The taxation agenda of the meeting of the European finance ministers will once again be an extremely busy one, on Tuesday 5 December. Fortunately, the working groups have managed to complete two of the three major dossiers on the agenda: VAT on e-commerce and the conclusions concerning the taxation of digital. The ministers will also agree on the blacklist of jurisdictions that are non-cooperative in taxation matters.
Blacklist. The preliminary meeting at the Council of the permanent representatives of the member states to the EU (Coreper) is reported to have lasted no more than 20 minutes. France, supported by Spain and Cyprus, reportedly proposed to monitor the implementation of the commitments made by the third countries at a very early stage. They called for his proposal to be reflected in the conclusions to be adopted. The United Kingdom and the Netherlands, for their part, stressed the success of the process, as certain third countries appear to be under the pressure of the cut-off date of the Economic and Financial Affairs Council of 5 December, which will approve the list of non-cooperative countries and territories, with letters of undertakings continuing to flood in.
The countries making their commitments most recently are Aruba, Armenia, the Cayman Islands, Granada, Fiji, Jordan, Swaziland, the United Arab Emirates, the Marshall Islands, Morocco and Tunisia. Letters from Palau, Macao and Vietnam arrived on Friday 1 December. There are reportedly at least 20 countries in the hotseat. The fiscal attachés will be tasked with evaluating the last commitments to arrive, at 11 AM on Monday.
There will definitely be two lists. One will feature jurisdictions that have not engaged at all or enough, the other will feature those that have offered commitments deemed sufficient, but the implementation of which will need to be monitored.
The Ecofin Council on Tuesday is, furthermore, expected to approve the idea of a double set of sanctions: - administrative, related to access to various sources of European funding; - legislative, to take the form of a toolbox that Europeans may use, with no obligation.
VAT on e-commerce. This was the hot potato of the ministers' meeting of November, but the political agreement will nonetheless be approved without discussion. A statement to the Ecofin minutes has been drafted to appease concerns expressed by the German delegation, which lifted its veto a few days ago. The statement calls upon the Commission to prepare implementing measures, particularly on the provisions relating to extending the VAT one-stop shop to supplies of goods online and to all cross-border services to final consumers. The statement in particular stresses the need not to put companies established in the EU at a disadvantage. It also states that if it appears unlikely that detailed implementing measures can be adopted within a sufficient period of time to set the required technological systems in place, the Commission will, by no later than the end of 2019, assess whether article 2 (related to the one-stop shop) can still be implemented in 2021. If not, it will make an emergency proposal, on the basis of a Council mandate, to partially or fully postpone articles 2 and 3 (removing the VAT exemption for small dispatches under €22) of the directive.
Taxation of digital. The draft compromises seeking to obtain consensual conclusions on the taxation of digital services have come in thick and fast, one after the other. The final version is ultimately no more prescriptive than the conclusions of the heads of state or government of October.
Compared to the initial draft conclusions, the main difference is that the idea of pinning down the possible elements of a virtual permanent establishment has been removed. In a draft dated 20 November, this concerned the number of users, the duration of the digital economic presence and the location of digital activities within a jurisdiction. (Original version in French by Élodie Lamer)