Richard Cornelisse

Posts Tagged ‘Commission’

Modernising VAT for cross-border e-commerce: Commission launches public consultation

In BEPS, Indirect Tax Strategic Plan on 28/09/2015 at 9:48 pm

imagesThe European Commission has launched a public consultation to help identify ways to simplify the Value-Added Tax (VAT) payments on cross-border e-commerce transactions in the EU.

The Commission is seeking to receive a wide range of views from business owners and other interested parties before it drafts its legislative proposals on the topic in 2016, as part of the Digital Single Market strategy.

Andrus Ansip, European Commission Vice-President for the Digital Single Market, said:

“We promised to support companies, and especially smaller ones, to reduce burdens arising from different VAT regimes. Today we ask businesses and other stakeholders to help find the most effective and meaningful ways of delivering on this promise. In the Digital Single Market Strategy we have already put forward some measures we would like to take, such as a VAT threshold for startups.”

Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs said:

“This consultation presents a real opportunity to ensure that future VAT revenues from the digital economy are distributed fairly and effectively. At the same time, we want to make it as easy as possible to comply with the rules. We also have an interest in ensuring that future legislation reflects the reality for businesses across the EU.”

This consultation is also part of the ongoing assessment of the new rules for VAT payments on cross-border telecommunications, broadcasting and electronic services which came into force last January.

The Commission is keen to garner feedback on the associated Mini-One Stop Shop (MOSS), the tool that allows businesses that sell digital services to customers in more than one EU country to declare and pay all their VAT in their own Member State.

The consultation will run for 12 weeks and end on 18 December 2015.

The Digital Single Market Strategy In the context of the Digital Single Market, the Commission is working to minimise burdens attached to cross-border e-commerce arising from the different VAT regimes within the EU.

It wants to provide a level playing field for EU companies, big or small, and ensure that VAT revenues flow to the country where the consumer is based.

The Commission will make a legislative proposal in 2016 to reduce the administrative burden on businesses arising from different VAT regimes.

The consultation launched today will feed into preparations for these important proposed measures.

The Commission will propose simplification measures for small business including an appropriate threshold which can address the problems without causing further distortions to the single market or compliance challenges for tax administrations.

Specifically, the Commission will propose reducing the administrative burden on businesses arising from different VAT regimes including:

  1. extending the current single electronic registration and payment mechanism to cover the sale of tangible goods;
  2. introducing a VAT threshold to help online start-ups and small businesses;
  3. allowing cross-border businesses to be audited only by their home country for VAT purposes;
  4. removing the VAT exemption for the import of small consignments from suppliers in third countries.

Current VAT rules for e-services

The new “place of supply” rules for businesses dealing in cross-border telecommunications, broadcasting and e-services came into effect on 1 January 2015. This meant that such goods and services would be taxed in the Member State of the customer buying the product. VAT is a consumption tax, and these rules aim to ensure that the taxation of e-services reflect where consumption takes place. In this way, VAT goes to the treasury of the country where the buyer is based.

As part of the changes, the Mini-One Stop Shop (MOSS) was set up to simplify cross-border VAT payment procedures for e-commerce. For the first time, businesses could register and account for VAT payable to other Member States through a simplified quarterly online return, hosted by the tax administration in their own Member State. Preliminary data indicates that more than EUR 3 billion VAT will be paid through MOSS in 2015 representing approximately EUR 18 billion in sales.

Despite the broad support for the new rules, some very small businesses have faced some difficulties, particularly in the UK where they were previously exempt from VAT up to a threshold. In its original proposal, the Commission had included a VAT threshold to exempt smaller businesses from the changes, but Member States rejected that option. The Commission would like to put that option forward again in order to support the EU’s start up and smallest companies. Link to public consultation 

Commission modernises EU customs procedures

In Indirect Tax Strategic Plan on 29/08/2015 at 7:28 pm

The European Commission has adopted today a legal act to create a simpler, more modern and integrated EU customs system to support cross-border trade and provide for more EU-wide cooperation in customs matters.

It builds on the Union Customs Code adopted in 2013, which sets out detailed rules for twenty-first century customs processes.

Customs services play a central role in policing the EU’s external borders and in facilitating trade.

The customs union is the operational arm of much of the EU’s commercial policy measures. In addition, a growing range of government agencies call on customs to enforce their policies at the border.

EU customs handle 16% of world trade, or over two billion tonnes of goods a year with a value of EUR 3,400 billion. Pierre Moscovici, EU Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “A modern and cost-effective customs system facilitates international trade and is conducive to growth.

It also plays a vital role in defending the safety and security of European citizens and in protecting Member States’ interests.”

The Commission has been working for several years on a major overhaul of customs rules in the EU. The basic regulations were changed in 2013. Detailed acts must subsequently be adopted so that the new rules can be applied as of 1 May 2016.

Today’s decision takes the form of a delegated act. This kind of legal act, introduced by the Treaty of Lisbon in 2010, gives the Commission power to adopt the technical, non-essential elements of an existing legislation, in this case of the Union Customs Code.

The act adopted today covers a wide area of customs activity, including:

  • Simplifications of the customs procedure inward processing which allows the processing of non-Union goods without payment of import duty and other charges to support creation of added value in the EU;
  • Clearer rules to ensure equal treatment of economic operators in the EU;
  • Wide-ranging provisions which will allow customs decisions and authorisations to be valid across the EU in the future;
  • Establishing common data requirements as the basis for new IT systems linking Member States’ customs administrations to ensure a seamless exchange of information;
  • Improvements in risk management to reinforce the fight against trade in illicit and prohibited goods, terrorism and other criminal activities.

The delegated act will now be considered by the European Parliament and the Council. In accordance with Article 290 TFEU, both can raise their objections within two months.

This period of scrutiny can be extended by a further two months.

Background

The EU customs union has provided a stable foundation for economic integration and growth in Europe for over four decades.Customs legislation is decided at EU level while the implementation of that legislation falls primarily on the Member States. Efficient customs administrations are essential to ensure a level playing field for traders in different Member States and to police the EU’s external borders.

In 2012, the Commission outlined a course of action for a more robust and unified customs union by 2020 in its Communication on the State of the Customs Union. The Communication provided for a reform of its legal framework as well as a vast shift towards digitisation.

The Union Customs Code (UCC) which came into force in 2013 enables customs to focus more on trade facilitation as well as on security, safety and the enforcement of intellectual property rights. It also improves cooperation between customs authorities and other services.

Today’s delegated act builds on this by setting out the details of the rules which will apply as from 1 May 2016. It will be supplemented by an additional implementing act, which is being submitted to Member States at the same time and will set out procedural details. The implementing act will be voted by the Customs Code Committee composed of representatives from Member States.

The Commission consulted extensively with Member States and trade interest groups to prepare the delegated act. The act was adopted well ahead of the 1 May 2016 deadline to allow stakeholders to adapt.

For more information

Video: One minute in the life of the EU Customs Union

Source: European Commission – PRESS RELEASES – Press release – Commission modernises EU customs procedures

Press release – Commission modernises EU customs procedures

In Audit Defense, Indirect Tax Strategic Plan on 28/07/2015 at 2:19 pm

The European Commission has adopted today a legal act to create a simpler, more modern and integrated EU customs system to support cross-border trade and provide for more EU-wide cooperation in customs matters. It builds on the Union Customs Code adopted in 2013, which sets out detailed rules for twenty-first century customs processes.

Customs services play a central role in policing the EU’s external borders and in facilitating trade. The customs union is the operational arm of much of the EU’s commercial policy measures. In addition, a growing range of government agencies call on customs to enforce their policies at the border. EU customs handle 16% of world trade, or over two billion tonnes of goods a year with a value of EUR 3,400 billion.

Pierre Moscovici, EU Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “A modern and cost-effective customs system facilitates international trade and is conducive to growth. It also plays a vital role in defending the safety and security of European citizens and in protecting Member States’ interests.”

The Commission has been working for several years on a major overhaul of customs rules in the EU. The basic regulations were changed in 2013. Detailed acts must subsequently be adopted so that the new rules can be applied as of 1 May 2016.

Today’s decision takes the form of a delegated act. This kind of legal act, introduced by the Treaty of Lisbon in 2010, gives the Commission power to adopt the technical, non-essential elements of an existing legislation, in this case of the Union Customs Code.

The act adopted today covers a wide area of customs activity, including:

  • Simplifications of the customs procedure inward processing which allows the processing of non-Union goods without payment of import duty and other charges to support creation of added value in the EU;
  • Clearer rules to ensure equal treatment of economic operators in the EU;
  • Wide-ranging provisions which will allow customs decisions and authorisations to be valid across the EU in the future;
  • Establishing common data requirements as the basis for new IT systems linking Member States’ customs administrations to ensure a seamless exchange of information;
  • Improvements in risk management to reinforce the fight against trade in illicit and prohibited goods, terrorism and other criminal activities.

The delegated act will now be considered by the European Parliament and the Council. In accordance with Article 290 TFEU, both can raise their objections within two months. This period of scrutiny can be extended by a further two months.

One minute in the life of the EU Customs Union

via European Commission – PRESS RELEASES – Press release – Commission modernises EU customs procedures.

EU Commission – improving VAT compliance – random awards for tax compliance

In EU development on 21/01/2015 at 7:44 am

The use of receipt-based tax lotteries to increase (VAT) tax compliance has been of growing interest amongst EU Member States. Some countries have introduced such lottery schemes, namely Malta in 1997, Slovakia in 2013 and Portugal in 2014. Others have been intrigued about the possibility of introducing a lottery.

The use of tax lotteries also has a history outside of Europe, notably in Taiwan since the 1950s. While there is growing interest in the use of tax lotteries throughout Europe, the understanding of best practises and success factors, is still limited. Therefore, this workshop brought together countries with experience and those interested in running tax lotteries.

TAXUD and the JRC in this context coordinated, establishing a platform for discussion amongst the Member States.

Tax receipts lotteries are designed to increase the issuance of receipts in business-to-consumer-transactions. This way, transactions are more likely to be part of the official (not the shadow) economy and VAT can be collected.

The idea of lottery schemes is to provide consumers with an incen-tive to ask for a receipt. The incentive is that the receipt is not just a piece of paper documenting the transaction made, but serves as a (potential) lottery ticket, giving consumers eligibility to participate in a tax lottery.

The lottery in turn gives the chance to win a prize if for a randomly drawn receipt. Hence, while obtaining the receipt is (for any legal transaction) of no extra cost to the consumer, it becomes valuable, as it serves as a lottery ticket.

For the tax authority the cost of paying prizes (and administering the lottery) is, in turn, outweighed by the extra revenue of an increased tax base, and by a citizen-policing effect of detecting VAT-dodging businesses.

While the general idea of a tax lottery is relatively straightforward, the specifics of how best to design and introduce the lottery are often less clear. Also the positive fiscal effect (the cost of the lottery being outweighed by the reduction of VAT evasion) is an empirical question.

Furthermore, the political economy (i.e., considerations of how to get such a scheme into the political process) of a tax lottery require consideration in advance. Additionally, the tax lottery can also serve other purposes, such as serving as a communication vehicle to the citizens to stress the importance of tax payments.

They may also trigger a public discussion about the two-way character of taxes (them being more than just a tribute, but something from which citizens expect something in return).

To discuss these points, European countries who had already a lottery scheme in place (Malta, Slovakia, Portugal) were invited to present their experiences, additional to presentations by a further invited specialist (Georgia), a researcher on this topic (with an implementation proposal for Greece) as well as the TAXUD and the JRC together with interested countries, to discuss the specificities.

Participants came together for a one-day workshop. Points of particular importance were to consider the moral issue of lotteries, to flank the lottery with an informational campaign, to use the lottery as a data collection tool, to keep transaction costs of participating in the lottery low, to consider all the actors involved, and to use the data generated in the process of the lottery.

It was also discussed that the fiscal success of the lottery can be significantly increased if focussing on particularly problem- atic sectors, where cash-in-hand practises are more prevalent, while putting less emphasis on large corporations and retail chains, for which the fiscal effect is minimal.

This report summarises the workshop, following a pyramidal approach. In the following section the motivation and elements of the workshop are summarised briefly.

More detail is included later, consisting of presentation protocols, the agenda, the participant list, an evaluation and reference to further information.

Access report

Improving VAT compliance – random awards for tax compliance

VAT eLearning course – European Commission

In EU development on 12/04/2014 at 10:12 am

An eLearning course has been developed by the European Commission under the Fiscalis 2013 Programme to help tax officials in EU countries and others with a particular interest in value added tax (VAT) get a good basic knowledge of EU Directive 2006/112/EC, known as ‘the VAT Directive’.

The training has been prepared by the Commission’s Taxation and Customs Union Directorate General in close collaboration with expert taxation officials and is freely available for download.

The course is available in the following languages: EN, BG, NL, EL, HU, LV, PL, SL, ES, SV, MK, IT.

About the electronic training course

This course aims at presenting the fundamental elements of the VAT Directive. It has an EU-wide perspective and does not explain national variations or derogations. By the end of the course the learner should have a good understanding of the basic principles of the EC VAT directive.

The course contains six hours of training and consists of fourteen units as follows:

  • Introduction
  • Context
  • Legal framework
  • Scope
  • Territory
  • Taxable persons
  • Transactions
  • Place of taxable transactions
  • Chargeable event and taxable amount
  • Rates
  • Exemptions
  • Right to deduct
  • Obligations
  • Final assessment

How to Start and Use the Course?

  1. First, extract the zip-file to a folder of your choice on your computer
  2. Read the ‘Quick Start Guide’ document
  3. This document will provide you with all the necessary information
  4. Install the course to your system as specified in the Quick Start Guide document or ask your system administrator to do so
  5. Open the course and follow the instructions within the course

via VAT eLearning course – European commission.

Press release – Commission takes Luxembourg to Court of Justice over VAT in the case of independent groups of persons

In EU development on 21/02/2014 at 10:45 pm

The European Commission has decided to take Luxembourg to the Court of Justice of the European Union over the VAT system applied by Luxembourg to independent groups of persons.

Under the VAT Directive, certain services supplied by a group to its members are exempt from VAT to avoid making operations downstream more expensive for these members, given that the VAT cannot be deducted. Strict conditions must be complied with to benefit from the exemption.

Under Luxembourg law, the services provided by an independent group to its members are free of VAT provided that the members’ taxed activities do not exceed 30% (or 45% under certain conditions) of their annual turnover. Group members are also allowed to deduct the VAT charged to the group on its purchases of goods and services from third parties. Lastly, operations by a member in his or her own name but on behalf of the group are regarded as outside the scope of VAT.

Under European law, in order to be exempt from VAT the services provided by an independent group to its members must be directly required for their non-taxable or exempt activities. The Luxembourg rule providing for a ceiling for taxed operations does not fulfil this condition. Moreover, group members should not be allowed to deduct VAT charged to the group.

The European Commission consequently takes the view that these arrangements are not compatible with the EU’s VAT rules. In addition, they would be likely to produce distortions of competition.

Background

The Commission sent a reasoned opinion to the Luxembourg authorities formally requesting them to bring their legislation into line with Directive 2006/112/EC on the common system of VAT (IP/12/63).

On 7 August 2012 Luxembourg excluded from the system groups whose services were mainly used for taxed operations. However, this amendment is not sufficient to bring Luxembourg law into line with the Directive.

Useful links

For press releases on infringement cases in the taxation or customs field see:
http://ec.europa.eu/taxation_customs/common/infringements/infringement_cases/index_en.htm

For the latest general information on infringement measures against Member States see:
http://ec.europa.eu/community_law/index_en.htm

On the February infringement package decisions: MEMO/14/116

On the general infringement procedure: see MEMO/12/12

via EUROPA – PRESS RELEASES – Press release – Commission takes Luxembourg to Court of Justice over VAT in the case of independent groups of persons.

Tax Fraud: Commission looks at how VAT collection and administrative cooperation can be improved

In Audit Defense, EU development, Processes and Controls on 13/02/2014 at 6:05 pm

Tax Fraud: Commission looks at how VAT collection and administrative cooperation can be improved

Today the Commission adopted two reports which shed more light on problems linked to fighting Value Added Tax (VAT) fraud within the EU, and which identify possible remedies.

The first report looks at VAT collection and control procedures across the Member States, within the context of EU own resources. It concludes that Member States need to modernise their VAT administrations in order to reduce the VAT Gap, which was around €193 billion in 2011. (see IP/13/844) Recommendations are addressed to individual Member States on where they could make improvements in their procedures.

The second report looks at how effectively administrative cooperation and other available tools are being used in order to combat VAT Fraud in the EU. It finds that more effort is needed to enhance cross border cooperation, and recommends solutions such as joint audits, administrative cooperation with third countries, more resources for enquiries and controls and automatic exchange of information amongst all Member States on VAT. Both reports are part of the broad Commission Action Plan to fight against tax fraud and evasion (see IP/12/1325), and can be found online on the European Commission’s Taxation and Customs Union website .

  1. Report I from the Commission to the Council and the European Parliament on the application of Council Regulation (EU) no 904/2010 concerning administrative cooperation and combating fraud in the field of value added tax
  2. Report II from the Commission to the Council and the European Parliament. Seventh report under Article 12 of Regulation (EEC, Euratom) n° 1553/89 on VAT collection and control procedures.

via EUROPA – PRESS RELEASES Daily News.

EU to establish a cooperation framework with non EU countries to fight VAT fraud

In EU development on 08/02/2014 at 9:09 am

Tackling tax fraud: Commission proposes stronger cooperation with non-EU countries on VAT
As part of the fight against tax fraud, the Commission has today asked for a mandate to negotiate VAT administrative cooperation agreements in with Russia and Norway.

An estimated €193 billion in VAT revenues (1.5% of GDP) was lost due to non-compliance or non-collection in 2011. While this loss is attributed to a mix of different factors, VAT fraud is certainly an important contributor.

Cooperation agreements with the EU’s neighbours and trading partners would improve Member States’ chances of identifying and clamping down on VAT fraud, and would stem the financial losses this causes. (See EC Press 6/2/2014).

Balkans.com Business News Correspondent – 07.02.2014

As part of the intensified battle against tax fraud, the Commission today launched the process to start negotiations with Russia and Norway on administrative cooperation agreements in the area of Value Added Tax (VAT). The broad goal of these agreements would be to establish a framework of mutual assistance in combatting cross-border VAT fraud and in helping each country recover the VAT it is due. VAT fraud involving third-country operators is particularly a risk in the telecoms and e-services sectors. Given the growth of these sectors, more effective tools to fight such fraud are essential to protect public budgets. Cooperation agreements with the EU’s neighbours and trading partners would improve Member States’ chances of identifying and clamping down on VAT fraud, and would stem the financial losses this causes. The Commission is therefore asking Member States for a mandate to start such negotiations with Russia and Norway, while continuing exploratory talks with a number of other important international partners.

Algirdas Šemeta, Commissioner for Taxation, said: “The supply chain has evolved dramatically since VAT was first implemented in the EU. Globalisation and e-commerce open up new windows of opportunity, but also create new risks. Fraudsters play on cross-border differences and information gaps between countries. The EU needs to work hand-in-hand with its international partners if it is to successfully combat VAT fraud. That is what the Commission is proposing today, with a request for negotiating mandates to formalise this cooperation.”

The cooperation agreement would be based on the Regulation on administrative cooperation in the field of VAT, which currently sets the framework for intra-EU collaboration in this area. Among the ways in which Member States cooperate against VAT fraud are by allowing each other access to their data bases, and exchanging information (either automatically or on request) on taxpayers’ activities. Eurofisc is also a very effective network for Member States to exchange information and intelligence on VAT fraud.

The use of such instruments could be extended to third countries through cooperation agreements against VAT fraud. The EU intends to negotiate such agreements with neighbouring countries, its main commercial partners and countries to be considered leaders in the field of electronically supplied services. For now, exploratory talks have been initiated with Norway, Russia, Canada, Turkey and China. Both Norway and Russia have already indicated that they are now ready to start official negotiations.

via EU to establish a cooperation framework with non EU countries to fight VAT fraud.

Fighting Tax Evasion and Avoidance: A year of progress

In EU development on 17/12/2013 at 9:47 am

Why has the Commission made fighting tax fraud and evasion a priority?

Every year, billions of euros of public money are lost in the EU due to tax evasion and tax avoidance. As a result, Member States suffer a serious loss of revenue, as well as a dent to the efficiency their tax systems. Businesses find themselves at a competitive disadvantage compared to their counterparts that engage in aggressive tax planning and tax avoidance schemes. And honest citizens carry a heavier burden, in terms of tax hikes and spending cuts, to compensate for the unpaid taxes of evaders. Fighting tax evasion is therefore essential for fairer and more efficient taxation.

The cross-border nature of tax evasion and avoidance, along with Member States’ concerns to maintain competitiveness, make it very difficult for purely national measures to have the full desired effect. Tax evasion is a multi-facetted problem requiring a multi-pronged approach, at national, EU and international level.

EU Member States need to cooperate closely if they are to increase the fairness of their tax systems, secure much needed tax revenues and help to improve the proper functioning of the Single Market. In addition, the “strength in numbers” of the EU acting as a united block helps give more weight in achieving faster and more ambitious progress at international level in the area of tax good governance.

What progress has been made in fighting tax evasion and avoidance at EU level over the past year?

In December 2012, the Commission presented an Action Plan to better tackle tax evasion and corporate tax avoidance (IP/12/1325). This Action Plan kick-started what has become a highly intensive EU campaign to better fight these problems. It was endorsed at the European Council in May, where EU leaders called for effective steps to be taken to combat tax evasion and avoidance.

In the 12 months since the Action Plan was presented, there has been remarkable progress in this area at EU level, and a number of important new initiatives have been put forward by the Commission. Among the actions taken in 2013 were:

  1. Expanding the automatic exchange of information widely within the EU

In June, the Commission proposed extending the automatic exchange of information between EU tax administrations, to cover all forms of financial income and account balances (IP/13/530). This paves the way for the EU to have the most comprehensive system of automatic information exchange in the world. It will also ensure that the EU will well-placed to implement the new global standard (see below) quickly and with minimum disruption to businesses. The proposal could be agreed by Member States in the first half of 2014.

  1. Tightening EU corporate tax rules against aggressive tax planning

In November, the Commission proposed measures to close loopholes in the Parent-Subsidiary Directive and address national mismatches. This will shut off opportunities for a particular type of corporate tax avoidance (IP/13/1149). The proposal should be discussed and possibly agreed by EU Finance Ministers under the Greek Presidency.

  1. Negotiating with neighbouring countries for greater transparency

The Commission was given a mandate to negotiate stronger tax agreements with Switzerland, Andorra, Monaco, San Marino and Liechtenstein (MEMO/12/353) in May. Commissioner Šemeta immediately visited all 5 countries, to give political drive to the talks and underline that the EU was looking for swift and ambitious negotiations. Formal negotiations have begun with the 4 smaller countries and will start with Switzerland as soon as it has its own negotiating mandate (expected before the end of the year).

  1. Establishing a Platform on Tax Good Governance

The Commission established a Platform on Tax Good Governance to discuss the best ways to fight tax evasion and avoidance and monitor progress in this area at both EU and national level (IP/13/351). The Platform has already started work on how best to implement the Commission’s Recommendations on Aggressive Tax Planning and on how to deal with tax havens. Its work programme also includes several other areas of focus, including an EU Taxpayer’s Code, ways to increase transparency of multinationals and looking at the effects of EU tax policy on developing countries.

  1. Launching the debate on Digital Taxation

The Commission established a High Level Expert Group on Taxation of the Digital Economy, chaired by former Portuguese Finance Minister Vitor Gaspar. It will meet for the first time on 12 December (IP/13/983). Corporate tax avoidance is an especially pressing problem in the digital sector. The group will look at the particular challenges in digital taxation and propose solutions in the first half of 2014 to ensure that the digital sector pays its fair share of taxes, while not creating tax obstacles to this pro-growth sector.

  1. Agreeing new instruments to better fight VAT fraud

In June, Member States unanimously agreed on a set of measures to better combat VAT fraud. The Quick Reaction Mechanism and reverse charge mechanism will allow Member States to react more quickly and efficiently to large-scale VAT fraud, thereby reducing substantial losses for public finances. These new instruments will be ready for use from 2014 (IP/12/868).

  1. Proposing new standard VAT form to improve tax compliance

In October, the Commission proposed a simplified, standard VAT form for use by businesses throughout Europe. In addition to easing life for businesses, this standard form will help to improve tax compliance by simplifying the procedure for businesses to declare the VAT they owe (IP/13/988). And greater compliance means greater revenues for national budgets.

  1. Publishing a new report on VAT Gap in EU

The Commission published a study on the VAT Gap in the EU, which amounted to €193 billion in 2011. Prior to this study, the most recent estimates for the VAT Gap dated back to 2006. The new figures help to better understand the recent trends in the EU, to better shape and target policy measures to improve VAT compliance (MEMO/13/800).

  1. Preventing harmful tax competition

The Commission has continued to scrutinise and control state aid granted through tax measures to companies. It has also supported the work of the Code of Conduct Group against harmful tax competition, contributing detailed analyses of many national tax regimes for consideration by the Code Group.

  1. Introducing more corporate transparency

The new Accounting Directive introduces an obligation for large extractive and logging companies to report country-by-country the payments they make to governments, and also on a project-basis. Taxes levied are among the payments to be reported. The revised Capital Requirements Directives (CRDIV) improves transparency in the activities of banks and investment funds in different countries, particularly regarding profits, taxes and subsidies in different jurisdictions (MEMO/13/690). It is hoped that the implementation of the May European Council Conclusions will ensure that all large companies and groups make public how much they pay in tax and in which country, as banks now need to do. Finally, the Commission’s proposal to revise the anti-money laundering legislation includes a specific reference to tax crimes (IP/13/87).

The active work at EU-level was also mirrored in the active role that the EU played in pushing forward international discussions to improve tax good governance worldwide (see below).

Where is there room for greater action at this stage in the fight against tax evasion and avoidance in the EU?

First and foremost, agreement is needed on the Savings Tax Directive (MEMO/12/353) before the end of 2013, as called for by the European Council in May. This is crucial to close loopholes in the Savings Directive, and ensure that it can continue to work well. An EU-wide framework for automatic information exchange will also give banks more legal certainty and clarity about reporting obligations.

Progress on the Common Consolidated Corporate Tax Base (CCCTB) is also very important to better tackle corporate tax avoidance (IP/11/319). In addition to substantially reducing administrative burdens for businesses, the CCCTB has the potential to eliminate many opportunities for profiting by multinational companies. This is recognised in the OECD’s action plan against Base Erosion and Profit Shifting (BEPS), and agreement on the CCCTB would ensure that the EU is the standard setter in this area.

As stated in last year’s Action Plan, the Commission would encourage Member States to make better use of the Code of Conduct on Business Taxation. This can be a highly effective tool for identifying and eliminating harmful tax regimes within the EU. The Commission is currently considering ways of strengthening the Code, for example by extending its scope or amending the Code criteria.

In addition, Member States have been called upon to intensify efforts at national level to tackle tax evasion and avoidance. Country specific recommendations were given to 13 Member States to improve tax compliance at national level. And the 2013 Annual Growth Survey again called on all governments to step up their national campaigns against tax evasion, and strengthen their coordinated action to tackle aggressive tax planning and tax havens.

Meanwhile, the Commission is continuing work on the medium and long-term actions set out in the Action Plan against tax evasion last year. These include a Taxpayers’ Code, an EU Tax Identification Number and possibly common sanctions across the EU for tax offences.

What has been achieved at international level to improve the fight against evasion and avoidance, and what has been the EU’s contribution to this?

In September 2013, G20 leaders agreed on concrete measures to better tackle tax evasion and corporate tax avoidance worldwide. First, they confirmed a move to greater international tax transparency, by agreeing that automatic exchange of information should be the new global standard of cooperation between tax administrations. Second, they endorsed the OECD’s BEPS action plan to curb corporate tax avoidance worldwide. These measures confirm a major improvement in international taxation – one that will make it fairer, more effective and better equipped for the 21st century economy. With the political commitment made, the focus is now on implementing these changes.

With regard to the automatic exchange of information, the EU has drawn on its own experience and expertise in this area to actively contribute to the development of the new global standard. In particular, the Commission has tried to ensure that the global standard takes into account the existing EU automatic information exchange arrangements and is compatible with EU law (e.g. data protection), so as to avoid any unnecessary difficulties for businesses. The latest draft of the global standard appears to meet at least most EU needs, and the OECD intends to present the final version to the G20 Finance Ministers in February for agreement.

Meanwhile, the BEPS Action Plan complements the EU measures to tackle aggressive tax planning, while also addressing issues that can only be effectively dealt with at international level. The BEPS action plan sets out 15 specific actions to re-adjust international standards in taxation so that they are better shaped for the changing global economy. Over the next year, new rules and standards will be developed in areas such as permanent establishment, transfer pricing and digital taxation. The aim is to protect the fairness and integrity of tax systems, and better equip governments in their clamp down on corporate tax avoidance. The EU has already valuable experience in various areas covered by BEPS such as transfer pricing and tackling hybrid mismatches. And the work of the Commission’s expert group on digital taxation will provide input for the OECD digital taskforce. With this input and experience to offer, the EU can continue to play a central role in the work to implement BEPS, particularly if a strong, coordinated position is maintained amongst all Member States.

Annex

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