The Member States’ ambassadors to the EU (Coreper) will give their green light on Wednesday 25 November to the adoption by written procedure of EU Council conclusions on “fair and effective taxation in times of economic recovery, the tax challenges linked to digitalisation, and tax good governance in the EU and beyond”.
The draft text, dated 20 November, welcomes the action plan presented by the Commission last July (see EUROPE 12528/2) and sets out Member States’ priorities in this area.
The text recognises that, while additional work on new tax initiatives is needed, it is first and foremost necessary to both ensure that existing tax legislation is properly implemented and improve tax compliance and cooperation.
In particular, it stresses that any new initiative should better combat aggressive tax planning and tax fraud and make taxation simple and efficient, taking into account the specific conditions and needs of Member States and the digitalisaton of their economies and, of course, respecting Member States’ competences in the field of taxation.
The text particularly welcomes the initiatives proposed by the Commission to clarify, simplify and modernise EU VAT rules, in particular those on the modernisation of VAT reporting obligations, in order to combat fraud more effectively.
Other measures supported by the EU Council include the legislative proposal to amend obsolete VAT provisions on financial services and to simplify the special scheme for travel agents.
The text nevertheless specifies that attention must be paid to the competitiveness of the sectors concerned and the impact of the Covid-19 crisis on them, as well as to the increased outsourcing of input services by operators in the financial sector, the insurance sector, and other sectors with a limited right to deduct input VAT.
The Member States also support the strengthening of their network of anti-fraud experts, Eurofisc, provided that it remains flexible and operational, they warn. In their view, the impact assessment of potential improvements should, inter alia, address data protection and security issues, cost and revenue aspects as well as the use of new technologies.
Digital taxation
The text also addresses digital taxation (see EUROPE 12591/24) and confirms that Member States continue to support “the work within the OECD’s inclusive framework on BEPS, which aims at reaching a global consensus solution by mid-2021 at the latest, taking into account the interests of all Member States, to ensure that all companies pay their fair share of tax on profits generated by their EU activities”.
At the same time, the draft conclusions recall that the Commission has already committed itself to presenting proposals for new own resources by June 2021, including a digital sector-based resource, in the framework of the EU’s post-Covid-19 Recovery Plan.
The European Council is due to assess the issue in March 2021. This topic is also on the agenda for the next videoconference meeting of EU finance ministers on 1 December.
Revision of the ‘Code of Conduct’ group’s mandate
The text also states that the German Presidency has launched discussions on the revision of the ‘Code of Conduct’ group’s mandate in the EU Council, as proposed by the Commission in its Communication entitled “Tax Good Governance in the EU and beyond”.
In particular, it agrees that “ongoing discussions on the scope of the mandate should also address those features of tax systems that have general application and that may have harmful effects”.
The text also endorses the traditional ‘Ecofin’ Council report to the European Council on tax issues (https://bit.ly/3pQtrFU ) as well as the report on the work of the Code of Conduct group in the Council (https://bit.ly/2J7y7GI ).
See the conclusions: https://bit.ly/335pWlh (Original version in French by Marion Fontana)