ETAF feedback on the VAT in the digital age package
On Wednesday 4 April 2023, ETAF replied to the European Commission's public consultation on the VAT in the digital age package (ViDA). ETAF sees this huge step towards more digitalisation as an opportunity that will free some time for tax advisers to focus more on the core business of their work, i.e. giving advice. However, digitalisation does not come without any risk and some safeguards will have to be put in place to make a successful transition. In particular, we consider that the deadline of two days after the chargeable event takes place for the issuance of invoices is too demanding, especially for SMEs, and should be extended. Moreover, we believe that a phased introduction for SMEs and micro-enterprises could be considered. While all businesses, regardless of their size, should be able to at least receive e-invoices, SMEs could be granted a transitional period of one year for issuing e-invoices. Such a gradual introduction would, in our view, increase the acceptance of the e-invoicing system among SMEs and micro-enterprises and thus also increase the chances of a successful transition. In any case, detailed rules must be known well ahead, at least 8 months in advance, in order to leave enough time for the tax profession to inform their customers and help them to adapt to the new legislation. Finally, ETAF also pointed out the importance of the regulated tax profession for a successful transition.
European Commission gives a preview of its SAFE plan
The European Commission publicly unveiled its first ideas concerning the future proposal for a Directive to tackle the role of enablers that facilitate tax evasion and aggressive tax planning (Securing the Activity Framework for Enablers – SAFE) on Friday 31 March during a tax conference in Zurich organized by the American Bar Association Section of Taxation, the International Bar Association, and the International Fiscal Association. Benjamin Angel, director of direct taxation, tax coordination, economic analysis and evaluation at the Commission reportedly explained that the intention is clearly to have penalties on the intermediaries that would not respect the law. He reportedly mentioned the possible creation of a register for intermediaries. If a tax administration in the EU sees an arrangement involving a third country and concludes that it is problematic, leads to tax losses, and falls within the definition of aggressive tax planning that the SAFE proposal will introduce, the administration could sanction the concerned intermediary, he reportedly explained. For serious or recurring cases and after the exhaustion of all appeal possibilities, the administration could decide to deregister the intermediary. The intermediary would in consequence not be allowed to create tax arrangements in a third country for EU natural or legal persons. The Commission would also reportedly foresee a fine on the client that will hire a non-registered intermediary.
MEPs start their work on DAC8
The European Parliament has recently published its draft opinion on the proposal for an eighth amendment to the Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC8). The Green MEP Rasmus Andresen, who drafted the opinion, expressed his satisfaction with the hard work carried out over the past few years on exchange of information. While highlighting the "growing and increasingly important role of the European Parliament in European tax legislation”, he regretted that their recommendations have only been partially taken on board by the Commission in its DAC8 proposal. To this end, in the draft opinion he looks at integrating some of these recommendations. Among other things, the rapporteur proposes to shorten the deadlines by which the authorities are obliged to provide the requested information. He also proposes expanding the categories of beneficial ownership information to be exchanged so as to include capital gains from immovable property, financial and luxurious assets stored in free ports, customs warehouses or safe deposit boxes. The rapporteur also refers to the recent ECJ judgment invalidating DAC6 reporting requirements that infringe professional privilege and calls upon the Commission to present a proposal that would make the Directive compliant with the decision of the Court, while preserving the obligation on intermediaries to report aggressive cross-border tax-planning arrangements. Other issues addressed in the amendments also include joint audits, the European TIN and disclosure of information communicated pursuant to this Directive.
Green MEPs quiz the Commission about an effective minimum capital gains tax in the EU
In a written question published on Wednesday 4 April, Green MEPs Claude Gruffat, Ernest Urtasun, Terry Reintke, David Cormand, Kira Marie Peter-Hansen and Rasmus Andresen asked the Commission if it will evalute a a minimum tax on capital gains in the EU and consider making it an EU own resource. In the EU, capital gains taxation differs vastly from one Member State to another, the MEPs write. These disparities can lead to tax avoidance and the shifting of capital ownership, instead of achieving the goal of a real redistribution of wealth, which is the core principle of taxation, they explain. The six green MEPs consider that a minimum tax on capital gains in the EU would have the potential to achieve a real redistribution of wealth through the taxation of capital. The Commission will have to provide an answer within eight weeks.
EDPB raises concerns over recent developments on the AML package
The European Data Protection Board (EDPB) published on Wednesday 4 April a letter that it sent to the European Parliament, the Council of the EU and the European Commission concerning recent developments on the AML package. The letter highlights the significant risks to privacy and data protection posed by some amendments introduced by the Council (articles 54(3a), 55(5) and 55(7) a), which would allow private entities, under certain conditions, to share personal data between each other for AML/CFT purposes concerning suspicious transactions and data collected in the course of performing customer due diligence obligations. The EDPB expressed serious concerns about the lawfulness, necessity and proportionality of these provisions, which could result in its opinion in very large-scale processing by private entities. Moreover, the EDPB considered that the amendments do not adequately specify the conditions under which such processing is justified, and that they do not provide sufficient safeguards, given that such processing could have a significant impact on individuals, such as blacklisting and exclusion from financial services. The EDPB therefore recommends to the co-legislators not to include these provisions in the final text.
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.