EU Commission Tax & Compliance Bulletin 68

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

EU Commission Publishes ATAD Implementation Report

The EU Commission published a Report to the European Parliament and Council on the implementation of ATAD and ATAD2, the EU Anti-Tax Avoidance Directive, a factual document outlining the status of the implementation of the directive in Member states pursuant to Article 10 of the Directive. ATAD is key pan-European legislative instrument, requiring Members States to implement specific tax-avoidance legislation in areas such as interest limitation rules, exit taxation, controlled foreign company rule (“CFC”), hybrid mismatches rule and general anti-abuse rule (“GAAR”). The focus of this report is the early implementation in areas such as interest limitation rules, GAAR and CFC legislation.

Germany: EU Must Form a Fiscal Union

The EU must work towards forming a fiscal union, in addition to the monetary one, in order to better deal with the consequences of the health crisis and the post-virus economic recovery, Germany’s Federal Finance Minister and Chair of the ECOFIN, Olaf Scholz said at a session of the European Parliament’s Economic Affairs Committee (ECON) on 2 September 2020. An international agreement on minimum taxation to prevent further tax arbitrage is a high priority for the EU presidency, as is the taxation of the digital economy and Financial Transactions Tax (FTT) , with FTT requiring further work. Regarding CCCTB, Mr Scholz reminded the Committee members that France and Germany have made their own proposals, and what is at stake concerning the non-implementation of CCCTB proposals is the competitiveness of the Single Market.

Shipping Industry Warns Against EU Emission Trading System Extension

The shipping industry is warning against EU plans to extend the Emissions Trading System to shipping, stating it could incite trade wars and undermine the authority of the International Maritime Organisation in imposing emissions limits. Extending the EU Emissions Trading System to shipping would raise over 10 billion Euro per year. Non-EU countries are being urged to vocally oppose the extension of the scheme.

In July, the EU launched consultations on an EU Carbon Border Adjustment Mechanism and changes to the Energy Taxation Directive. The Carbon Border Adjustment Mechanism will aim to prevent carbon leakage caused by offshore production and carbon intensive imports, to ensure import prices reflect their carbon footprint, in order to achieve EU climate goals. Following on from an inception impact assessment published in March as part of its work to progress the EU Green Deal, the consultation will run until 28 October.

Forthcoming: Global Forum on Tax Transparency Report

The Global Forum on Tax Transparency and Exchange of Information, an OECD based inclusive-framework organisation, has published a Report (available to read on 1 September) on the second round of peer review concerning compliance with international standards for exchange of information for nine jurisdictions: Anguilla, Chile, China, Gibraltar, Greece, Korea, Malta, Papua New Guinea and Uruguay. With 161 members, the Global Forum on Transparency and Exchange of Information for Tax Purposes is the leading international body working on the implementation of global transparency and exchange of information standards around the world.

UK Set to Abandon Level-Playing Field Commitments

The UK government has indicated that legislative plans are put in place to eliminate the legal force of the commitments undertaken with the Withdrawal Agreement, abandoning key agreement reached last year on State aid and trade of goods with Northern Ireland. According to the Financial Times, the UK Government will publish this week the Internal Market Bill, which seeks to abolish these key commitments and will legally take precedence over parts of the Withdrawal Agreement. The White Paper on the Internal Market, published in July, has already caused some tension in the UK, with the Scottish and Welsh leaders accusing Westminster of “destabilising the constitutional settlement between the four constituent nations”.

EU Consultation on Foreign Subsidies

The EU Commission has an open public consultation on foreign subsidies, seeking feedback on the White Paper on levelling the playing field as concerns foreign subsidies. The White Paper sets out the preliminary orientations for legal instruments to address the regulatory gap in relation to: foreign subsidies distorting the Single Market regarding to the general market operation of economic operators active in the EU, acquisitions of EU undertakings, public procurement procedures, and foreign subsidies in the context of access to EU funding.

The consultation can be accessed via the EU Have Your Say portal and is open until 23 September.

VAT Gap Report Published by EU Commission

report concerning the VAT gap in 2018 published by the EU Commission shows that EU Member States lost over 140 billion Euro in tax revenues in that year. The VAT gap refers to the difference between expected tax revenues from VAT, and the amount of tax that was eventually collected.

The nominal gap between 2017 and 2018 reduced by over 1 billion Euro, a slight decrease to the year before, however forecasts for the 2020 year, which take into account the economic impact of COVID-19, anticipate a reversal in this positive progress. The report highlights the need to address issues in EU VAT rules leading to VAT fraud. Romania, Greece and Lithuania recorded the highest percentages of missing VAT, with Sweden, Croatia and Finland recording the lowest percentages.


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.