EU Green Deal and Malta & EU Compliance Bulletin 72

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EU Green Deal

EU Council Conclusions on Tax Challenges and the EU Green Deal Recovery

The Council of the EU has adopted the conclusions reached on fair and effective taxation in times of recovery, on tax challenges linked to digitalisation and on tax good governance in the EU and beyond. The conclusions emphasise the importance of fair and efficient tax systems in recovery from the coronavirus crisis, and the role of EU Green Deal in the recovery.

The Council also reiterated support for EU participation in the ongoing OECD negotiations to agree an international solution to the challenges posed by the digital economy and urged the Commission to be ready with legislative solutions required following the outcome of negotiations.

The Council in its report also expresses support for the Commission proposals concerning extending the scope of the directive on administrative cooperation in tax matters, to extend exchange of information to the platform economy and e-assets, in the DAC7 and DAC8 proposals.

EU Parliament Calls for Wider Scope of EU Tax Blacklist

On proposal of the Permanent Subcommittee on Tax Matters (“FISC”), European Parliament’s Economic Affairs Committee adopted a resolution calling for stricter and legally binding EU rules on non-cooperative jurisdictions for tax purposes, criticising the listing process at present as ‘lenient and confusing’.

The resolution welcomes the legal link between tax good governance standards and the use of EU funds and calls for State Aid rules and Member States’ national support programmes to be linked in order to ensure businesses with ties to listed jurisdictions are not eligible for support. The European Commission was criticised for failing to introduce effective measures that would reduce tax avoidance incentives. Taking into account the negotiations on Pillar II at OECD/ Inclusive Framework level, the European Parliament proposed that the Commission introduce the following measures with a separate legislative proposal:

a) Non-deductibility of costs;
b) Reinforced Controlled Foreign Company (CFC) rules;
c) Withholding tax measures;
d) Limitation of participation exemption;
e) Switch-over rule;
f) Reversal of the burden of proof;
g) Special documentation requirements, especially regarding transfer pricing.

In addition, the Parliament supported screening and possible inclusion of the United Kingdom in the blacklisting process once the Brexit transitional period has lapsed, thus extending the geographical scope of the process, albeit excluding the least developed countries.

Commenting, Chair of the Subcommittee on Tax Matters, Paul Tang (The Netherlands) said that EU countries are responsible for 36% of tax havens: “By calling the EU list of tax havens “confusing and inefficient”, the European Parliament tells it like it is. While the list can be a good tool, it is currently lacking an essential element: actual tax havens. Countries on the list account for just 2% of corporate tax avoidance! EU member states currently decide in secret which countries are tax havens, and do so based on vague criteria with no public or parliamentary scrutiny. This needs to change. If we focus on others, we also need to look ourselves in the mirror. And what we see is not pretty. EU countries are responsible for 36% of tax havens. The tax subcommittee commits itself to investigate and scrutinise all member states that are responsible for tax avoidance. Our work is only just starting.”

EU Legislative Priorities for 2021

Joint declarations have been signed by the European Parliament, the Council of the European Union and the European Commission identifying the EU legislative priorities for 2021, and the policy objectives for 2020 – 2024.

The legislative priorities are to:

  1. Implement the EU Green Deal;
  2. Shape Europe’s digital decade;
  3. Deliver an economy that works for people;
  4. Make Europe stronger in the world;
  5. Promote a free and safe Europe;
  6. Protect and strengthen our democracy and defend our common European values.

EU Legislative Policy Objectives for 2020 – 2024

The policy priorities are:

  1. Ensuring a full recovery from the COVID-19 pandemic;
  2. Accelerating the transition to a fairer, healthier, greener and more digital society in the EU and on the global stage;
  3. Maintaining the EU’s global leadership in fighting climate change;
  4. Shaping our own digital solutions and establishing Europe’s digital sovereignty;
  5. Making our economy more resilient and robust;
  6. Defending our common values and strengthening our democratic model;
  7. Strengthening the EU’s role as a global actor.

On the tax front for 2021 legislative priorities, the declaration notes the EU’s ongoing intention to “pursuing fair digital taxation”, “ensure more transparency on the taxation of multinational businesses; and ensure fair competition within the EU and on the global stage” and also emphasises the EU’s commitment to “tackle money laundering and the financing of terrorism, tax fraud, evasion and avoidance as well as ensuring a sound and fair tax system”.

In the policy objectives concerning making the EU economy more resilient and robust, the declaration states that the EU needs “to strengthen our single currency, ensure greater financial stability and protect ourselves against financial crimes, tax fraud, evasion and avoidance, and money laundering. European businesses and people need to be protected against unfair competition from abroad. To achieve this, we will introduce an appropriate set of actions on taxation and address the distortive effects that certain foreign subsidies have on our single market.”

EU-China Trade Agreement

On 30 December, the EU and China reached an in-principle comprehensive agreement on investment. Under the agreement, European countries will have increased access to the Chinese market, allowing them to establish companies in key sectors, including manufacture. The agreement also includes commitments to fair competition through standard setting, transparency, sustainable development and dispute settlement.

European Commission President Ursula von der Leyen said of the in-principle agreement: “Today‘s agreement is an important landmark in our relationship with China and for our values-based trade agenda. It will provide unprecedented access to the Chinese market for European investors, enabling our businesses to grow and create jobs. It will also commit China to ambitious principles on sustainability, transparency and non-discrimination. The agreement will rebalance our economic relationship with China”. Further information is available here.


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.