On Wednesday 24 June, as part of an overhaul of the nine DAC directives on administrative cooperation and the exchange of tax information, the European Commission proposed making some provisions more effective and simplifying others by easing reporting obligations for taxpayers.
Consolidating nine directives into a single legislative text, the legislative proposal notably provides for the introduction of a new Taxpayer Identification Number (TIN) verification tool, in order to improve the quality of the information exchanged and significantly increase automatic matching rates.
“Second, we are removing the obligation to report cross-border tax arrangements that are of limited value for tax administrations. Third, we are increasing the reporting threshold for online sales of goods”, said European Commissioner for Taxation Wopke Hoekstra.
For example, a digital platform for the resale of second-hand goods is currently required to send a report to the national tax administration about the identity of a seller if that seller carries out more than 30 transactions, or from a minimum annual income threshold set at €2,000.
The legislative revision is intended to remove the reporting obligation linked to the number of transactions and to raise the minimum resale threshold to €3,000. This is expected to generate savings of €680 million.
Handled through the traditional ‘economic’ channel at the EU Council, this regulatory revision will require there to be unanimity among the Member States.
See the legislative proposal: https://aeur.eu/f/miz ; its annex: https://aeur.eu/f/mj0 ; and the European Commission’s impact assessment: https://aeur.eu/f/mj1
Omnibus. On the same day, the EU institution submitted an omnibus proposal to simplify European tax legislation, which will be handled by the EU Council through the general affairs channel.
As anticipated by Agence Europe (see EUROPE 13883/23)—through a revision of the Interest and Royalties Directive (IRD - 2003/49) and the Parent-Subsidiary Directive (PSD - 2011/96)—the European Commission proposes introducing an exemption from withholding tax on all cross-border payments of dividends, interest and royalties between EU companies. Expected savings: €5.3 billion.
“No more lengthy upfront procedures. No need to deal with complex, cumbersome refund procedures anymore that sometimes take years to complete”, Mr Hoekstra welcomed.
The European Commission is also suggesting amending the ATAD, which tackles aggressive practices leading to tax avoidance (2016/1164).
The proposed measures include: - an EU-wide deduction for research and development will be introduced in order to ensure the deductibility of certain eligible expenditure (investment in factories, machinery, etc.); - the rule limiting the deductibility of interest will be simplified by removing implementation options and making the de minimis threshold mandatory; - the exemption from the rule on controlled foreign companies will apply to companies already subject to the directive (‘pillar II’ - 2022/2523) transposing into EU law the OECD agreement on minimum taxation of multinationals.
All the proposals unveiled on Wednesday should make it possible to achieve “annual savings of around €8 billion, including €3.3 billion in administrative costs”, said the European Commissioner for Economy Valdis Dombrovskis.
Read the omnibus proposal: https://aeur.eu/f/mj5 ; its annex: https://aeur.eu/f/mj6 ; and the European Commission’s impact assessment: https://aeur.eu/f/mj7 (Original version in French by Mathieu Bion)