CFE’s Tax Top 5 October

  

  31 October 2016 

  1. Prominent line-up of speakers confirmed for this year’s CFE PAC conference

This year’s Professional Affairs Conference co-organised with our Slovenian member organisation ZDSS brings together a prominent line-up of speakers, including representatives from the Directorate General TAXUD of the European Commission, OECD, the European Parliament, national governments and associations.

Considering that the European Commission is suggesting EU-wide mandatory disclosure obligation, which goes further than the OECD proposed standards, lively discussion is anticipated. The Ljubljana conference is thus an opportunity to discuss the follow-up of OECD BEPS Action Point 12.

To find your way to Ljubljana, please follow this link.

  1. European Commission proposes major corporate tax reform

The European Commission adopted a package of corporate tax reform proposals on 25 October 2016 including a re-launch of the Common Consolidated Corporate Tax Base (CCCTB). It is envisaged that the re-launched CCCTB will be implemented in two steps. The directives are will be mandatory for multinational companies with a consolidated revenue of EUR 750 million.

Under the CCTB directive, the EU would adopt common rules to determine the tax base in the member states, with cross-border loss relief possibilities. The proposal also envisages deduction of expenses for research and development purposes.

CCCTB directive envisages consolidation for corporate tax purposes of multinational group profits, with formulary apportionment replacing the current transfer-pricing rules as the ultimate goal.

The ATAD II directive proposes extending the scope of the anti-abuse measures targeting hybrid mismatch arrangements to arrangements with third countries. The scope of the current ATAD is limited to arrangements within the EU under the anti-tax avoidance legislation adopted earlier in June.

The European Commission also proposed a Directive on double taxation dispute resolution mechanisms in the EU. The proposal aims to address shortcomings in the EU Arbitration Convention, imposing clearer and enforceable deadlines on member states to reach agreement on a solution to double taxation. Under the directive, a period of 15 months is envisaged for the arbitration phase of a tax dispute.

CCTB Directive: EN

CCCTB Directive: EN

Directive on double taxation dispute resolution mechanisms: EN

  1. European Commission published its annual work programme

The European Commission published its annual work programme for 2017. The Work Programme outlines Commission’s new initiatives and priorities for the year ahead. The Commission’s working programme focuses on the priorities coming from the political guidelines adopted earlier. With relevance for taxation, the Commission plans to continue working on the Single Market strategy and the proposals for fairer taxation of companies.

The work programme of the European Commission for 2017 is available here.

  1. CJEU to hold a public hearing in C-682/15 Berlioz – taxpayers’ rights case

C-682/15 Berlioz Investment Fund S.A. v Directeur de l’administration des Contributions directes is a preliminary ruling  from the Cour administrative in Luxembourg, lodged on 19 December 2015. The case concerns the application of EU law and the Directive of administrative cooperation in relation to administrative penalties for holders of information questioning the foreseeable relevance of information to be transferred to third countries.

The public hearing is scheduled for 8 November 2016 at 9:30, at the Court of Justice of the EU in Luxembourg. Here is the link to the Court of Justice record.

  1. Panama signs the multilateral convention on assistance in tax matters

Panama is the 150th jurisdiction to sign the world’s leading instrument to boost transparency and combat cross-border tax evasion, according to the OECD. The Convention is seen as a crucial instrument for implementation of OECD’s standards for automatic exchange of financial account information in tax matters, set to become effective as of 2017. It is also important instrument complementing OECD’s BEPS project and a tool to fight illicit financial flows.

The multilateral convention allows for administrative assistance in tax matters covering areas from automatic exchange of information, joint tax inspections to assistance in tax collection.

More on the following link.

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

Aleksandar Ivanovski / Mary Dineen

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24 October 2016

  1. OECD launches tax certainty questionnaire

The OECD has launched a Business Survey inviting businesses and other stakeholders to give their views on tax certainty. The survey is available online and should only take 15-20 minutes to complete. It is strictly confidential and anonymous.

The Business Survey has been launched in response to the OECD receiving a mandate from the G20 leaders and Finance Ministers to work on solutions to support certainty in the tax system with the aim of promoting investment, trade and balanced growth. The benefits of tax certainty in promoting investment trade and balanced growth were emphasized at the recent G20 Summit at Hangshou in September.

The survey, which builds on a survey undertaken by the European Tax Policy Forum (ETPF) and the Oxford University Centre for Business Taxation (OUCBT) in early 2016 consists of five sections:

  1. General, broad information on the individual respondent (whilst preserving anonymity)
  2. Characteristics of the firms (size, sector and geographical location)
  3. Economic factors affecting business decisions, including but not limited to taxation
  4. Sources of uncertainty in the tax system
  5. Measures to enhance certainty in the tax system

The survey will run from 18 October to 16 December 2016. It represents an opportunity to identify specific tax policy issues for the future G20 tax agenda and to contribute to creating practical and concrete solutions for a more certain and predictable tax system. The results of the survey will be published and presented to theG20 leaders in 2017.

The Business Survey is available at the following link:  link

An online Q&A session will take place, tomorrow, Tuesday 25 October at 15.00 (CEST). To register please complete registration form available at the following link: link

  1. Commission to publish proposed CCCTB Directive

The proposed directive on a Common Consolidated Corporate Tax Base (CCCTB) will form part of a package being presented by Commissioner Moscovici to the European Parliament tomorrow. It is expected that the details of the proposal will be outlined at a Commission press conference at 11.00 (CEST) on Wednesday 26 October. The proposed Directive will be published along with a proposed Directive on dispute resolution and a proposal for a Directive on hybrid mismatches involving third countries which will amend the ATAD. These measures follow on from the Commission’s Action Plan for Fair and Efficient Corporate Taxation which was launched in June 2015.

The relaunched CCCTB envisages an incremental approach which will firstly focus on securing a mandatory set of rules for the common base. Only when this is agreed shall work commence on the more controversial area of consolidation.

  1. OECD launches global review of MAP programmes in an advancement of the tax certainty agenda as part of the G20/OECD BEPS project

On 20 October 2016 the OECD released the key documents that will form the basis of the MAP peer review and monitoring process set out under Action 14 of the BEPS Action Plan. The documents and processes envisaged therein have been approved by the 84 countries which have to date joined the BEPS inclusive framework, it is these countries which will now be assessed pursuant to the program. The key documents include the Terms of reference and the Assessment Methodology for the review.

The group agreed to terms of reference that transform the BEPS minimum standards on dispute resolution into 21 items, covering:

  • prevention of tax treaty disputes;
  • availability and access to the mutual agreement program (MAP) for resolving tax treaty disputes;
  • resolution of MAP cases; and
  • implementation of MAP agreements.

The Assessment Methodology involves a two-stage review process Stage one of the review process will judge countries based upon whether they have the legal framework to apply the standards and whether the standards are applied in practice. Stage two of the review will involve an assessment of whether the countries addressed any shortcomings identified in stage one. In light of the fact that taxpayers are the primary users of the MAP, taxpayers will be asked to comment on their experiences with the countries’ MAP programs for tax treaty dispute resolution in order to facilitate the effectiveness of stage two of the process.

The documents also identify twelve best practices for tax treaty dispute resolution under MAP. These were not included in the concluded BEPS Plan but are an addition as part of the review. Adherence to these standards will not affect a country’s ranking.

The following is a link to the key documents: Link

  1. OECD releases tool for implementation of Common Reporting Standard (CSR)

On 20 October the OECD introduced a new database containing a list of the bilateral relationships that exist between jurisdictions currently subject to CSR. The introduction of the database represents a further step to implement the OECD Common Reporting Standard.

The following is a link to the database: Link.

  1. ECJ decision precludes tax authorities from denying a tax exemption by reason of a failure to comply with a procedural obligation.

On 20 October the ECJ released its decision in the German case of Josef Plökl (Case C – 24/15). Following the Opinion of the Advocate General the Court held that the tax authorities of a Member State of origin is precluded from refusing to grant a VAT exemption on an intra-community transfer from VAT on the ground that the taxable person failed to provide a VAT Identification number issued by the Member State of destination in circumstances where the other conditions for the granting of the exemption were satisfied and no specific evidence of tax evasion was present.

The text of the judgment is available at the following link and also available in other languages. Link

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The selection of the remitted material has been prepared by Piergiorgio Valente / Filipa Correia /  Aleksandar Ivanovski / Mary Dineen

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17 October 2016

  1. Ireland outlines key grounds of appeal against EC’s Apple State aid ruling

In a speech given to the Irish Upper House on 4 October 2016, the Irish Minister for Finance announced the primary arguments it will rely upon in its appeal against the EC’s Apple State aid decision.

The grounds to be relied upon are as follows:

  • The absence of a favourable tax treatment granted to Apple by Ireland;
  • The damage that being called into question may cause to Ireland’s credibility in the international tax debate;
  • The concern that the Commission is undermining the international tax principle of taxing value where it is created;
  • The fact that the concerned companies were not Irish tax residents;
  • The concern expressed by the US Treasury regarding Apple’s US tax liability reduction;
  • The contradiction of allowing other jurisdictions to tax the sums that Ireland is required to recover;
  • The encroachment of Member States’ sovereignty in tax matters and the uncertainty it creates for businesses; and
  • The absence of any right by Ireland to the EUR 13 billion of unpaid taxes claimed by the EC’s Apple State aid decision.
  1. The Platform for Collaboration on Tax launched in conjunction with the UN, IMF, OECD & World Bank Group

In a bid to  strengthen international cooperation in tax matters the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), the United Nations (UN) and the World Bank Group (WBG) created the Platform for Collaboration on Tax, a joint initiative aimed at increasing their cooperation on tax issues, with the aim of strengthening their capacity-building support, delivering jointly developed guidance and sharing information on operational and knowledge activities for the benefit of developing countries.

An event will be held at the UN Headquarters in New York on 21 October 2016 at which the four participating organisations will outline the objectives of the Platform to the UN delegates and set out the guiding principles for co-operation within the Platform and the primary activities which the Platform aims to implement. The presentation will also include a briefing on the joint report issued to the G20 entitled “Enhancing the Effectiveness of External Support in Building Tax Capacity in Developing Countries” – a publication which includes a series of recommendations and enabling actions to help ensure effective implementation and running of technical assistance programs.

  • Press release: EN
  1. CJEU: EU law prevents aggregation of separate partnerships

On 12 October 2016, the EU Court of Justice (CJEU) delivered its judgment in the Austrian preliminary ruling case Nigl and Others (C‑340/15), holding that EU law prevents aggregation of separate partnerships.

The case involved an attempt by the Austrian tax authority to view a number of family partnerships as a single taxable person and hence to deny them access to the Austrian “flat rate farmers” scheme.  In its decision, the CJEU concluded that EU law does not permit the amalgamation of the separate partnerships and treatment of them as a single taxable person, however, it concluded that EU law would allow use of the flat rate farmers scheme to be withdrawn from multiple partnerships such as those in the case, and that the withdrawal could have retrospective effect, subject to the national time limits for correcting VAT declarations.  As is ordinarily the case, it will be up to the national court to apply the CJEU’s conclusions on the European law points in the case, and the relevant national law.

  • Judgment: EN (All EU languages)
  • Advocate-General opinion: EN (All EU languages)
  1. Advocate General: aspects of Luxembourg’s cost sharing exemption rules infringe EU law

On 6 October 2016, CJEU Advocate-General Kokott released her opinion in the European Commission’s infringement proceedings against Luxembourg regarding the cost-sharing exemption  (C-274/45). According to the Commission, various aspects of Luxembourg’s domestic implementation of the EU VAT cost-sharing exemption infringed EU law.

The cost sharing exemption applies when two or more organisations with exempt and/or non-business activities join together on a cooperative basis to form a cost sharing group (CSG). EU law allows Member States to exempt supplies from the CSG to its members where certain criteria are met.

The Advocate-General broadly agreed with the Commission. In particular, she concluded that Luxembourg’s legislation does not restrict the CSG exemption to services ‘directly necessary’ for activities undertaken by its members. Further, if the CSG buys in services and charges these on to individual members, the member cannot deduct the VAT which should become irrecoverable at the level of the CSG just because the individual member has VAT recovery.

Luxembourg currently has an administrative concession which ignores purchases made in the member’s own name on behalf of the group. However, the AG considers that if the CSG member itself purchases services on behalf of the CSG, it does so as agent and therefore the VAT treatment of the onward charge should be the same as the services received by the member, meaning that the cost sharing exemption should not apply.

  • Advocate-General opinion: FR (available in most EU languages, not EN)

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

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10 October 2016

  1. CFE PAC Conference: “Involving tax advisers in fighting tax avoidance – What will change?” on 18 November in Ljubljana

On 18 November 2016, the CFE and its Slovenian member organisation ZDSS will host the 9th Tax Advisers´  Professional Affairs Conference in Ljubljana, dealing with recent initiatives at EU, OECD and national level to involve tax advisers in reporting tax avoidance, and to introduce disincentives for advisers who continue to promote it:

Mandatory disclosure rules for promoters of certain tax planning schemes to counter BEPS (base erosion and profit shifting) have been examined by the OECD, but the OECD has refrained from explicitly recommending countries to introduce such rules.

The European Commission is considering mandatory disclosure rules at EU level, going further than the OECD standard, and even mentioning possible publication of the information reported.

The European Parliament has asked for a European Code of Conduct for all advisers and mandatory disclosure rules for advisers involved with certain jurisdictions, as well as stricter sanctions for advisers engaging in unlawful practices.

Lastly, the UK tax administration is currently consulting on making promoters of tax avoidance pay for revenue lost to tax planning.

Speakers and discussants from the OECD, the European Commission and national governments, as well as recognised tax practitioners will present and discuss these recently proposed actions, dealing with the following questions:

–    Which of these seem best fit to achieve tax administrations´ aim to reduce tax avoidance?

–    Should such actions be a matter for the EU or the member states to regulate?

–    Will and should these actions lead to further regulation of the tax advisory activity?

–    Does a more regulated tax profession help government achieve its aim?, and

–    How can the taxpayer´s right to confidentiality and to receive advice by a trusted adviser be ensured?

Please check the dedicated CFE PAC Conference website for the programme and practical information: EN

  1. State Aid: Commission publishes Belgian “excess profit” decision

On 27 September 2016, the European Commission published its decision of 11 January 2016 on the Belgian “Excess Profit” tax exemption in which it concluded that this scheme amounted to illegal state aid to multinational enterprises.

The Excess Profit exemption scheme allows Belgian resident companies and permanent establishments of foreign companies that are part of a multinational group to reduce their tax base in Belgium by deducting from their actually recorded profit an estimated ‘excess profit’ based on the hypothetical profit a standalone company in the same sector. Companies had to apply for an advance ruling to be eligible for this regime. The Commission´s decision concerns 66 rulings issued between 2005 and 2014. The published decision also contains the names of companies that have benefited from the said regime.

  • Official Journal of 27 September 2016: EN (All EU languages available)
  • See short article in CFE European Tax & Professional Law Report December 2015 – February 2016: EN
  1. ECtHR: No Human Rights violation by search warrant based on evidence obtained in breach of the law

On 6 October 2016, the European Court of Human Rights decided that two German citizens whose home had been searched by police, the search warrant being based on evidence illegally obtained by bank employees in Liechtenstein and sold to the German secret services, could not claim a violation of Article 8 (right to respect for the home) of the European Convention on Human Rights.

The Court found that the search had been carried out in accordance with the law. It noted in particular the settled case-law of the German Federal Constitutional Court according to which there was no absolute rule that evidence which had been acquired in violation of procedural rules could not be used in criminal proceedings. According to the ECtHR, the search had also been proportionate because German law offered adequate and effective safeguards against abuse of powers by police, because tax evasion is a serious offence, because there was no indication that the German authorities had deliberately and systematically breached the law in order to obtain information for the prosecution of tax crimes, because the warrant had been explicit and detailed as concerned both the offence being investigated as well as the items sought as evidence, and, lastly, because the couple had not alleged any repercussions on their personal reputation as a consequence of the search of their home.

  • Judgment: EN
  • Press release: EN, FR
  1. VAT: CJEU decides on proportionality of national rules on concealment of supplies and revenues

On 5 October 2016, the EU Court of Justice (CJEU) held in the Bulgarian preliminary ruling case C-576/15, Maya Marinova, that where goods are not in the warehouse of the taxable person to whom they have been supplied and the relevant tax documents have not been recorded in the accounts of that taxable person, national law may allow tax authorities to presume that the taxable person has sold those goods to third parties and determine the taxable amount of the sale of those goods according to the factual information at hand pursuant to rules not provided for in the EU VAT directive. These national rules however may not go further than necessary to ensure the correct collection of VAT and to prevent evasion.

  • Judgment : EN (All EU languages)
  1. CJEU decides on VAT-exemption for plasma obtained from blood

On 5 October 2016, the CJEU decided in the German preliminary ruling case TMD (C-412/15) that VAT-exempt supplies of human blood do not include supplies of plasma obtained from human blood where that plasma is not intended to be used for direct therapeutic purposes, but exclusively for the manufacture of medicinal products.

  • Judgment: EN (All EU languages)
  • Advocate-General opinion: EN (All EU languages)
  1. EP: “Panama” Committee to host public hearing on 13 October

On 13 October 2016, from 9.00 to 12.30, the European Parliament´s Committee on Money Laundering, Tax Avoidance and Tax Evasion (PANA) will organise a public hearing with international and supranational organisations, to understand how international standards in the area of information exchange for tax purposes and Anti-Money Laundering are set, and which are the bodies and mechanisms which assess their effective implementation and enforcement.

  • PANA Programme : EN
  • PANA Registration : EN
  • PANA Webstreaming : EN
  1. OECD updates on tax transparency and beneficial ownership developments

On 7 October 2016, the OECD published a report to the G20 ministers of finance providing an update on the OECD work on tax transparency with a special emphasis on beneficial ownership information.

  • Report: EN
  1. GD Taxud and IMF to host conference on tax, investment and innovation on 17-18 November

On 17 and 18 November 2016, the European Commission´s Directorate-General Taxation and Customs Union and the International Monetary Fund will host a conference in Brussels titled ‘Taxation, Investment and innovation: a triptych for balanced growth’. It will discuss the role taxation can play in supporting investment, innovation and growth, including the questions:

  • Why and how does taxation matter for economic growth?
  • How can fiscal incentives support knowledge creation?
  • How can tax systems help grow innovation leaders?
  • Tax and the collaborative economy: what are the challenges and opportunities?, and
  • How will technological advances change taxation over the next decade?

The event is free of charge. Registration is required by 10 November 2016.

  • Press release: EN
  • Practical information: EN

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

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3 October 2016

  1. Commission requests Poland to implement automatic exchange of bank account information

On 29 September 2016, the European Commission published its September infringements package. The Commission called on Poland, among other actions in the package, to fully implement Council Directive 2014/107/EU on mutual assistance in the area of income and capital taxation. This Directive, which amends Directive 2011/16/EU on mandatory automatic exchange of information between national tax authorities, aims at strengthening administrative cooperation between Member States to better combat tax evasion and tax fraud. Member States were required to transpose these rules by 1 January 2016. In the absence of transposition of this Directive into national law in the required period, the Commission may refer Poland to the Court of Justice of the EU.

  • September infringement package press release: EN (All EU languages)
  1. OECD to hold public consultation meeting on transfer pricing

OECD will hold a public consultation meeting on transfer pricing matters on 11 – 12 October 2016 at the OECD Conference Centre in Paris. The consultation will cover attribution of profits to permanent establishments (PEs) and the revised Guidelines on profit splits. This OECD event focuses on issues dealt with under two recently published discussion drafts which discuss work under Actions 7, and 8-10 of the BEPS Action Plan. The CFE has commented on both of these discussion drafts.

  • Apply for registration to this event: Link
  • CFE Opinion Statement FC 12/2016 on the revised guidance on profit splits: EN
  • CFE Opinion Statement FC 13/2016 on the attribution of profits to PEs: EN
  1. European Commission State Aid Transparency policy brief

The European Commission´s Directorate-General Competition has published a policy brief summarising the existing State aid transparency provisions. The brief explains how the transparency provisions relate to the policy context of state aid control.  Specific provisions under the State Aid Modernisation programme require granting authorities at all levels to provide information about individual aid awards above €500,000.

For State aid in form of tax advantages, the notification period has been extended from six months to one year from the date of submission of the tax declaration.

  • Policy brief : EN
  1. Advocate-General Yves Bot delivers opinion in the “BFI” case (VAT Directive)

EU Court of Justice Advocate-General Yves Bot delivered his opinion on 29 September 2016 in the case of the Commissioners for Her Majesty’s Revenue and Customs v British Film Institute (BFI). The case concerned repayment of overpaid output VAT on the basis of the exemption of ‘cultural services’ in accordance with the Sixth VAT Directive. The Advocate General’s Opinion is suggesting that the EU Court of Justice should allow the national court to decide whether excluding BFI’s supplies from the exemption constituted a breach of “fiscal neutrality” principle thus preventing BFI from relying on “direct effect” of the EU law exemption during the period when the UK had failed to implement the EU law in its domestic legislation.

  • Opinion: EN (Available in most EU languages)
  1. CFE appointed member of the EU VAT Expert Group

On 30 September 2016, the European Commission appointed the CFE as a member of the VAT Expert Group for the Group´s third term (2016-2019). The VAT Expert Group is a group of organisations and individuals advising the European Commission on VAT legislation and policy. New CFE representatives will be Ms Trudy Perié from the Netherlands and Mr Jeremy Woolf from the UK.

A list of all new members of the VAT Expert Group is not yet available but will presumably be published on this website: EN

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

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