CFE’s Tax Top 5 April

 

Press Release 2016_02

Brussels, 25 April 2016

CFE presents the final Report of the Model Taxpayer Charter –

10 principles for greater fairness in taxation

The CFE (Confédération Fiscale Européenne), the European federation of tax advisers, is proud to announce the publication of the final version of the Model Taxpayer Charter. The Charter, which is based on good tax practice, strongly advocates a balanced approach between taxpayer rights and responsibilities

The Charter builds on a survey in 41 countries, which reviewed existing taxpayer rights and responsibilities. The consultation draft was discussed with the European Commission, the OECD and the UN Tax Committee. The Final Report takes into account feedback received from these organisations as well as comments following a broad consultation of tax administrations, academia and other stakeholders.

Ian Hayes, one of the three main authors said:

“The principal purpose of the Charter is to foster a relationship of mutual trust, respect and responsibility between taxpayers, tax advisers, tax administrations and the State. By so doing the costs of compliance will be reduced, the quality and efficacy of tax collection will be increased, the confidence of the taxpayer in tax systems and administrations will be boosted and all taxpayers can aspire to equal treatment without bias or preference.”

The Charter has been written to provide a definitive global benchmark for good tax governance – for governments administrations and taxpayers.

The Model Charter is part of a Final Report including a list of Fundamental Principles (see Annex), informally called the “Ten Commandments”: ten key rights and responsibilities of taxpayers and tax administrations.

The printed version of the final report on the Model Taxpayer Charter was first presented at the CFE Forum in Brussels on 21 April 2016, titled “Rebuilding international taxation: How to square the circle?”

The Charter and the Final Report can be accessed online: www.taxpayercharter.com

For more information please contact:

CFE

Uta Gayer, Head of Office

188A, Av. de Tervuren

B-1150 Bruxelles

tel: +32 2 761 00 91 / fax: +32 2 761 00 90

brusselsoffice@cfe-eutax.org / www.cfe-eutax.org

Note for editors:

The CFE is the umbrella organisation of the tax adviser profession in Europe. It was founded in 1959 and embraces 26 national organisations from 21 European countries and within them approximately 200,000 tax advisers. CFE consider its functions to be to safeguard the professional interests of tax advisers and to assure the quality of tax services provided by tax advisers and to exchange information about national tax laws and professional law and to contribute to coordination respectively of tax law in Europe.

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25 April 2016                                                                                                                                              

  1. EU Finance Ministers settle on pilot project for the automatic exchange of information on ultimate beneficial owners

Ministers at the informal ECOFIN Council on 22 April 2016 agreed to enter into a pilot project for the automatic exchange of information on ultimate beneficial owners as a follow-up to last week’s letter by the so-called G5 (The UK, Germany, Spain, France and Italy) expressing that group´s intention to embark on such pilot project.

The experience from this project should feed into an OECD- and FATF- (Financial Action Task Force) led development of a global standard and interlinked registries containing full beneficial ownership information.

European Commissioner Dombrovskis highlighted that the Commission will also follow-up on the mandate to explore ways to introduce disincentives for those who give advice in tax evasion planning and elaborate tax evasion schemes.

Media report that the meeting has revealed splits among countries such as France and the UK which support the publication of country-by-country tax information by large multinationals, proposed by the Commission on 12 April, and countries like Austria, Germany and Malta which are opposed to the proposal which requires qualified majority in the EU Council.

The European Commission also intends to table a revised proposal for the Anti-Money Laundering Directive, in the context of the fight against terrorism financing.

On tax havens blacklisting, the Dutch Council presidency is aiming at an agreement on a common EU methodology in May.

–        Press release EN

–        ECOFIN: Dutch EU presidency: line to take EN

–        What the papers say: Reuters; Out-law.com

2.      Linking up IT systems to new VAT requirements

Another topic addressed at the informal ECOFIN council meeting on 22 April was dedicated to the new VAT Action Plan and the need for enhanced cooperation between VAT tax administrations in the EU member states. Upgrading and linking IT systems appears to be crucial in order to allow tax authorities to get necessary information faster. The European Commission aims to finalize soon a feasibility study on the Social Network Analysis tool, also called Transaction Network Analysis (TNA).

–        Press release EN

3.      San Marino tax agreement approved by EU Council

On 21 April 2016, the EU Justice and Home Affairs Council approved the conclusion of an agreement with San Marino to fight tax evasion, requiring the EU member states and San Marino to exchange bank account information automatically, applying measures equivalent to those in an EU Administrative Cooperation Directive.

–        Press release all languages

4.      Bermuda signs agreement on CBCR to tax authorities

Bermuda signed the OECD Multilateral Competent Authority Agreement for the sharing of country-by-country reports drawn up in line with the Recommendations on BEPS Action 13, bringing the number of signatory countries to 33.

–        Press release: EN

5.      Israel extends mandatory tax planning disclosure requirements

Since the beginning of this year, new tax planning disclosure rules apply to tax advisers in Israel: While certain transactions considered as “tax planning” were already subject to disclosure since 2006, the existence of a written professional opinion regarding transactions, potentially resulting in a tax saving, must now be reported as well, including the transaction or activity to which the opinion relates and its estimated tax impact. A reporting obligation is triggered by an opinion for which fees exceed an equivalent of roughly € 24,000 or for which fees are contingent on the “tax benefit”. Opinions containing a legal position contrary to views published by the tax administration must be disclosed when the tax benefit exceeds roughly € 1.2 m in one year, or € 2.4 m over four years.

In the EU, Ireland, Portugal and the UK have introduced tax planning disclosure requirements. The OECD, in its Final Recommendations on BEPS Action 12, gives recommendations on disclosure requirements but refrains from commenting on whether countries should or should not introduce them.

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

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18    April 2016

  1. CFE Forum 2016: “Rebuilding international taxation: How to square the circle?”

The CFE Forum takes place in Brussels on Thursday, 21 April 2016 at the Representation of the State of North Rhine-Westphalia to the European Union, Rue Montoyer 47, in Brussels.

The Forum will put a focus on BEPS implementation and the discussion on EU level.

The finalisation of the BEPS project has provided go­vernments with materials, tools and blueprints for re­applying the basic principles of international taxation like economic substance, permanent establishment and value creation. Yet it is far from clear how this lar­ge-scale project should be implemented: how to sha­pe the new provisions so that they are fit for purpose? How can the implementation effort be coordinated in­ternationally and achieve its political objectives? And how can one assure that the reconstruction does not lose sight of the taxpayers who are going to be sub­ject to this new regime?

It will be crucial for both com­panies and tax authorities to clearly understand the concepts, and how they interact, in order to ensure that reasonable transactions are not deemed to be abusive.

Where traditional concepts are revised and tax rulings are under pressure, new ways of crea­ting legal certainty and ensuring confidentiality must be explored.

The CFE Forum 2016 will address these pressing topics both for direct and indirect taxes, and will help companies and their tax advisers prepare for the future.

High-level speakers from the European Commission, the OECD and national tax administra­tion have confirmed as well academia, business and tax advisers.

–         Link to all relevant information such as programme, registration and hotel reservation EN

2. European Commission unveils its proposal on public country-by-country reporting

On 12 April 2016, the European Commission tabled the legislative proposal for public country-by-country reporting of tax information. Please find all relevant links on the website of DG FISMA. Please note that the text of the proposal is still in a preliminary version.

–        Link to press conference EN

–        Link to press release EN (All EU languages available)

–        Questions and answers EN (FR available)

–        Message by Jonathan Hill, Member of the European Commission, EN

–        Provisional version of the text of the proposal EN; FR; DE

–        Executive Summary DE;EN

–        Impact assessment EN

–        Synopsis report on the consultation activities: All EU languages available

Main features of the proposal are:

All multinationals (EU and non-EU companies) with a global annual turnover exceeding € 750 million that have branches or subsidiaries in the EU would be required to publicly disclose information on:

–        the nature of the group´s activities,

–        the number of employees,

–        the total net turnover made, which includes the turnover made with third parties as well as between companies within a group,

–        the profit made before tax,

–        the amount of income tax due in the country as a reason of the profits made in the current year in that country,

–        the amount of tax actually paid during that year,

–        and the accumulated earnings.,

on an annual basis. Reporting should also include explanations on discrepancies between the amounts of income tax actually paid and income tax accrued.

The information has to be provided for each EU member state in which the multinational operates. For non-EU countries, aggregated information may be provided. The proposal provides for stronger transparency requirements for companies’ activities in countries which do not observe international standards for good governance in the area of taxation. Reportedly, this is a last-minute addition in reaction to the controversy around “Panama Papers”. These third countries will be determined using a common EU screening process that has been announced as part of the Anti-Tax Avoidance Package of 28 January but still needs to be developed.

The information will have to be available for at least 5 years on the company´s website and in an EU business register.

Country by country reporting to tax administrations by multinationals (also applying the € 750 million turnover thresholds, in accordance with the OECD BEPS 13 Recommendations) has already been proposed by the Commission on 28 January, as part of its Anti-Tax Avoidance Package. That proposal also provides for exchange of this information among member states. A political agreement on that proposal in the EU Council has already been reached on 8 March 2016.

What the papers say:

–        The Guardian: EN

3. Follow-up on Panama Papers: Tax administrations meeting at the OECD

Senior tax administration officials from all over the world gathered on 13 April at the Joint International Tax Shelter Information and Collaboration (JITSIC) Network of the OECD in Paris in order to explore opportunities for obtaining data, co-operation and information-sharing in light of the “Panama Papers”. JITSIC is a grouping of tax officials who exchange views, information and practices at an operational level. It is a network of the OECD Forum on Tax Administration.

According to press reports of 16 April 2016, the UK has asked the OECD to take the lead in drafting a global tax havens black list.

–        OECD press release EN

–        Report on “City a.m.” website: EN

4.      OECD report to G20 calls for further steps to ensure global standards on tax transparency

A report recently delivered by the OECD Secretary-General’s to the G20 Finance Ministers calls for additional steps to ensure that all countries and jurisdictions immediately endorse and implement all global standards devised and implemented by the Global Forum on Transparency and the Exchange of Information for Tax Purposes. So far, a number of jurisdictions have yet to properly implement the exchange of tax information on request, first agreed in 2009. It also notes that a number of others have refused to commit to the new standard for automatic exchange scheduled to go into effect in 2017-18.

–        OECD report: EN

–        OECD press release: EN (FR available)

5.      New EP committee set up on Panama Papers

On 14 April 2016, the European Parliament´s Conference of Presidents, uniting the EP president and political group leaders, agreed to set up an inquiry committee to investigate the information from the so-called Panama Papers. The mandate will be determined on 4 May by the Conference of Presidents to be followed by a vote at the plenary session in Strasbourg in May.

–        EP press release: EN; FR

6.      Judgement ECJ on Sparkasse Allgäu:  Freedom of establishment does not preclude notification obligations on inheritance tax

On 14 April 2016, the Court of Justice of the EU decided in Case C‑522/14 on a German request for a preliminary ruling made in proceedings between Sparkasse Allgäu and the Kempten tax office concerning the refusal of that credit institution to disclose to the Kempten tax office information relating to the accounts held with its dependent branch established in Austria by persons who, at the time of their death, had their place of residence for tax purposes in Germany.

The Court of Justice’s ruling states that “Article 49 TFEU [freedom of establishment] must be interpreted as not precluding legislation of a Member State which requires credit institutions having their head office in that Member State to notify the national authorities of assets held or managed at their dependent branches established in another Member State in the event of the death of the owner of those assets who is resident in the first Member State, in the case where there is no similar notification obligation in that second Member State and credit institutions there are subject to banking secrecy breach of which constitutes a criminal offence.”

–        ECJ Case C-522/14 judgement: EN (all languages available)

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

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11 April 2016

1.      European Commission publishes VAT Action Plan

On 7 April 2016, the European Commission tabled its VAT Action Plan aiming to modernise the current EU VAT system. The Action Plan does not yet contain any legislative proposals but sets out the Commission´s upcoming initiatives aiming to make the VAT system simpler, more fraud-proof and business-friendly.

The Action Plan sets out the following main measures:

–         key principles for a future single destination-based European VAT system, according to which the supplier of goods will collect the tax from his customer, treating domestic and cross-border supplies equally. This would be supported by a one-stop-shop system extending to all cross-border B2B supplies;

–         short-term measures to tackle VAT fraud improving existing cooperation tools such as Eurofisc, to enable member states to carry out joint risk assessments and audits;

–         update the framework for VAT rates and set out options to grant member states greater flexibility in setting them;

–         plans to simplify VAT rules for e-commerce in the context of the Digital Single Market Strategy and for a comprehensive VAT package to make life easier for SMEs.

Concerning VAT rates, the Commission argues that the current framework (a minimum standard rate of 15% and two reduced rates of at least 5% for certain goods and services) is outdated and does not allow newly emerging services such as e-books from benefiting from reduced rates, presenting two options for reform:

–         to maintain the minimum standard rate of 15% and revise the list of reduced VAT rates, or

–         to grant member states more authority in determining their VAT rates. The required minimum standard rate would be abolished together with the list of reduced rates.

In cross-border e-commernce, the Commission will present a legislative proposal to modernise and provide simplification, using a one-stop shop system also for tangible goods bought online.

The Communication also recommends government measures to facilitate voluntary taxpayer compliance and to offer taxpayers digital accounts.

–        VAT Action Plan, dedicated European Commission website: EN (DE, FR available)

–        Communication “on an action plan on VAT: Towards a single EU VAT area – Time to decide”: EN/DE/FR

–        Press release: EN (All EU languages)

–        Commission announcement: “20 measures to tackle the VAT gap”: EN

–        Questions and answers: EN (FR available)

2.      Press: European Commission to strengthen public country-by country reporting

In March, a draft of the European Commission’s proposal to oblige companies to publish country-by-country tax information was leaked to the press. According to the Financial Times, this earlier draft required country-by-country disclosure only for activities within the EU, thus allowing companies to present aggregated information for the rest of the world, to the disappointment of tax justice campaigners.

A revised leaked version following the “Panama Papers” suggests that changes have been introduced to disallow business which have subsidiaries in tax havens to limit their country-by-country breakdown to EU states. In its Anti-Tax Avoidance Package of 28 January, the Commission has announced work on common EU criteria to define tax havens and possible sanctions.

The ECOFIN Council is expected to deal with the proposal in June.

–       Financial Times article (reserved to subscribers): EN

3.      CJEU:  VAT liability does not have to enjoy precedence in liquidation

On 7 April 2016, the CJEU delivered its judgment in case C-546/14, Degano Trasporti, on whether a liquidation procedure which would result in only partial recovery of VAT, violates a member state´s duty to effectively recover the tax.

The judgement concludes that EU law does not require member states to grant VAT debts preferential treatment over all other categories of debt. An insolvent trader may apply to a court to open a procedure for an arrangement with creditors for the purpose of settling its debts by liquidating its assets, in which that trader offers only partial payment of a value added tax debt and establishes by an independent expert that the trader’s bankruptcy would not result in a greater part of the VAT debt would to be repaid. The CJEU followed the opinion by Advocate-General Sharpston of 14 January 2016.

–          CJEU judgment (All EU languages): EN

–          Opinion: EN (All EU languages)

4.      Follow-up on “Panama Papers”

Last week´s data leak dubbed “Panama Papers” which revealed ownership information on 214,000 shell companies in the British Virgin Islands, Panama and other jurisdictions, and exposed names of politicians and other prominent persons, keeps producing news throughout the EU and beyond:

The UK Financial Conduct Authority (FCA) has asked 20 banks and financial institutions to reveal, by mid-April, any links to the Panama law firm from which the leaked documents originate and to that firm´s offshore clients. The UK opposition has asked to establish direct rule in the UK´s crown dependencies to stop tax evasion.

The French banking supervisory authority ACPR has asked the French banks for additional reporting on their activities in countries considered tax havens. France has also decided to put Panama back on its list of uncooperative countries, due to the country´s alleged poor compliance with a bilateral agreement on tax cooperation.

France, Spain and Australia have initiated investigations into possible tax fraud and money laundering, as a result of the revelations.

Germany, according to press reports, is planning disclosure obligations for tax-saving schemes and a change to limitation periods for tax evasion; these would only commence once the taxpayer has complied with his reporting obligations.

Panama so far has not committed itself to participate in the international automatic exchange of certain bank account information (OECD Common Reporting Standard). However, only in February 2016, the inter-governmental Financial Action Task Force had removed Panama from its grey list of countries lagging behind in the fight against money laundering and terrorism financing.

With the implementation of the 4th EU Anti Money Laundering Directive which has to be completed in June 2017, EU member states are obliged to set up transparency registers of beneficial owners of their legal entities and, with some limitations, also for trusts. These registers will be accessible for competent authorities, obliged entities such as tax advisers, and (in the case of legal entities) for persons and organisations having a legitimate interest.

The OECD is planning to host a special project meeting on “Panama Papers” on 13 April.

–        Dedicated website of the International Consortium of Investigative Journalists: EN

–        OECD press release, 8 April 2016: EN/FR

–        4th EU Anti Money Laundering Directive: All EU languages

Press:

–        Le Monde article, 7 April 2016: FR

–        The Telegraph article, 7 April 2016: EN

–        Die Welt article, 10 April 2016: EN

–        Yahoo/AFP article, 5 April 2016: EN

–        Euractiv article, 5 April 2016: DE

–        Statistical data on “Panama Papers”: EN

–        Politico article, 4 April 2016: EN

5.      US announces measures against “tax inversion” deals

The U.S. Department of Treasury´s announcement of 4 April 2016 of its intention to make “tax inversion” deals, by which corporations relocate their headquarters to countries with a lower tax rate, less financially appealing, has led to the calling off of a planned merger between pharmaceutical companies Pfizer (US) and Allergan (Ireland). In the past couple of years, several US companies have changed tax domicile through an acquisition of a foreign company to profit from lower tax rates abroad. Around 23 tax inversion deals took place since 2012, according to the US Congressional Research Service. Irish-based corporations have been very popular, as they allow the firms to benefit from the Irish corporate tax rate of 12.5%, instead of the 35% rate of US corporate tax.

–        The Guardian article, 5 April 2016: EN

–        Irish Times article, 8 April 2016: EN

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

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4 April 2016

1.    CFE comments on the BEPS Final Recommendations and the proposal for an EU Anti-Tax Avoidance Directive

The CFE has issued Opinion Statements on the two major initiatives in international corporate taxation in Europe: On 25 March 2016, it commented on the European Commission´s proposal of 28 January 2016 for an Anti-Tax Avoidance Directive, and on 1 April 2016, it issued seven Opinion Statements on the OECD´s Final BEPS Recommendations of 5 October 2015. The Statements on BEPS were issued together with AOTCA, the Asia-Oceania Tax Consultants´ Association.

–        CFE Opinion Statement FC 3/2016 on the Anti-Tax Avoidance Directive: EN

–        CFE/AOTCA Opinion Statement FC 4/2016 on the Final BEPS Recommendations (overall statement), and Opinion Statements FC 4a- 4f/2016 on specific BEPS Actions (Actions 1, 4, 5, 8-10, 12 and 14): EN

2.    Discriminatory taxation of legacies to foreign charities: Germany amends its legislation

Germany is going to change its tax law to allow donations to foreign charities the same inheritance tax treatment as donations to German charities. This commitment has led to the closing of an infringement proceeding against the country on 25 February 2016, as the Commission announced on 31 March.

Previously, domestic charities had been granted an exemption from German inheritance tax, whereas similar charities established in other EU/EEA States only enjoyed this exemption if their state of residence granted an equivalent or reciprocal exemption to comparable German charities.

–        List of infringement cases: EN (see Germany)

3.      Public consultation on start-ups in the EU

On 31 March 2016, the European Commission launched a public consultation with a view to improve the environment for start-ups in the EU. This consultation addresses entrepreneurs as well as other stakeholders and is part of the EU Single Market Strategy. Deadline for this consultation is 30 June 2016.  The Single Market Strategy also takes up ideas to simplify VAT requirements and puts forward a proposal on business insolvency.

–        Consultation website: EN

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

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