Court also confirmed the Commission’s finding that the scheme at issue was selective because it was not open to companies that had decided not to make investments, centralise activities or create employment in Belgium. The scheme was also selective because it was not open to undertakings that were part of a small group, it concluded.
Call for evidence on new EU measures on the recognition of qualifications of third country nationals
The European Commission opened on 14 September a public consultation on a package of new measures on the recognition of qualifications of third country nationals, expected to be issued towards the end of the year. The package would include: - a communication on maximising the potential of talent mobility as part of the European Year of Skills, - a recommendation on the recognition of qualifications of third country nationals, - a legislative proposal for an EU Talent Pool, - and a proposal for a Council recommendation on a learning mobility framework. The Commission considers recommending that Member States better align their recognition processes for the qualifications of non-EU nationals with the system set out in Directive 2005/36/EC on professional qualifications, simplify procedures, reduce processing times and allow access to electronic procedures to reduce burdens for applicants. In particular, it wants to focus on facilitating recognition to access regulated professions, particularly for “in-demand sectors”, it said. Interested stakeholders have until 12 October to send their feedback to the European Commission.