Brussels, 17/11/2010 (Agence Europe) - As announced in our newsletter of 15 November (EUROPE 10256), the Ecofin Council, on 17 November, resumed discussion of the VAT treatment of financial and insurance services and administrative cooperation in taxation. Discussions will continue notably with a view to an agreement on this second point at the meeting on 7 December.
- Amendment of the 2007 directive on the treatment of financial and insurance services as regards VAT. This involves amending provisions on VAT exemption for these services and setting out the necessary application arrangements. Ministers were to discuss the Presidency note on the state of progress and suggesting future orientations. The Presidency stated that the Council could decide not to continue discussions on: - the cost-sharing group (possibility for financial firms to pool VAT-exempt investments), a possibility already covered by the VAT directive; - the option-to-tax (allowing financial firms to opt for taxation), given the inherent risk of negative impacts on budgetary revenues. The Commission will examine other possibilities with member states to come to a taxation system optionally or compulsorily alternative to current exemption. With regard to the definition of exempted services, the Council will continue technical discussions: current definitions are no longer appropriate and must be reviewed to avoid administrative costs and bring greater uniformity so as to prevent possible court actions.
Commissioner Šemeta confirmed that the option-to-tax and the cost-sharing group were two points on which “we have come to the point where political cooperation is necessary”. With regard to the definitions, differences between member states relate to the correct interpretation of existing exemptions, notably for the externalisation of services. Rectifications will have to be brought, then, without over-extending exemption cover, taking account of implications for competitiveness and national budgets. Following a French intervention, the Commission said it was prepared to set out the definition of a uniform tax base.
- Discussion on the directive on cooperation among member states in the area of taxation, the aim of which being to bring EU law into line with OECD standards in this field and to tackle fraud and tax evasion. Ministers were due to discuss a proposal for a compromise from the Presidency on Articles 8 and 23b of the directive which relate respectively to: - the extent and conditions for automatic information exchange; - transitional measures for on request information exchange with a view ultimately to removing all conditions from this exchange. The amendments brought by the Presidency relate to the number of categories of revenue, reduced from 8 to 5, and the timescale planned for the coming into effect of the various provisions.
While most delegations were of the view that the Presidency compromise provided the best balance between the different positions, some countries expressed objections: - Italian minister Giulio Tremonti linked Italy's agreement on the compromise to energy measures to ensure application of the directive on savings taxation. He said that this could be got round by means of trusts or bilateral agreements between certain countries (the UK and Germany with Switzerland); the Presidency and the Commission will take account of these objections and will bring forward new proposals in December; - Denmark, which raised the issue of the imbalance between member states caused by the clause on the “availability” of information to be provided (some countries provide more, some less); - Luxembourg, which wants to stop any inexact request for on-request information to avoid any “fishing” for tax information, and would like to see set out in the body of the directive how exchange of on-request information would work; it called for a reference to bilateral tax treaties; - Austria, which shared Luxembourg's objections and would like to postpone the exchange of information on certain points from 2010 to 2013. (F.G./transl.rt)