CFE’s Tax Top 5 January 2016

25 January 2016

1.      State Aid: Commission asks Belgium, France and the Netherlands to end tax exemptions for ports

On 21 January 2016, the European Commission requested that Belgium, France and the Netherlands should make the commercial activities of their ports fully subject to corporate income tax.

The Commission states that public companies, when carrying out economic activities such as the commercial operation of port infrastructure, compete with private operators who are subject to paying corporate tax, and a difference in taxation is a distortion of competition, giving port operators a selective advantage in breach of EU state aid rules. The Commission further argues that these activities can be distinguished from the operation of infrastructure for the exercise of the essential responsibilities of the State (e.g. safety, surveillance, traffic control), which fall outside the scope of EU state aid control.

Most French ports are fully exempt from corporate income tax. The Netherlands have made public companies subject to corporation tax as of 2016, but have not included their sea ports. In Belgium, a number of sea and inland waterway ports are exempt from the general corporate income tax regime but subject to a different tax regime, resulting in an overall lower level of taxation compared to other companies in Belgium.

–         Press release : EN (FR, NL, DE)

2.      Germany and Australia conclude first “post-BEPS” double tax treaty

Germany and Australia have concluded a new double tax treaty including a number of anti-BEPS measures part of the final OECD Recommendations of October 2015. In the area of Permanent Establishment (PE), the Treaty includes a rule to prevent artificial fragmentation of PE, new rules to determine a dependent agent PE (as has been pointed out, the latter are not fully in line with the OECD Recommendations), a rule addressing the splitting up of contracts for construction or installation PEs, and the inclusion of a new rule on activities having a preparatory or auxiliary character. The Treaty also includes a principal purpose text and provides for binding arbitration in case of disputes (except where the principal purposes test applies).

–        Text of the Tax Treaty : EN

3.      VAT and Digital Single Market: EP vote and anticipated VAT Action Plan

On 19 January 2016, the European Parliament adopted an own-initiative report on the Digital Single Market. The EP favours the Mini One-Stop Shop (MOSS) system but suggests that there should be a threshold for SMEs. The report also asks the European Commission to propose a change to the VAT Directive allowing member states to reduce VAT rates for the press, digital publishing, e-books and on-line content. The EP has also used the occasion to express once more its support for a CCCTB.

The Commission is expected to propose an Action Plan for an efficient and fraud-proof definitive VAT regime on 8 March 2016. The Commission confirmed that it would also look at the option of the reverse charge mechanism, reportedly at the request of Czech Republic.

–         Text adopted: EN (all EU languages), see paragraphs 47-51

4.      EU Council strategic agenda for Dutch, Slovak and Maltese presidencies trio

The current Dutch presidency of the EU Council and the two upcoming Council presidencies of Slovakia and Malta have published a joint “strategic agenda” demonstrating the three countries` commitment to ensure consistency and progress in the work of the EU Council for the next 18 months. Tax items mentioned include, i.a., improving exchange of tax information, and advancing the upcoming European Commission initiatives on (1) an anti-BEPS package to be presented on 27 January 2016, (2) the VAT Action Plan and (3) a CCCTB proposal expected in summer 2016.

–         Strategic agenda: EN

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The selection of the remitted material has been prepared by Piergiorgio Valente / Filipa Correia / Rudolf Reibel

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18 January 2016                                                                                                                                                     

  1. Eurostat 2014 Tax Revenue Statistics: Tax-to-GDP ratio in Europe on the rise

On 15 January 2016, the European Commission´s statistical office Eurostat published its updated Tax Revenue Statistics for the EU countries, Iceland, Norway, Serbia and Switzerland, including new data for 2014. The figures demonstrate a rise in the overall tax-to-GDP ratio, meaning the sum of taxes and net social contributions as a percentage of GDP, from 39.9% to 40% in the EU. The ratio is higher in the Eurozone (41.5%, up from 41.2%) and highest in Denmark (50.8%), followed by Belgium and France (both 47.9%). At the opposite end of the scale, Romania (27.7%), Bulgaria (27.8%) and Lithuania (28.0%) registered the lowest ratios. Due to progressive tax rates, tax-to-GDP ratios often rise in times of economic recovery.

The figures also contain breakdowns by tax categories and by levels of government, revenues in absolute terms and historical data since 1995.

–         Eurostat Tax Revenue Statistics: EN (including more linked documents)

–         Eurostat press release: EN

2.      Advocate-General: Import VAT should be paid on goods unduly removed from customs warehouse and re-exported

On 12 January 2016, the EU Court of Justice (CJEU) Advocate-General Campos Sánchez Bordona issued his opinion in the joined German preliminary ruling cases Eurogate Distribution and DHL Hub Leipzig, C-226/14 and 228/14, stating that imported goods removed from a customs warehouse and re-exported without complying with the necessary customs formalities should be subject to import VAT, and that the warehouse keeper or carrier can be held liable, even if he could not legally dispose of the goods.

–        Opinion: DE (several EU languages, not EN)

  1. Advocate-General: Outsourced handling of insurance claims should not be exempt from VAT

On 23 December 2015, Advocate-General Kokott delivered her opinion in the Polish preliminary ruling case Aspiro, C-40/15. Aspiro assesses for insurance companies the validity of claims made by policyholders and the amounts to be paid, without having a contractual relation to these clients. According to the opinion, such outsourced activity should not fall under the VAT exemption.

–        Opinion: PL (several EU languages, not EN)

  1. Advocate-General: VAT liability does not have to enjoy precedence in liquidation

On 14 January 2016, Advocate-General Sharpston issued her opinion in the Italian preliminary ruling case C-546/14, Degano Trasporti, on whether a liquidation process under Italian law which would result in only partial recovery of VAT violates´s the country´s duty to effectively recover the tax. The opinion finds that EU law does not require member states to grant VAT debts preferential treatment over all other categories of debt. In exceptional circumstances, a member state may reasonably consider it legitimate to waive full payment of a VAT debt. Where an undertaking is in financial difficulties, other categories of debt such as wages, social security contributions or maintenance payments may deserve higher protection.

National law may also allow an arrangement with creditors involving liquidation of the assets without offering full payment of the state’s VAT claim if conditions are attached to such arrangement to safeguard the state´s interest.

–        Opinion: EN (All EU languages)

–        Press release: EN (several languages available)

  1. Call for applications: Second term of Tax Good Governance Platform

On 15 January 2015, the European Commission issued a call for applications for a second term of its “Platform for Tax Good Governance, Aggressive Tax Planning and Double Taxation”, a forum set up in 2013, in which representatives of businesses, tax professionals and NGOs discuss current tax policy matters with the EU member states, moderated by the Commission. CFE is a member of the Platform. Applications have to be submitted by 15 February 2016.

–         Call for applications : EN/DE/FR

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The selection of the remitted material has been prepared by Piergiorgio Valente / Filipa Correia / Rudolf Reibel

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