The European Commission has recently responded to the recommendations contained in the report by the European Parliament’s special TAX3 Committee on financial crime, fraud, and tax evasion (see EUROPE 12203/5). An English response document, consulted by EUROPE, had already been sent to the European Parliament on 18 June, prior to the formal transmission, which will take place once the translations are ready.
“The resolution contains 430 recommendations. Many of the recommendations are addressed to the Member States and to the Council. Therefore, the Commission addresses only those recommendations which fall within its competences”, it explains.
Overall, the 40-page document reiterates everything that the Commission has already put in place, details the work in progress, and passes responsibility onto the next Commission with regard to potential future legislative initiatives.
Taxation. The TAX3 Committee notably wanted several tax files to be released in the EU Council. In its report, it had also asked the Commission to present a new legislative proposal, based on Article 116 of the TFEU, should the EU Council not reach a unanimous decision on the Common Consolidated Corporate Tax Base (CCCTB).
However, the Commission has, once again, reiterated that Article 116 of the TFEU—which allows unanimity in the EU Council to be circumvented in tax matters—can only be used to eliminate distortions of competition due to different tax rules if these distortions cannot be eliminated in consultation with the Member States concerned.
The Commission states, “as regards the CCCTB proposal, the requirements for the activation of the Article 116 procedure are not met”.
The TAX3 Committee also obtained a dismissal regarding the European Digital Services Tax (see EUROPE 12212/6). The Commission writes, “the use of enhanced cooperation, as requested in the resolution of the EP, appears to be unrealistic at this time”.
It explains that this would not be compatible with the OECD’s timetable of work on an international solution to digital taxation (see EUROPE 12272/3), since the results of this work will not be known until 2020 at the latest.
As for the request for a European financial police force established within Europol (see EUROPE 12203/5), the Commission reiterates that Europol currently does not have the authority to conduct its own investigations but indicates that its duties could be revised in 2022.
Golden visas. With regard to ‘golden visas’ (which allow for a residence permit, or even nationality in a Member State, to be granted in exchange for substantial investment in the host country), MEPs asked Member States to plan for them to be abolished “as soon as possible” and asked the Commission to monitor these programmes closely.
Here again, the Commission lists its actions and refers back to its January 2019 report (see EUROPE 12178/2). It writes, “The Commission shares the analysis made by the Parliament of the risks posed by investors schemes, including in terms of security, money laundering, corruption, circumvention of EU rules, and tax evasion”.
Moreover, it reiterates that it has established a group of experts from Member States precisely to address these issues and develop a common set of security controls by the end of 2019. The group held its first meeting on 5 April and will meet again on 8 July.
Cryptocurrency. “The Commission shares the concerns of the EP with regard to the potential threat that virtual assets could represent for money laundering and terrorism financing activities”, the Commission replies to the TAX3 Committee, which asked it to develop an appropriate framework at the EU level in order to regulate cryptocurrency.
It reiterates that it started work so as to “lay the groundwork in anticipation of the actions of the new Commission” (see EUROPE 12229/33).
For cryptoassets already covered by EU rules, the Commission will re-examine European legislation in order to ensure that it is appropriate for their use. It indicates that for the types of cryptoassets that are not covered, it will launch a feasibility study on a possible common regulatory approach at the EU level, either by expanding existing legislation or by developing a sui generis system. (Original version in French by Marion Fontana)