Awaiting and discussing the SAFE proposal: the expectations of the regulated tax profession
On 28 June 2023, the European Tax Adviser Federation (ETAF) organized a conference in Brussels on the tax profession’s perspective on the upcoming Directive to tackle the role of enablers that facilitate tax evasion and aggressive tax planning (Securing the Activity Framework for Enablers – SAFE).Initially planned for release in June 2023, the proposal has been indefinitely postponed, which has created a lot of uncertainties among tax stakeholders. The ETAF conference was nevertheless the opportunity for the speakers and the audience to publicly expose their expectations on this important proposal for the tax profession. In his keynote speech, ETAF Head of office, Michael Schick, stated that to tackle the core of the problem and avoid disproportionate bureaucracy, it is necessary to target non-regulated tax professionals, operating outside any binding professional law framework, and to strictly limit the material scope to complex structures in non-EU countries. MEP Paul Tang, Chair of the FISC subcommittee of the European Parliament argued for a broad regulation and registration, even if he admitted that you can have a “lighter touch” for countries that are already regulated. He also advocated for a disciplinary mechanism to make sure to get after the bad apples. Andrea Rabb, ETAF Board member and Vice-President of International Affairs of ETAF Hungarian member Moklasz warned that an EU register could run against the strong requirements set by countries who already regulate the tax profession and create a risk of counterproductive levelling down of qualified tax experts. For Manon François, Researcher at the EU Tax Observatory, SAFE would help having a more consistent framework for enablers. She also advocated for getting more information from the multinationals firms directly and enlarge the scope of the country-by-country reporting. The conference can be watched again here.
MEPs quiz EU Commissioner Paolo Gentiloni on upcoming tax proposals
On Wednesday 28 June, the ECON committee of the European Parliament held a structured dialogue with EU tax commissioner Paolo Gentiloni in order to discuss ongoing and upcoming priorities of the Commission in the area of taxation. Asked about the SAFE proposal, Mr Gentiloni said that the European Commission is ready from a technical perspective but that without progress on the UNSHELL Directive, he is not sure about the value of putting forward the SAFE proposal now. Commissioner Gentiloni noted that as regards the OECD process on Pillar I, the discussion is ongoing and there is a chance to reach an agreement by 11-12 July. If there is an agreement, the multinational convention will be approved, and the process of signing will be able to start. Topics also touched upon the revision of the directive on the exchange of tax information (DAC8) and the new EU common system for the avoidance of double taxation and prevention of tax abuse in the area of withholding taxes (FASTER).
European Commission warns against gold-plating on CbCR
The European Commission reportedly asked Member States not to go beyond what is foreseen in the public country-by-country reporting Directive that should apply to large multinational enterprises with cross-border activities, when transposing it. According to a letter leaked in the press on Thursday 29 June, the Commission told Member States that the transposition and implementation of public CbCR reporting should ensure uniformity and certainty for MNEs in the scope. In particular, the European Commission reportedly said that for some provisions of the directive “gold-plating” may lead to “perceived fragmentation of the European markets” and “increased complexity” to comply with various legislation, particularly MNEs with multiple establishments of third country parents operating in the EU. Member States had until 22 June 2023 to transpose the Directive into their national legislation.
MEPs and experts discuss the role of tax incentives
On Monday 27 June, the FISC subcommittee of the European Parliament held a public hearing on the role of tax incentives in achieving EU policy goals. MEPs discussed this topic with Dr Markus Meinzer, Director of Policy at the Tax Justice Network, co-author of “Comparing tax incentives across jurisdictions: a pilot study (2019)”, Dr Ana Cinta González Cabral, Economist at the Centre for Tax Policy and Administration, Tax Policy and Statistics Division (OECD), co-author of the report “Tax Incentives and the Global Minimum Corporate Tax: Reconsidering Tax Incentives after the GloBE Rules”, and Dr Björn Kauder, Senior Economist for Financial Policy and Tax Policy, Institut der deutschen Wirtschaft Köln (German Economic Institute). Speakers highlighted that while tax incentives could be the right policy option, such as in the case of market failures, a holistic approach should look at their impact on society as a whole. Moreover, business investment responded to many other factors and not tax rates alone, such as whether the necessary skills or infrastructure was in place, they said. Finally, calls were also heard for any tax incentives in the EU to seek to increase equality between countries and within countries, in addition to fostering the green transition.
MEPs adopt their opinion on DAC8
On Wednesday 28 June, the ECON committee of the European Parliament adopted their opinion on the eighth amendment of the Directive on administrative cooperation (DAC8). The proposal has already been agreed by the Council of the EU in May. Contrary to the Council, MEPs kept the definition of high-net-worth individuals and supported the proposed common minimum penalties for non-reporting. They also broadened the scope of the information that must be exchanged, to include income and capital gains from financial and luxury assets. They asked as well for the Commission to consider the creation of a European Taxpayer Identification Number (TIN). In addition, the MEPs reportedly suggested that the Commission assess the need for and the most appropriate way of including information on ownership, income and financial or non-financial assets in other areas in the automatic exchange of information: - beneficial owners of immovable property and companies; - financial assets; - non-financial assets such as cash, art, gold or other valuables held at free ports, customs warehouses or safes; - ownership of yachts and private jets; - accounts at larger peer-to-peer lending, crowdfunding and similar platforms. The vote in plenary is scheduled for September, after what the Council will be able to formally adopt the DAC8 proposal.
European Commission unveils its framework proposal for a digital euro
On Wednesday 28 June, the European Commission presented a proposal for a European legal framework for a potential digital euro as a complement to euro banknotes and coins. If introduced, the digital euro, would be available for payments both online and offline. While online transactions would offer the same level of data privacy as existing digital means of payments, offline payments would ensure a high degree of privacy and data protection for users, the Commission said. Banks and other payment service providers across the EU would distribute the digital euro to people and businesses. Basic digital euro services would be provided free of charge to individuals. Merchants across the euro area would be required to accept the digital euro, except very small merchants who choose not to accept digital payments. Ultimately, it will be up to the Governing Council of the European Central Bank (ECB) to decide whether or not to launch a digital euro. The ECB is expected to complete its investigation phase in October 2023. In parallel, the European Commission also presented a legislative proposal on the legal tender of euro cash to safeguard the role of cash.
EU leaders meet in Brussels
EU Head of States and governments met in Brussels on Thursday 29 and Friday 30 June. They adopted conclusions on Ukraine and security and defence, where they reiterated their resolute condemnation of Russia’s war and solidarity with Ukraine. Among other things, they called for the immediate safe return of Ukrainian civilians, who have been unlawfully deported to Russia and Belarus. The President of Ukraine, Volodymyr Zelenskyy, addressed the leaders via video conference. The EU leaders also held a discussion on migration and were joined by NATO Secretary-General, Jens Stoltenberg, for a working lunch to discuss EU-NATO cooperation and Euro-Atlantic security.
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.