VAT (Value Added Tax) Tax & Compliance EU Bulletin 71

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 Roadmap on VAT (Value Added Tax) Rules for Financial & Insurance Services

The EU Commission has published a Roadmap concerning VAT (Value Added Tax) rules for financial and insurance services, noting that the existing rules have been criticised for being complex and difficult to apply, leading to uncertainty, high compliance costs and lack of VAT (Value Added Tax) neutrality. This initiative to review the VAT rules for financial and insurance services was contained in the Commission’s 2020 Tax Package Action Plan.

The Roadmap details that a study is being completed to “produce an overview of the measures applied by all the Member States based on the provisions governing the VAT (Value Added Tax) treatment of financial and insurance services”, which will then form the basis, together with input from a public consultation, for a proposal for a directive to “address the competitive disadvantage faced by financial and insurance operators… caused by irrecoverable VAT”. The impact assessment will consider the implications of either removing the existing exemption or keeping it and modifying the scope, as well as issues caused by the current exemption such as cost-sharing and issues with calculating VAT on high-frequency trading.

EU Commission Publishes Taxpayers’ Rights Communication & Recommendation Roadmaps

The European Commission has published roadmaps concerning a planned Communication taking stock of taxpayers’ existing rights in the EU and Recommendation to Member States to facilitate the implementation of taxpayers’ rights and simplify tax obligations. The Roadmaps set out that a public consultation will take place in the coming two months.

The planned initiatives form part of the Commission’s Tax Package Action Plan, within the section on Simplifying EU Tax Rules for Competitiveness in the Single Market. The initiatives aim to improve awareness of taxpayers’ rights throughout the EU, and the Recommendation will “reflect on how Member States may accommodate their tax laws’ related procedures to better respect and make more effective such rights. The document also suggests how, if necessary, Member States can further coordinate them, in order to improve the relationship between taxpayers’ and tax administrations in an EU and the overall support to the recovery context.”

EU Single Customs Window Proposal Published

The European Commission have recently published a proposal for a Regulation to establish the the European Union Single Window for customs which will allow businesses to complete border formalities through a single portal. The EU Commission has published an EU Customs Union Action Plan setting out measures to be taken over the coming four years to achieve an “integrated European approach to customs risk management.” Further information concerning the proposed EU Customs Window can be found on this webpage.

The proposal sets out that “The concept of a single window is to be understood as a digital solution for the exchange of electronic information between different government authorities, and between the latter and economic operators. The window “places an onus on regulatory authorities to enable economic operators to submit to a single point both customs and EU non-customs data required for goods clearance. This will lead to reductions in duplication, time and cost of compliance for economic operators.”

ECOFIN: Ministers Endorse EU-Level AML Supervision

The Council of the EU, sitting as Economic and Financial Affairs Council (ECOFIN) held a video-conference meeting on 5 November. Key conclusions include endorsement of Commission’s Anti-Money Laundering (AML) Action Plan, in addition to creating a single EU rulebook and pan-European AML supervisor. The EU-level supervisor will have direct supervisory powers over a selected number of high-risk obliged entities, as well as the authority to take over supervision from a supervisor in an EU Member state.

The Commission, following Council’s conclusions, will equip an EU AML/CFT supervisor with risk-basis defined competence such as supervising a selected number of obliged entities that have high inherent ML/TF risk and which are chosen on the basis of appropriate risk criteria; authority to step in and take over supervision from a national supervisor in clearly defined and exceptional situations on the basis of objective and transparent criteria, in cases where the national supervisor is unable to enforce compliance or cannot ensure adequate supervision. The obliged entities considered high-risk at present include: credit institutions, payment institutions, bureaux de exchange, E-money institutions, and virtual asset service providers covered by FATF recommendations.

OECD Publishes Report on Taxing Digital Currencies

The OECD has published a report on Taxing Digital Currencies, examining the tax treatment of virtual currencies, and emerging taxation issues surrounding crypto-assets. The report findings confirm that tax policymakers are in the initial stages of considering the implications of these assets, with G20 and finance ministers calling on organisations to analyse the evasion risk posed by digital currencies and establish compliance and taxation frameworks for emerging digital currencies.

The taxation implications of crypto-assets are being examined by CFE Tax Technology Committee, with a specific working group being established in the Committee following on from the European Commission announcing as part of their Tax Package 2020 that EU rules on automatic exchange of information would be extended to crypto assets and e-money.

Forum on Harmful Tax Practices 2020 Review

The OECD’s Inclusive Framework has approved the 2020 reviews of the Forum on Harmful Tax Practices. The reviews are carried out as part of the implementation of Action 5 of the OECD/G20 Base Erosion and Profit Shifting Project, concerning assessments undertaken by the Forum on Harmful Tax Practices (FHTP) of preferential tax regimes.

From the 49 regimes reviewed in 2020, jurisdictions have made legislative changes to abolish or amend 29 of the regimes, 4 regimes are now fully compliant with the BEPS Action 5 standard, 7 regimes are in the process of being amended and 2 were found not to be harmful. The 2 remaining regimes were out of scope.

In 2021, the Forum on Harmful Tax Practices will focus on the effective implementation of the standard, including the spontaneous exchange of information on activities and income of entities by parent, ultimate parent and beneficial owner jurisdictions, as well initiate monitoring to ensure no or nominal tax jurisdictions have mechanisms in place to comply with the FHTP Standard.

EU Commission Seeks to Expand Exchange of Information to Crypto-assets & e-Money

The European Commission has published an Inception Impact Assessment on expanding current exchange of information rules in the field of taxation to include crypto-assets and e-money.

As limited information is available from tax administrations about the use of crypto-assets or e-money and any resulting revenue losses, the Commission will be carrying out an Impact Assessment and public consultation to consider which assets should be subject to any proposed Directive or Recommendation, how to define crypto-assets and to identify the relevant intermediaries for tax and reporting purposes.

The Inception Impact Assessment sets out that the Commission through this initiative aims to “provide tax administrations with information to identify taxpayers who are active in new means of exchange, notably crypto-assets and e-money. It will also ensure consistency with ongoing work at EU level, such as the Digital Finance Strategy adopted on 24 September 2020 and the proposal for a Regulation on Markets in Crypto-assets, and at international level on the taxation on crypto-assets and e-money.”

The public consultation, which will happen alongside consultations with tax administrations, is scheduled to commence in the coming weeks.


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.