EU Carbon Emissions, Compliance and Tax Bulletin 69

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AML CFT, Company taxation, EU, VAT (Value Added Tax), European Union Commission, double taxation, roadmap, transfer pricing, business taxation-CFE, OECD Pillar 1

EU State of the Union Address – Own Resources & Environmental Taxes

European Commission President Von der Leyen delivered her first State of the Union address on 16 September 2020, setting out the Commission’s vision on EU recovery from COVID-19 and the strengthening and advancement of the EU.

Taxation was central to many of the issues focussed on during the address, in particular in relation to the goal announced to reduce EU emissions by 55% by 2030, up from the planned 40% decrease. The Carbon Border Adjustment Mechanism will be central to this plan, with Von der Leyen stating, “Carbon must have its price – because nature cannot pay the price anymore.”

“This Carbon Border Adjustment Mechanism should motivate foreign producers and EU importers to reduce their carbon emissions, while ensuring that we level the playing field in a WTO-compatible way.” Von der Leyen also detailed 37% of the New Generation EU funds will be invested in projects in line with the EU Green Deal objectives, with 30% of the 750 billion Euro Next Generation EU recovery instrument to be raised through green bonds.

Digital taxation was again emphasised as a priority for the European Union. Von der Leyen expressed EU support for continued international negotiations but reiterated that failing agreement an EU solution would be introduced, stating, We will spare no effort to reach agreement in the framework of OECD and G20. But let there be no doubt: should an agreement fall short of a fair tax system that provides long-term sustainable revenues, Europe will come forward with a proposal early next year.”

EU Commission TAXUD Conference on Taxation & COVID-19 Recovery

The EU Commission held an online conference on 21 September, hosted by Commissioner Paolo Gentiloni, on the topic of the Role of Taxation in Recovery and Long-term Growth, examining EU taxation priorities in contending the impact of COVID-19 and EU tax policy and modern business. Speakers included Paolo Gentiloni, Olaf Scholtz, German Minister for Finance and Benjamin Angel, Director for Direct Taxation, TAXUD.

Commissioner Gentiloni set out the TAXUD priorities as EU own resources to fund COVID-19 measures, pursuing tax fairness by continuing work at the OECD level on minimum taxation and fair taxation of the digital economy, and implementing this at EU level. German Finance Minister Olaf Scholtz confirmed that fairness and how to tax corporations were a key focus, and that progress on CbCR and CCCTB were priorities for the German Presidency. Benjamin Angel confirmed Commission support for progress on the files, stating that more transparency and fighting tax havens through minimum taxation and effective taxation of multinationals were high on the EU agenda.

OECD BEPS Action 13 CbCR Compilation Published

The OECD & G20 Inclusive Framework on BEPS have published a compilation of the BEPS Action 13 Country-by Country reports.

The 2020 compilation includes data from 131 jurisdictions, an increase from the previous year, and confirms that implementation is largely consistent with the Action 13 minimum standard. The report further shows that over 90 jurisdictions have introduced legislation with filing obligations on MNEs with revenue above 750 million, with all remaining Inclusive Framework members working towards implementing similar legislation. Additionally, recommendations made for jurisdictions in the first two peer review stages were found to have largely been addressed and accordingly removed. Further information is available here.

European Union Commission Virtual Anti-Money Laundering Conference

On 30 September the EU Commission held an online conference on the topic of “Closing the Door on Dirty Money”, as a follow-up from the consultation phase concerning its Anti-Money Laundering Plan published in May. Speakers included Commission Executive Vice President Valdis Dombrovski, Nicola Gratteri, Chief Prosecutor of Catanzo, and François Molins, General Prosecutor at the French Court of Cassation. During the conference, Mr Dombrovski discussed the Commission plans for an EU oversight authority and harmonisation of anti-money laundering rules within the EU, noting that there was minimal negative feedback received during the consultation carried out concerning the Action Plan earlier this year. The panellists were also largely in favour of an oversight body with sufficient powers to not only investigate but also penalise wrongdoing, as well as a bloc-wide single rule book that would align AML regulation across the EU. A comprehensive package on the proposals will be presented by the Commission in early 2021.

Council of the EU Update Blacklist of Non-Cooperative Jurisdictions for Tax Purposes

The EU’s list of non-cooperative jurisdictions for taxation purposes was updated by the Council of the EU on 6 October 2020.

Anguilla and Barbados were added to the Blacklist following on from the OECD’s Global Forum peer review reports on transparency and exchange of information, in which the jurisdictions had their compliance ratings downgraded from partially compliant to non-compliant.

Additionally, the Council of the EU endorsed the removal from the EU black and/or greylist of a number of other jurisdictions, including Oman, the Cayman Islands, Mongolia and Bosnia and Herzegovina, establishing that those countries have implemented reforms to comply with EU tax good governance standards.

Twelve jurisdictions now remain on the EU blacklist: American Samoa, Anguilla, Barbados, Fiji, Guam, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, the US Virgin Islands and Vanuatu.

European Union Commission Approves 1.5 Billion Euro in State Aid for Italian Companies

The European Commission has approved State aid measures that will provide over 1.5 billion Euro to companies in Italy which were badly impacted by COVID-19 conditions. The measures allow for a 30% reduction of social security contributions due where the place of employment is in the regions of Southern Italy.

The State aid is approved in line with the Temporary State Aid Framework adopted in March to assist Member States in dealing with the economic impact of the COVID-19 outbreak. To minimise the economic impact of the COVID-19 outbreak, the Framework allows Member States to provide aid by: providing grants, selective tax advantages, and advance payments of up to 800,000 Euro; providing State guarantees for loans taken by businesses; subsidising public loans to companies, putting in place safeguards for banks providing State aid to the economy; and providing short-term export credit insurance.

Executive Vice-President Margrethe Vestager stated of the measures: “Southern Italy has been hard hit by the economic consequences of the coronavirus outbreak. This 1.5 billion Italian measure will support labour and help companies active in the regions of Southern Italy tackle the liquidity issues they are facing as a result of the outbreak, thereby maintaining the level of employments and preserving the continuity of economic activity during and after the outbreak. We will continue working closely with Member States to ensure that national support measures can be put in place in a coordinated and effective way, in line with EU rules.


Source: Malta Institute of Taxation Click here and CFE Tax Advisors Europe Click Here

Please contact David Marinelli should you wish to discuss any matter relating to your Malta registered company.