The Inland Revenue Department has just published a news item on its website regarding the year of assessment 2015 tax return for companies.
The following is the link to the news item https://ird.gov.mt/news.aspx?newsid=240
27 April 2015
1. CFE at European Parliament hearing on tax rulings and other issues
On 16 April 2015, CFE President Henk Koller was interviewed by members of the European Parliament´s Special Committee on Tax Rulings and Measures Similar in Nature or Effect (TAXE) on tax rulings and other matters related to the fight against tax evasion and tax avoidance, including tax advisers´ ethics, country by country reporting and the CCCTB proposal.
– Video recording : All EU languages (CFE contribution starts at 11 :18 hrs)
2. CJEU rules on services supplier´s right to VAT refund if the tax was also paid erroneously by the recipient
On 23 April 2015, the EU Court of Justice (CJEU) held in the Bulgarian preliminary ruling case C-111/14, GST Sarviz AG Germania, that the only person liable to VAT is the taxable person supplying the services where these services are supplied from a fixed establishment located in the member state in which the VAT is payable. The recipient of these services established in the same member state cannot be assumed liable, even if he has already paid the tax on the mistaken assumption that the supplier did not have a fixed establishment in that state. However, a supplier of services has a right to a refund of the VAT which he has paid when the recipient who has also paid the VAT in respect of the same services is refused the right of deduction on the ground that he did not have the corresponding tax document and any adjustment of tax documents is precluded under national law where a definitive tax adjustment notice exists.
– Judgment: EN (All EU languages)
3. Indirect Tax: CJEU rules on the definition of capital company
On 22 April 2015, the CJEU decided in the Polish preliminary ruling case C-357/13, Drukarnia Multipress, that a partnership limited by shares under Polish law must be regarded as a capital company in the sense of the Directive on Indirect Taxes on the Raising of Capital 2008/7/EC even if only some of its capital and members satisfy the conditions laid down by that provision.
– Judgment: EN (all EU languages)
4. CJEU rules on the taxable amount for calculation of VAT on an application of a building
On 23 April 2015, the CJEU ruled in the Belgian preliminary ruling case C-16/14, Property Development Company, that the taxable amount for the calculation of VAT on an application of a building that the taxable person has constructed is to be the purchase price, at the time the application is made, of buildings whose location, size and other essential characteristics are similar to those of the building in question. In that regard, it is irrelevant whether part of the purchase price is due to interest on borrowed capital. The judgment refers to the (former) “6th” VAT Directive.
– Judgment: EN (all EU languages)
5. CJEU: Sweden has to exempt postal services from VAT
On 21 April 2015, the CJEU decided in the infringement case C-114/14, Commission v. Sweden, that Sweden has to exempt public postal services from VAT. The country had refused to do so, arguing that a public postal services no longer exists in Sweden since the liberalisation of the sector in the 1990s and that a VAT exemption of one service provider only would give this provider an advantage over its competitors.
-Judgment: EN (all EU languages)
6. Commission publishes VAT Committee documents of last two meetings
The European Commission has published the working documents of the 102nd and 103rd VAT Committee meetings of 31 March and 20 April 2015. Matters dealt with include the implications of the CJEU judgment of September 2014 on VAT grouping in the Skandia case.
– VAT Committee agendas and meeting documents: EN
The selection of the remitted material has been prepared by Piergiorgio Valente / Filipa Correia / Rudolf Reibel
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20 April 2015
- CJEU: Germany cannot make tax deferral conditional on reinvestment of capital gains in Germany
The EU Court of Justice (CJEU) decided on 16 April 2015 in an infringement procedure against Germany (C-591/13) that German income tax rules making a deferral of taxation on capital gains from the sale of an asset of a permanent establishment located in Germany subject to the condition that those capital gains are reinvested in the acquisition of replacement assets of a permanent establishment within Germany are incompatible with the EU and EEA freedom of establishment.
- Judgment : EN (all EU languages)
- CJEU decides on the VAT treatment of ancillary charges in immovable property rent
On 16 April 2015, the CJEU has decided in the Polish preliminary ruling case C-42/14, Wojskowa Agencja Mieszkaniowa w Warszawie on the VAT treatment of charges by a landlord to a tenant for electricity, heating, water and waste disposal supplied by a third party. The CJEU clarified that the letting of immovable property and the provision of water, electricity and heating as well as waste collection accompanying that letting should normally be regarded as distinct and independent supplies that may require a separate VAT treatment, unless the elements of the transaction are so closely linked that they form a single, indivisible economic supply, which is for the national court to decide.
- Judgment: EN (all EU languages)
- CJEU rules on Romanian motor vehicle registration tax exemption
On 14 April 2015, the CJEU decided in the preliminary ruling case C-76/14, Manea, that Romania can impose a tax on imported second-hand motor vehicles at the time of their first registration in Romania and on vehicles already registered in the country at the time of the first transfer of the ownership within Romania. It is however not possible to exempt from this tax already registered vehicles for which a tax previously in force but found to be incompatible with EU law has been paid, as such exemption would favour non-imported second hand vehicles over imported ones.
–Judgment: EN (all EU languages)
– Advocate-General Opinion : EN (all EU languages)
30 March 2015
On 26 March 2015, the European Commission has sent a reasoned opinion to Belgium asking the country to provide for a possibility to deduct from the taxable income the income from financial instruments which have been sold, given as security or lent in the context of in rem securities or loans in cross-border situations. The Commission considers that the Belgian rules do not comply with the EU Parent-Subsidiary Directive.
On 26 March 2015, the European Commission has decided to refer Greece to the EU Court of Justice (CJEU) regarding two provisions in Greek inheritance tax legislation:
The first concerns bequests to non-profit organisations in another EU or EEA country. Greek law applies a preferential tax rate of 0.5% for certain Greek non-profit entities, whereas similar non-profit entities established in other EU/EEA states can only benefit from the preferential tax rate if legacies to Greek non-profit entities also have access to a preferential tax treatment in the other country. If such reciprocity is not met, the applicable tax rate varies between 20-40%, depending on the taxable value of the property.
The second case concerns an exemption of a primary residence from inheritance tax which is available only for taxpayers (and heirs) who live(d) in Greece.
On 25 March 2015, the European Parliament adopted a non-legislative “Annual Tax Report”, commenting on a wide range of issues currently discussed in EU and international tax policy such as automatic exchange of information, country-by-country reporting, tax rulings, the financial transaction tax, the CCCTB, tax havens, BEPS, specific regimes for income from intellectual property (“patent boxes”) and the recent revisions of the EU Parent-Subsidiary and Anti Money Laundering Directives. The report originally drafted by Greek MEP Eva Kaili seeks to strike a balance between promoting growth-friendly taxation and allowing non-harmful tax competition between states while fighting non-transparency, tax avoidance, tax evasion and fraud. The report does not fail to stress the governments´ role in encouraging complex tax planning by undertakings. The CFE has provided input to the process. A number of points, e.g. on the importance of legal certainty, clarity of the law and predictability of government action, on the confidentiality of information exchanged and business secrets, on the general usefulness of tax rulings, on the presumption of innocence and on the need for a European Taxpayer´s Code advocated by CFE have been included by MEPs in the final text.
The European Commission has sent a reasoned opinion asking France on 26 March 2015 to apply the normal VAT rate to products of agricultural origin which are not intended for use in food products or in agricultural production. France authorises the application of a reduced VAT rate for certain products used in the production of non-food industrial products.
The VAT cross border rulings project is a pilot project offering taxable persons who envisage cross-border transactions between two or more participating EU member states to ask for a binding advance ruling on the VAT treatment of these transactions. The pilot has started in June 2013 and has now be extended again, to continue until 30 September 2018. Only a limited number of EU member states have so far agreed to participate.
23 March 2015
On 18 March 2015, the European Commission has adopted its “Tax Transparency Package” including a proposal for amendment of the EU Directive on Administrative Cooperation in Direct Taxes, introducing automatic exchange of information on cross-border tax rulings and advance pricing agreements (APA) among EU member states. Information on advance tax rulings shall be exchanged as of 2016 on a quarterly basis using a predefined format. The information exchange on APAs shall also concern agreements concluded in the previous 10 years. The proposal does not contain any monetary or size thresholds. Excluded from the exchange are tax rulings issued only to individuals.
Moreover, the “Tax Transparency Package” includes a Communication on tax transparency to fight tax evasion and avoidance, mentioning possible further steps including country by country reporting of tax information and transparency requirements for aggressive tax planning arrangements. The package also mentions the repeal of the EU Savings Tax Directive which has become redundant since the inclusion of the OECD/G20 Common Reporting Standard in the Administrative Cooperation Directive in December 2014. Further measures include a review of the Code of Conduct on Business Taxation, work on quantifying more precisely the tax gap and promoting tax transparency at international level.
Before summer 2015, the Commission is planning a re-launch of the CCCTB proposal.
– Press release, 18 March 2015
– Legislative proposal COM(2015)135
– Communication COM(2015)136 on tax transparency to fight tax evasion and avoidance
– FAQs: EN
2. Tax transparency II: Commission concludes deal with Switzerland
On 19 March 2015, the European Commission concluded negotiations on an a new tax transparency agreement with Switzerland providing for automatic exchange of information in line with the new OECD/G20 global information exchange standard from 2018. Member States will receive, on an annual basis, the names, addresses, tax identification numbers and dates of birth of their residents with accounts in Switzerland, as well as a broad set of other financial and account balance information. The new agreement will be signed following authorisation by the EU Council and the Swiss government.
– Press release: EN
On 17 March 2015, the European Commission´s Expert Group on automatic exchange of financial account information published its first report. The group was created in October 2014 to assist the Commission in the implementation of automatic exchange of information in direct taxes.
– First Report: EN
– AEFI Expert Group, more information (meeting reports, membership etc): EN
4. Tax Transparency IV: Country by country reporting again on EP agenda
The European Parliament is again discussing the introduction of an obligation of large companies to make public, on a country by country basis, information on turnover, employees, profit or loss, taxes paid thereon and public subsidies received, in the context of a review of the rules on shareholder rights. Such amendment has been suggested in an opinion of the ECON Committee. The dossier is in the hands of the JURI Committee several members of which have also proposed introducing CBCR. The JURI vote is still due. As the dossier concerns the EU Accounting Directive, the ordinary legislative procedure applies in which the EP votes on equal footing with the EU Council.
– JURI draft report: Several languages
– ECON Opinion of 2 March 2015: EN
5. VAT: Commission updates information on national laws relating to MOSS
On 16 March 2015, the European Commission has published a final report containing information on national rules applied for the use of the mini one-stop shops (MOSS) for e-services, telecommunication and broadcasting services.
Basic information for micro-businesses has been made available as well.
– National rules (Excel file): EN
– Basic information for micro-businesses: EN
– Overview: Application by member states of VAT rules with relevance for the MOSS: EN
– Dedicated website on VAT for telecommunications, broadcasting and e-services: EN/DE/FR
The selection of the remitted material has been prepared by Piergiorgio Valente / Filipa Correia / Rudolf Reibel
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16 March 2015
On 12 March 2015, the EU Court of Justice (CJEU) decided in the German preliminary case C‑594/13, “go fair Zeitarbeit”, that neither state-examined care workers who provide their services directly to persons in need of care nor a temporary-work agency which supplies such workers to establishments recognised as being devoted to social wellbeing come within the scope of the VAT public interest activities exemption for ‘bodies recognised as being devoted to social wellbeing’.
– Judgment : All EU languages
On 10 March 2015, the EU Ecofin Council endorsed the recommendations made by the Joint Transfer Pricing Forum (JTPF) in June 2014 on Secondary Adjustments, Risk Management and Compensating Adjustments, asking member states to implement the recommendations as soon as possible. The Council also recognised “that given the high workload on the Mutual Agreement Procedures under the Arbitration Convention, the implementation of Alternative Dispute Resolution mechanisms may be usefully considered by the JTPF”.
– Council conclusions : EN
– June 2014 Recommendations (see Annexes): EN
On 12 March 2015, the European Commission opened an in-depth state aid investigation into the Hungarian tax on the turnover from advertisement activities. The Commission has concerns that the progressive tax rates could selectively favour smaller companies, as the rate relies on turnover instead of profit. Another doubt concerns the fact that the deduction of previous losses is granted only for companies that did not make profit in 2013. The Commission has also taken a suspension injunction, prohibiting Hungary from applying progressive rates until the end of the investigation.
– Press release: EN/DE/FR/HU
The selection of the remitted material has been prepared by Piergiorgio Valente / Filipa Correia / Rudolf Reibel
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9 March 2015
1. Italy and Switzerland sign agreement to encourage voluntary disclosure of undeclared funds
On 23 February 2015, Italy and Switzerland signed an agreement with the aim of encouraging Italian residents to return undeclared assets to Italy. The deal provides for a partial amnesty for account holders who declare their Swiss accounts to the tax authorities by 30 September 2015. The agreement also modifies taxation rules for cross-border commuters. According to estimates, undeclared Italian funds in Switzerland amount to € 173 billion.
– Bloomberg article : EN
– EUObserver article : EN
On 5 March 2015, the EU Court of Justice (CJEU) confirmed in its judgment on cases C-479/13 and C-502/13 the European Commission´s actions for infringement against France and Luxembourg which apply reduced rates on electronic books. The Court specifies that the VAT Directive allows reduced rates only for books provided by a physical means of support. Books provided only electronically did not constitute goods but e-services, and there is no room for a reduced VAT rate for e-services.
– Judgment regarding Luxembourg: All EU languages
– Judgment regarding France: All EU languages
– Press release: EN
On 5 March 2015, the CJEU decided in the Austrian preliminary ruling case C-175/14, Prankl, that where goods subject to excise duty have been smuggled into the territory of a member state and are transported, without the required accompanying documents, to another member state, where they are discovered, the transit member states are not permitted also to levy excise duty on the driver who transported them. These goods cannot be considered as having been held for commercial purposes in the transit state.
– Judgment: All EU languages
According to a report published by NGOs, McDonald´s managed to save one billion of taxes throughout Europe between 2009 and 2013, benefiting from an advantageous tax treatment of IP receipts provided for by Luxembourg law. As a result, McDonald’s paid €16 million in taxes on royalty payments received worth more than €3.7 billion. In 2013, it paid €3.3 million in taxes across Europe. Most McDonald´s restaurants are not operated by the company itself but by franchisees who pay for the use of the McDonald´s logo and other intellectual property.
– EUObserver article : EN
– « Unhappy meal » report : EN
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2 March 2015
On 24 February 2015, the EU Court of Justice (CJEU) decided on the German preliminary ruling case C‑559/13, Grünewald, upon reference by the German Court of Finance. The CJEU held that a member state must allow a non-resident taxpayer who has received in that state commercial income from shares in a business which were transferred to him by a relative in the course of a gift by way of anticipated succession to deduct from that income the annuities which he has paid to that relative in consideration for that gift, whereas that legislation allows a resident taxpayer to make such a deduction.
– Judgment: All EU languages
On 26 February 2015, the European Commission has decided to refer Germany to the CJEU because of its VAT legislation on exemptions for cost sharing groups. Cost sharing groups are associations of taxpayers for the purpose of purchasing services from third parties. According to the VAT Directive, services supplied by cost sharing groups to their members are exempt from VAT if the members’ activities are exempted from VAT, the shared services are directly necessary for the members’ activities, the group claims exact reimbursement of each member’s share of the joint expenses and finally, such exemption does not cause distortions of competition. However, the VAT Directive does not limit the exemption to any particular sector, as German law, for health and medical services.
– February infringement package : All EU languages
– More detailed press release : DE/EN/FR
On 26 February 2015, the European Commission referred Portugal to the CJEU for its car registration tax for imported second-hand vehicles which, according to the Commission, does not sufficiently take into account depreciation. On the same day, the Commission decided to send reasoned opinions to Finland and Ireland for their tax treatment of motor vehicles rented and leased in another member state and registered by a resident, demanding that in such cases, only a proportionate amount of car tax should be levied. The Commission also criticised the administrative burden for such cases.
– February infringement package : All EU languages
– Press release: PT/DE/EN/FR
On 26 February 2015, the European Parliament´s Special Committee on Tax Rulings elected Alain Lamassoure (EPP, FR) as its chair at its constituent meeting. As vice-chairs, the committee elected Bernd Lucke (ECR, DE), Marisa Matias (GUE/NGL, PT) and Eva Joly (Greens/EFA, FR). Rapporteurs will be appointed on 9 March. The committee will look into EU member states’ tax rulings since 1991 and review how the European Commission currently applies its state aid rules with regard to rulings. Moreover, the committee will seek to establish any negative effects that aggressive tax planning has had on public finances and will deliver recommendations for the future.
– Press release: EN/FR
– Mandate of the Committee: All EU languages
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23 February 2015
On 18 February 2015, the European Commission has announced legislation on the automatic exchange of information on tax rulings and other measures to increase tax transparency for March 2015. A second package of measures dealing with fair and efficient corporate taxation is to be expected this summer, which will also take into account current initiatives by the G20 and OECD to tackle tax avoidance.
– Press release : EN (all EU languages)
On 20 February 2015, the European Commission issued a call for applications for the second three-year term of the EU VAT Forum, an expert group of industry, tax practitioner and member states representatives tasked with finding practical, non-legislative solutions to cross-border VAT problems, e.g. a more efficient use of IT technology, the fight against fraud and the reduction of administrative burden. The current mandate of the VAT Forum in which CFE is also active will expire in September 2015.
– Information on the EU VAT Forum: EN/DE/FR
On 16 February 2015, the EU VAT Committee updated its list of guidelines, including, inter alia, guidance on the right to VAT refund for non-taxable persons registered with a “mini-one-stop-shop” and on the use of the refund application, adopted unanimously at the latest VAT Committee meeting on 31 October 2014. The VAT Committee consists of representatives from all EU member states; it issues non-binding guidelines.
– All guidelines: EN/DE/FR (see page 180 for MOSS guideline)
– More information on the EU VAT Committee and its guidelines: EN/DE/FR
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16 February 2015
On 8 February 2015, the International Consortium of Investigative Journalists (ICIJ) announced the leakage of 60,000 files associated with 100,000 individuals and legal entities, containing information on illicit dealings of HSBC´s Swiss branch with i.a. suspected war criminals until 2007. Some of the information was already held and exchanged by the French tax administration with other countries, leading to investigations and successful collection of reportedly more than € 1 billion in taxes and penalties. The bank, in its statement, explained how internal procedures have changed since the commission of the questionable practices.
– Link to ICIJ´s website
– Swiss leaks search function
– HSBC reponse
On 12 February 2015, the European Parliament´s plenary voted to set up a special committee to look into EU member states’ “tax rulings and other measures similar in nature or effect” and make recommendations for the future. The committee will have 45 members and is established for an initial period of six months. Calls by a number of MEPs to set up an inquiry committee were turned down by the EP´s Conference of Presidents the week before. The committee will look into tax ruling practices since 1991, but will also review the way the European Commission treats state aid in member states and the extent to which they are transparent about their tax rulings. It will also seek to ascertain the negative impact of aggressive tax planning on public finances and will come up with recommendations for the future.
– Press release: EN (All EU languages)
On 30 January 2015, the UK tax administration HMRC has invited public comments on proposals to introduce new measures for serial users of tax avoidance schemes and how to introduce specific penalties for cases where the General Anti-Abuse Rule (GAAR) applies. HMRC asks whether to introduce these measures, and on the detail of how these should be implemented. The consultation will be open until 12 March 2015.
– Consultation document: EN
On 10 February 2015, in the wake of the EU Court of Justice´s Skandia judgment of 17 September 2014 (C-7/13), the HMRC has issued a brief setting out its position on the implications of the judgment.
The OECD´s progress report of 12 February 2015 on its BEPS Action Plan has been made available online.
– Click here
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9 February 2015
On 3 February 2015, the European Commission has opened in-depth state aid investigations into the Belgian tax rulings practice of “excess-profit tax rulings” that allow multinational groups to reduce their corporation tax liability by “excess profits” that are considered to result from the advantage of being part of a multinational group. Accordingly, such rulings are not available to Belgian groups or single companies. While Belgium claims that the system is justified under the arm’s length principle and to avoid double taxation, the Commission considers that the rulings may overestimate the benefits of belonging to a multinational group and doubts whether other countries actually tax these benefits.
The outcome of the investigation is still open. Third parties have the possibility to comment. The decision to open investigations is not yet public.
– Press release: EN (DE FR NL available)
– Speech of Competition Commissioner Vestager, 3 February 2015: EN
On 6 February 2015, the European Commission published an invitation to comment on the in-depth state aid investigation into the Luxembourg rulings on the corporate tax treatment of Amazon, opened on 7 October 2014. Comments have to be sent within one month.
– Invitation to comment: EN
On 6 February 2015, the OECD reported that its members and the G20 countries have reached agreement on the following measures to counter BEPS:
– a mandate to launch negotiations on a multilateral instrument to streamline implementation of tax treaty-related BEPS measures; the OECD intends setting up an ad-hoc negotiating group open to all states, with the aim to conclude drafting by the end of 2016.
– an implementation package for country-by-country reporting (based on the template proposed in September 2014) as of 2016 and a related government-to-government exchange mechanism to start in 2017; according to the new guidance, reports should be filed for multinationals with a turnover above € 750 million in their countries of residence;
– criteria to assess whether preferential treatment regimes for intellectual property (patent boxes) are harmful; these are based on the “modified nexus approach”, initially proposed by the UK and Germany, which allows a taxpayer to receive benefits on IP income in line with the expenditures linked to that income and which provides for a transitional regime until 2021.
– Mandate for developing a multilateral instrument: EN
– Guidance on country-by-country reporting: EN
– Note on the “modified nexus approach” to patent boxes: EN
The European Parliament´s Conference of Presidents, on 5 February 2015, decided not to set up an enquiry committee on violation of EU state aid rules through member states´ tax rulings practice, despite a vote of 188 MEPs in favour of setting up such Committee on 14 January. Instead, the decision was taken to propose to the EP plenary the setting up a “special committee” on tax evasion. Such Committee can have a broader scope but does not have the power to ask for national documents to be handed over or to summon witnesses, as an enquiry committee has. Two days before the Conference of Presidents´ decision, the EP´s legal service had recommended that the creation of an enquiry committee be refused, stating that the proposal was ill-conceived as it did not specify the object of investigation and lacked clarity in identifying the offences to be examined.
– Press release: EN
The OECD is planning to hold a webcast providing an update to its work to counter corporate base erosion and profit shifting on Thursday, 12 February 2015 from 15:00 to 16:00 CET. Previous BEPS webcasts have been made available online after the event.
– Webcast: EN
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3 February 2015
As the BEPS project proceeds to completion, it is crucial that companies, their tax advisers and tax administrations are aware of the implications of the new international framework grounded on transparency, multilateral cooperation and information exchange. With concepts such as the “spirit of the law”, “economic substance” and “value creation” coming to the fore, tax mitigation and the structuring of companies’ businesses will have to take into account a larger number of variables and a different set of risks.
The forthcoming 2015 CFE Forum will address these pressing topics in direct and in indirect tax and help companies and their tax advisers prepare for the future.
– Programme and registration: EN
On 3 February 2015, the EU Court of Justice (CJEU) has found UK legislation making cross-border loss relief subject to certain conditions compatible with EU law. The decision dismisses the European Commission´s infringement action against the UK (case C-172/13). The Commission had held that the legislation at issue (which had been enacted as a consequence of the CJEU´s 2005 judgment in the case Marks & Spencer) infringes the freedom of establishment to the extent that losses were only to be considered final if at the end of the relevant accounting period no rule on carrying-forward of losses exists in the country of the subsidiary or the subsidiary that incurred the losses had gone into liquidation, and that the UK provision excluded cases before April 2006 from cross-border group relief. The Court did not agree that the refusal of loss relief where there is no possibility of loss-carrying-forward in the subsidiary´s state violates the freedom of establishment. Moreover, it disagreed with the Commission´s conclusion that the subsidiary would have to go into liquidation to make losses final and found that the Commission had not established that losses incurred before April 2006 were actually not eligible.
– Judgment: All EU languages
– Press release: EN
On 26 January 2015, the European Commission has decided to set up a new Joint Transfer Pricing Forum (JTPF) consisting of representatives of the EU member states and 18 organisations to advise the Commission in finding practical solutions to transfer pricing issues. The mandate of the JTPF will be two years. Deadline for applications is 25 February 2015.
– Commission decision: EN, DE, FR
– Call for applications: EN, DE, FR
The EU Ecofin Council of 27 January 2015 has formally adopted the revision of the EU Parent-Subsidiary-Directive, providing for a minimum anti-abuse rule. Agreement on the amendment had already been reached at the previous Ecofin meeting of 9 December 2014. EU member states have to implement the new rule (as well as the subject-to-tax clause adopted in July 2014) until the end of 2015.
– Press release: All EU languages
– Text of the amendment: EN
On 27 January 2015, the finance ministers of ten of the eleven EU countries participating in the plan to introduce a financial transactions tax by way of enhanced cooperation have agreed that such tax should be levied as of 1 January 2016. The countries (Austria, Belgium, Estonia, France, Germany, Italy, Portugal, Slovakia, Slovenia and Spain) agree that the tax shall apply to shares and derivatives. Details of the new tax are still to be discussed but discussions have reassumed under Austrian coordination. The only country absent was Greece, due to the upcoming change of government following the elections of end-January.
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26 January 2015
On 22 January 2015, the EU Court of Justice decided in preliminary ruling case C-55/14, Stade Luc Varenne, upon reference by a Belgian court that making available, for consideration, a football stadium under a contract reserving certain rights and prerogatives to the stadium owner and providing for the supply, by the owner, of various services, including services of maintenance, cleaning, repair and upgrading, representing 80% of the charge which is agreed, does not constitute, as a general rule, a ‘letting of immovable property’ within the meaning of that provision.
– Judgment: EN (All EU languages)
The OECD has recently published the comments received from stakeholders on four discussion drafts released in late 2014. CFE has commented on three of these, together with AOTCA, the association representing tax professionals in Asia and Australia.
– Low value-adding intra-group services (part of BEPS Action 10): All stakeholder comments
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05 January 2015
From 16 to 19 December 2014, the OECD has released a total of 6 discussion drafts on 5 actions of the “base erosion and profit shifting” (BEPS) Action Plan for public comments: These concern interest deductions (BEPS Action 4, deadline: 6 February 2015), transfer pricing (BEPS Actions 8, 9 and 10, deadline: 6 February 2015) and dispute resolution (BEPS Action 14, deadline: 16 January 2015). More specifically, in the area of transfer pricing, the OECD has produced two separate discussion drafts (deadline: 6 February 2015): The first concerns transfer pricing aspects of cross-border commodity transactions, and the second the use of profit splits in the context of global value chains.
– Interest deductions (BEPS Action 4):
– Transfer Pricing (BEPS Actions 8, 9, 10):
– Specific transfer pricing aspects (Action 10) :
– Dispute resolution (Action 14) :
– Webcast: Update on the BEPS project, 15 December 2014
On 18 December 2014, the EU Court of Justice (CJEU) has ruled in an infringement proceeding (C-640/13) against the UK that the country infreinged EU law by curtailing retroactively and without notice or transitional arrangements the right of taxpayers to recover tax levied in breach of EU law.
– Judgment: EN (FR available)
On 18 December 2014, the OECD has opened a public consultation on two proposed new elements in the international VAT/GST Guidelines issued by OECD in 2014.
The two discussion drafts relate to the place of taxation of business-to-consumer supplies of services and intangibles (B2C Guidelines) and provisions to support the application of the Guidelines in practice (Supporting provisions).
Interested parties can comment on these drafts by 20 February 2015.
– Report on Tax Challenges of the Digital Economy (BEPS Action 1)
The European Commission has revised its dedicated website collecting information and guidance on the new VAT place of supply and “mini one stop shop” rules for the abovementioned services which apply since 1 January 2015. The Commission estimates that VAT revenues of most EU countries will rise, as a consequence of the rule that B2C services will now be taxed where the consumers are located. In the past, multinational providers of on-line services could save taxes by selling their services through subsidiaries in Luxembourg which had a VAT rate of only 15%.
On 23 December 2014, the European Commission has published a website on “tax free shopping”, containing information on VAT refund for persons residing in non-EU countries visiting the EU.
On 16 December 2014, the European Parliament and the EU Council have reached political agreement on the revision of the EU Anti Money Laundering Directive. The agreed version seems to include the introduction of central registers listing information on the ultimate beneficial owners of EU-based corporate and other legal entities, as well as trusts. These registers will be accessible by competent authorities, “obliged entities” such as tax advisers and other professionals entrusted with anti-money laundering obligations and, subject to certain conditions, the public. The agreed text which is not yet public will still have to be formally adopted by the EP´s competent ECON and LIBE Committees, the EP plenary and the Council.
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15 December 2014
The EU Ecofin Council adopted on 9 December 2014 a common general anti abuse rule (GAAR) in the EU Parent-Subsidiary Directive which has been designed as minimum harmonisation, allowing member states to leave or put in place stricter anti-abuse laws.
At the same meeting, the EU Ecofin Council adopted an amendment to the EU Directive on Administrative Cooperation in Direct Taxes to match the Directive with the OECD “global” standard for automatic exchange of information. The first information exchange according to the new rules is due to take place by the end of September 2017. Austria has been granted a delay of one year but the country has declared that it does not intend to make use of this derogation.
In an interview with the German daily newspaper Frankfurter Allgemeine Zeitung, European Commission president Jean-Claude Juncker expressed his view that the planned automatic exchange of information on international tax rulings could possibly be introduced without unanimity voting in the EU Council, stating that the planned rules concern administrative cooperation, where EU legislation can be passed with a qualified majority of member states (and the European Parliament on an equal footing), instead of unanimity which is required for tax legislation. Juncker also said that the proposal would not be limited to exchange of rulings but could also concern rules requiring companies to disclose their tax strategy. The proposal should be presented by summer 2015.
– EU Observer article (EN), 10 December 2014
– Frankfurter Allgemeine interview with Jean-Claude Juncker (DE), 9 December 2014
On 9 December 2014, the International Consortium of Investigative Journalists published a new series of confidential tax rulings issued by the Luxembourg tax authorities between 2003 and 2011, concerning 35 multinational companies such as Microsoft-owned Skype and Walt Disney.
The Italian EU Council presidency published a report on the progress on the proposed Financial Transactions Tax (FTT) during its term. The member states participating in the enhanced cooperation agree that a FTT should be introduced progressively, with shares and some derivatives as a first step. While the EU FTT should be harmonised, participating member states should be left the possibility to continue taxing financial products not (yet) covered by the EU FTT. However, further key issues are still unresolved, such as the types of derivatives to be included as a first step, general taxation principles (residence and/or issuance) and the collection mechanism.
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8 December 2014
On 28 November 2014, the finance ministers of France, Germany and Italy sent a joint letter to EU tax Commissioner Pierre Moscovici, asking the Commission to propose a comprehensive EU Directive to counter BEPS (base erosion and profit shifting by multinational enterprises). The Directive should contain a “general principle of effective taxation”, according to which the benefits of the Parent-Subsidiary and the Interest & Royalties Directive should be denied if they do not lead to effective taxation. Member states should adopt this Directive by the end of 2015. The ministers express their support for the European Commission´s recent initiative to oblige member states to automatically exchange among each other information on international tax rulings, including transfer pricing matters. They also require registers of beneficial owners of companies, to be available to tax administrations.
Other issues touched upon are patent box regimes, agreed counter-measures against tax havens and a common GAAR (general anti abuse rules).
– Letter of 28 November 2014
On 5 December 2014, the European Commission has published a list of national contact points for any questions of operators regarding the 2015 changes to VAT on electronic, telecommunication and broadcasting services.
Registration for the next OECD webcast on 15 December 2014 (15-16:00 CET) on latest developments on the OECD Action Plan on BEPS is now open.
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24 November 2014
On 19 November 2014, Switzerland has signed, as the 52nd country, the “multilateral competent authority agreement”, dealing with the practical implementation of the OECD global standard on automatic exchange of financial information in tax matters. The decision is still subject to parliamentary approval and possibly a plebiscite.
– Information on the multilateral competent authority agreement on OECD website: EN
On 21 November 2014, the OECD has published a discussion draft on the prevention of tax treaty abuse (BEPS Action 6), as a follow-up to the OECD report of 16 September 2014 on this topic. The new discussion draft deals in particular with the limitation of benefits (LOB) rule, as well as with issues related to the treaty entitlement of collective investment vehicles (CIVs) and non-CIV funds.
Comments are invited until 9 January 2014.
– News release: EN (FR available)
– BEPS 6 follow-up Discussion Draft, 21 November 2014
On 20 November 2014, the European Commission published a comprehensive cross-country study on taxes on wealth and transfer of wealth in the EU member states, including inheritance and gift taxes, real estate and land taxes and net-wealth taxes. While inheritances are taxed in 20 member states, gifts in 21 and real estate in every member state, taxes on net-wealth are rare. Though several countries have “environmental” taxes on the possession of certain assets, only three member states use net-wealth as a tax base.
The Commission also made available the presentations given at the ECFIN workshop of 17 November 2014 in Brussels.
On the same day, the European Commission published a study by the German think tank ZEW (Zentrum für Europäische Wirtschaftsforschung / Centre for European Economic Research) on the effective tax rates in EU countries, including also Canada, Japan, Macedonia, Norway, Switzerland, Turkey and the United States. The report considers primarily taxes on corporations, but also includes analyses of personal taxes on investment and saving. It also considers both cross-border investment and investment by small and medium sized enterprises.
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17 November 2014
The finance ministers of Germany and the UK have reached an agreement not to extent special regimes providing for low taxation of income from intellectual property (so-called patent boxes) beyond 2020, according to media reports. The UK has introduced such tax incentive in 2013. In the future, the use of patent boxes should require more economic substance in the country.
– Financial Times article, 12 November 2014: EN
– Handelsblatt article, 10 November 2014: DE
On 14 November 2014, the European Commission published the non-confidential version of the decision of 11 June 2014 to open an in-depth investigation into transfer pricing arrangements on corporate taxation of Starbucks in the Netherlands.
In a speech given at the European Parliament on 13 November 2014, the new Commissioner for Economic and Financial Affairs, Taxation and Customs, Pierre Moscovici confirmed his determination to pursue the fight against tax fraud, evasion and avoidance, which he called his priority. The speech also contains a hint at the possibility to make the CCCTB (common consolidated corporate tax base), proposed by the Commission in 2011, mandatory, and mentions the automatic exchange of tax rulings as a possible way forward.
– Speech before the European Parliament on 13 November 2014 (EN/FR)
On 13 November 2014, in an infringement proceeding of the European Commission against the UK (C-112/14), the EU Court of Justice concluded that, by adopting and maintaining tax legislation concerning the attribution of gains to participators in non-resident companies which treats domestic and cross-border activities differently, the UK has infringed the free movement of capital.
– Judgment : EN (FR available)
The G20 leaders endorsed a “G20 Leaders Communiqué” at their summit in Brisbane on 16 November 2014, supporting the OECD work on reforming the international tax system, in particular the BEPS project and the global automatic information exchange standard. The Communiqué mentions that “profits should be taxed where economic activities deriving the profits are performed and where value is created.” The G20 leaders also declared that they commit themselves to finalising, in 2015, work on “transparency of taxpayer-specific rulings found to constitute harmful tax practices.”
This is complemented by a report of the OECD providing an update on BEPS, the global automatic information exchange standard, tax and development and the ongoing monitoring work of the Global Forum on Transparency and Exchange of Information for Tax Purposes which has to date assessed the compliance of 105 jurisdictions with the international standard on exchange of information on request and has started working on including beneficial ownership in the standard, before commencing implementation of the new automatic exchange of information standard.
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10 November 2014
On 5 November 2014, the International Consortium of Investigative Journalists (ICIJ) has published 548 comfort letters issued between 2002 and 2010 by the Luxembourg tax authorities to 343 multinational companies including, e.g., FedEx, Ikea and Pepsi. Most of the rulings were approved between 2008 and 2010. ICIJ contents that these comfort letters allowed the companies involved to shift profits to other jurisdictions and as a result of this, to pay only marginal amounts of tax. Only documents from PWC were published. The documents can be consulted in a database.
Luxembourg´s finance minister Gramegna was quoted that although the rulings were fully in line with the law, they had led to tax avoidance by big corporations, adding that what is legal may not be ethically desirable and calling this an untenable situation for Luxembourg and the citizens in Europe. He also said that the Commission´s request to Luxembourg to submit all tax rulings was excessive.
Several members of the European Parliament have strongly criticised Jeans-Claude Juncker who was Luxembourg´s prime minister/finance minister at the time. Members of the left GUE/NGL group have started gathering MEPs to initiate a vote of no confidence.
– News release on ICIJ.org: EN
– Luxembourg leaks Database: EN
On 7 November 2014, the EU Ecofin Council discussed a compromise text for including a general anti-abuse rule (GAAR) in the EU Parent-Subsidiary Directive. The text, proposed by the Italian Council Presidency, suggests a GAAR that denies the benefits of the Directive to all arrangements that have been put in place mainly to obtain a tax advantage which defeats the object or purpose of the Directive and which are not genuine, meaning lacking valid economic reasons which reflect economic reality. The rule would only provide for minimum harmonisation, allowing member states to maintain in place stricter rules against fraud, evasion or abuse. The Council press release notes that Belgium, the Netherlands and the UK expressed a need for clarification or parliamentary scrutiny.
On 3 November 2014, the OECD has published a discussion draft on amending the provisions applying to low value-adding intra-group services in the Transfer Pricing Guidelines (BEPS Action 10). Excessive management fees and head office expenses are considered common types of base eroding payments. The discussion draft proposes an approach which identifies a wide category of common intra-group services commanding a very limited profit mark-up on costs, applies a consistent allocation key for all recipients, and provides greater transparency through specific reporting requirements. The draft is open for comments until 14 January 2015.
– News release: EN
On 7 November 2014, the EU´s General Court annulled two decisions by the European Commission of 2011, classifying a Spanish tax rule which allowed for the deduction from the corporation tax base of goodwill for the acquisition of a shareholding in a foreign company of at least 5% as staid aid (T-219/10 and 399/11, Autogrill España and Banco Santander). The Court held that the Commission has not sufficiently established that the Spanish tax measure had been selective. Indeed the undertakings affected did not share any specific characteristic distinguishing them from other undertakings, apart from the fact that they would be capable of satisfying the conditions to which the grant of the measure is subject.
After the EU Ecofin Council meeting of 7 November 2014, progress was reported on the planned EU Financial Transaction Tax, to be adopted by a group of 11 EU member states (Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain), using the “enhanced cooperation” mechanism. Ministers have agreed that the tax, as a first step from the beginning of 2016, should apply to shares of companies listed at a stock exchange and possibly be extended to derivatives in a second step.
– Council press release (p.9), 7 November 2014
– Italian Council Presidency report: State of play, 31 October 2014
On 6 November 2014, the Court of Audit of the Netherlands reported figures on the development of money flows through so-called special financial institutions (SFI) which transfer dividends, interest and royalties from a company in a foreign country to a company in another foreign country:
Dividend payments into SFIs increased from € 13.1 billion (2004) to € 72.7 billion (2012), outgoing dividend payments from € 25.6 billion to € 53.7 billion. The tax on dividends in the Netherlands has decreased to 15% in 2007, is in line with the European trend. € 2.2 billion in dividend taxes were collected in 2013.
Royalty payments into SFIs increased from € 5.4 billion (2003) to € 18.5 billion (2012). Royalties exiting the Netherlands grew from € 4.4 billion to € 13.3 billion. Royalties are not taxed in the Netherlands.
As to interest payments, figures doubled in roughly the same period.
– Report (NL)
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3 November 2014
On 30 October 2014, the European Commission issued a staff working document setting out five options for redesigning from scratch a destination-based EU VAT system. The paper is a deliverable announced in the Commission´s 2011 Communication on the future of VAT and will be followed up by a final report on the quantitative effects of each of the five options in spring 2015.
On 29 October 2014, 51 countries signed a multilateral declaration on their implementation of the new G20/OECD global standard on annual automatic exchange of tax information endorsed by the G20 finance ministers in September 2014. Most jurisdictions have committed to implementing this standard on a reciprocal basis with all interested jurisdictions. Governments also agreed to require that beneficial ownership of all legal entities be available to tax authorities and exchanged with treaty partners.
On 31 October 2014, the OECD released a discussion draft on the artificial avoidance of the Permanent Establishment status (BEPS Action 7) for public consultation. Comments can be submitted until 9 January 2015.
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27 October 2014
- Improving Transparency and Combating Tax Avoidance to Top Agenda of Ninth Forum on Tax Administration, on 23-24 October 2014 in Dublin, Ireland
Global initiatives like the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project and the move toward automatic exchange of financial account information at a global level will take centre stage when Heads of Tax Administrations from 46 countries meet on 23-24 October in Dublin, Ireland.
Participants in the Ninth Meeting of the OECD Forum on Tax Administration (FTA) will discuss how tax administrations can best improve taxpayer services and tax compliance, while boosting efficiency, effectiveness and the fairness of tax systems. The FTA is the leading international body concerned with tax administration, bringing together the heads of tax administrations from the OECD, members of the G20 and large emerging economies.
- EU Taxation – Study confirms billions lost in VAT Gap:
- DG ECFin publication – Tax reforms in EU member states:
- New Zealand – New Zealand’s Inland Revenue’s position concerning certain scenarios (following June 2014’s consultation) that would be subject to the general tax anti-avoidance rule:
- Commission asks GERMANY to stop discriminatory taxation of legacies to foreign charities
16 October: The Commission has requested that Germany amend its discriminatory inheritance tax legislation, with regard to legacies to charities in other Member States or EEA States because it is in breach of EU rules on free movement of capital.
The German legislation treats legacies to charities established in other EU/EEA States less favourably than legacies to certain charities established in Germany. Domestic charities are granted an exemption from inheritance tax. However, similar charities established in other EU/EEA States may only enjoy this tax exemption if their State of residence grants an equivalent or reciprocal exemption to comparable German charities. As a result, legacies to foreign charities are frequently more heavily taxed than legacies to German charities. The Commission considers that this is discriminatory and constitutes an unjustified restriction on the free movement of capital. The request sent to Germany takes the form of a Reasoned Opinion. If Germany does not comply within two months, the Commission may refer it to the Court of Justice of the European Union. http://europa.eu/rapid/press-release_MEMO-14-589_en.htm
- Commission asks ROMANIA to stop the discriminatory tax treatment of foreign legal entities
16 October: The Commission has requested Romania to amend its rules on the taxation of interest income because they restrict the free provision of services and the free movement of capital in the EU single market. Currently, resident legal entities can deduct the business expenses related to generating interest income. This results only their net income being taxed. However, legal entities established in another EU/EEA State and without a permanent establishment in Romania cannot benefit from such a deduction, and are taxed more heavily on their gross interest income obtained directly from Romania.
The Commission sees no valid justification for this different tax treatment, and considers it to be discriminatory and a restriction on the free movement of services. It therefore has asked Romania to amend its rules to bring them into line with EU law. The request is in the form of a Reasoned Opinion. In the absence of a satisfactory response within two months, the Commission may refer Romania to the Court of Justice of the European Union. http://europa.eu/rapid/press-release_MEMO-14-589_en.htm
20 October 2014
- Council agrees on including OECD/G20 automatic information exchange standard in EU Directive
On 14 October 2014, the EU Ecofin Council reached political agreement on amending the Directive 2011/16/EU on Administrative Cooperation in Direct Taxes to include automatic information exchange on interest, dividends and other income, as well as account balances and sales proceeds from financial assets. This brings the EU Directive in line with the new global standard on automatic exchange of information developed by the OECD on request of the G20. The proposal was made by the European Commission in June 2013 and developed subsequently to take account of the global standard presented in detail in July 2014 and endorsed by the G20 finance ministers in September.
The formal adoption of the Directive will take place at one of the forthcoming Council meetings, once translation into all EU languages has been completed. The newly agreed exchange will take place as of 2017. Austria was granted the possibility to postpone the standard by an additional year.
The amended Directive will provide an EU legal framework for applying the G20 standard. However, member states may already require information exchange going further than the categories listed in the current Directive, because the Directive provides that EU member states have to grant to any other member state the same more favourable conditions they grant to any third country, and a number of EU countries have bilaterally agreed further cooperation with the US, on FATCA.
– Council Press release
– European Commission FAQs
- Commission: Spain must recover aid through tax benefits for acquisitions of indirect shareholdings in foreign companies
On 15 October 2014, the European Commission concluded that tax benefits for acquisitions of indirect shareholdings in foreign companies was state aid incompatible with EU rules and has ordered Spain to claim back these aids. The case concerns a new interpretation of the Spanish scheme, allowing companies to deduct from their corporate tax base the “financial goodwill” arising from the acquisition of indirect shareholdings in foreign companies. The Commission has found that the measure provided the beneficiaries with a selective economic advantage; Spain has failed to notify the Commission of this new interpretation which is an extension of the previous practice which applied only to direct shareholdings and which had already been objected by the Commission in 2009 and 2011.
- Commission takes Belgium to CJEU for discriminatory taxation of collective investment undertakings
On 16 October 2014, the European Commission decided to refer Belgium to the EU Court of Justice for discriminatory taxation of collective investment undertakings (CIUs) established in other member states or EEA countries. In Belgium, the rate of annual tax on certain CIUs governed by foreign law established in other EU/EEA states is higher than the rate applied to similar CIUs established in Belgium. This concerns CIUs of which one or more sections or classes of securities are collected exclusively from institutional or professional investors acting on their own behalf and whose securities may be purchased only by these investors.
- VAT mini-one-stop-shops: Commission informs on implementation of relevant rules into national laws
The European Commission has published information on how member states have implemented provisions of the VAT Directive that have particular relevance for the mini-one-stop-shops for EU- and non-EU providers of e-service, telecommunication and broadcasting applying as of 1 January 2015. The information mostly concerns provisions whose implementation into national law is either optional or subject to differing interpretation in member states. The Commission stresses that the information is neither to be considered final nor exhaustive.
The Commission has also provided a list of national contact points.
- VAT: CJEU decides on the concept of fixed establishment for services received in another member state
On 16 October 2014, the EU Court of Justice delivered its judgment in the Polish preliminary ruling case C-605/12, Welmory, on the concept of fixed establishment of the recipient of a supply of services, stating that a taxable person who has established his business in one member state and receives services supplied by another taxable person established in another member state, must be regarded as having a fixed establishment in that other member state if that establishment is characterised by a sufficient degree of permanence and a suitable structure in terms of human and technical resources to enable it to receive the services supplied to it and use them for its business, which is for the referring court to ascertain.
DG Taxation and Customs Unit
VAT Expert Group
Malta Institute of Taxation is pleased to announce that it has been appointed as a member of the VAT Expert Group within the European Commission, Directorate –General, Taxation and Customs Union, Indirect Taxation and Tax Administration in Brussels. Dr. Sarah Aquilina BA., LL.M. (Lond), LL.D., MIT, IFSP has been appointed as MIT’s permanent representative and her alternate is Mr. Chris Borg.CPA, B.Com., B.Accty (Hons), FIA, FMIT, MIFSP
13 October 2014
On 6 October 2014, the European Commission opened state aid investigations into a tax ruling dating from 2003 but still in force, enabling Amazon´s main European retail company, Amazon EU SARL, to pay a large portion of its income (2.1 bn in 2013) to Amazon Europe Holding Technologies SCS, a partnership not taxable in Luxembourg, for intellectual property rights to the Amazon website, allegedly not at arm´s length terms, only leaving a minimal profit (28.8 m in 2013) to tax in Luxembourg.The case is the forth prominent example of state aid investigations into countries´ tax rulings on multinational companies, following the cases on Apple (Ireland), Starbucks (Netherlands) and Fiat Finance (Luxembourg). None of these have been decided to date.
– European Commission press release, 7 October 2014
– Financial Times article (EN), 6 October 2014 (registration required)
– Handelsblatt article (DE), 7 October 2014
– Euractiv article (EN), 8 October 2014
On 9 October 2014, the EU Court of Justice (CJEU) rendered its judgment in the preliminary ruling case C-326/12, van Caster, on the German rules on taxation of income from investment funds, dismissing the provision that the failure by a non-resident investment fund to comply with the obligations to communicate and publish certain information required by that legislation, which are applicable without distinction to resident and non-resident investment funds alike, will result in the flat-rate taxation of the income which the taxpayer earns from that investment fund, since that legislation does not allow the taxpayer to provide evidence or information that could prove the actual size of that income.
– Opinion of Advocate-General Wathelet (available in most EU languages, but not EN)
The French tax administration, together with the European Commission, will organise a free half-day event on the changes to place of supply rules and the new mini-one-stop-shops for EU providers of e-services, telecom and broadcasting to non-taxable persons that will come into force on 1 January 2015.
On 9 October 2014, the EU Court of Justice decided in the preliminary ruling case C-428/13, Yesmoke Tobacco, that Italy was not allowed to impose higher minimum excise duties on cigarettes whose retail price was below the price of the most commonly sold cigarettes. Such differentiation is liable to distort competition.
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6 October 2014
On 1 October 2014, the European Commission has extended the scope of its ongoing state aid investigation into the Gibraltar corporate tax regime to the jurisdiction´s tax rulings practice which allows companies to ask for advance confirmation of whether certain income, generated by companies incorporated in Gibraltar or that carried out an activity which generates income, are subject to taxation in Gibraltar. After having assessed 165 tax rulings, the Commission suspects that the Gibraltar tax authorities generally grant formal tax rulings without performing an adequate evaluation. The extension of an in-depth investigation gives interested third parties an opportunity to comment but does not prejudge the outcome.
Media reports from 28 September 2014 that the Commission has concluded that tax rulings bv the Irish tax administration in the case of Apple were illegal state aid (see last week´s Tax Top 5) have to date not been confirmed, but on 30 September, the Commission published its decisions of 11 June 2014 on the opening of the investigations concerning Apple and Fiat Finance.
– Press release of 16 October 2013 (opening of investigations into Gibraltar scheme)
– Press release of 1 October 2014 (extension to tax rulings practice)
On 2 October 2014, the EU Court of Justice (CJEU) decided on the French preliminary ruling case Fonderie 2A (C-446/13) on the place of supply of metal parts sold by a company in Italy to a person established in France, which the vendor has had painted by a third company in France to make them fit for purpose, before having them dispatched by that third company to the recipient. The CJEU ruled that such supplies must be deemed to be in the member state of the recipient, France.
– Opinion of Advocate-General Kokott
On 6 October 2014, the European Commission published its decision on the composition of the VAT Expert Group for its second two-year term starting on 1 October 2014. Among the 34 associations and firms and 6 individuals selected are the CFE, 5 CFE member organisations (from Croatia, the Czech Republic, Ireland, Malta and the UK) and one member of the CFE Fiscal Committee (Paolo Centore, Italy).
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29 September 2014
According to media reports, the European Commission is about to issue a decision that the rulings of the Irish tax administration on the tax treatment of two subsidiaries of Apple, Apple Sales International und Apple Operations Europe, were illegal state aid. The decisive element in distinguishing state aid from tax is the question whether the advantageous treatment of an undertaking or group of undertakings has been selective. State aid affecting trade between member states is in principle incompatible with the EU single market, subject to a limited number of exceptions and to notification to the European Commission which, in the case of Apple, has not taken place. If the aid is found to be illegal, Ireland will have to claim back billions of unpaid tax from Apple. There are two similar cases pending, concerning Starbucks in the Netherlands and Fiat Finance and Trade in Luxembourg.
On 25 September 2014, the European Commission decided to refer Germany to the EU Court of Justice regarding its rules on VAT refund which discriminate against non-EU operators. Under German legislation, operators established in another EU member state can authorise a third person to sign or submit their refund form to recover VAT, but taxable persons established outside the EU must personally sign the application form. The Commission considers that this requirement for third country operators goes against the EU law principles of effectiveness, proportionality and equivalence. There is no provision in EU law which requires VAT refund forms to be personally signed.
On 25 September 2014, the European Commission has requested Italy to amend its inheritance tax legislation which discriminates against bequests to non-profit organisations in another EU or EEA country. Under Italian law, legacies to non-profit organisations pursuing public and social goals are exempt from tax. However, if these are established elsewhere in the EU/EEA, an exemption is only granted if there is reciprocity from that member state, otherwise, the legacy is taxed at 8% of its value. In addition, Italian legislation excludes Italian bonds and public securities from the inheritance estate, while bonds and public securities issued by other EU and EEA states are not allowed this exclusion. The requests take the form of two reasoned opinions, giving Italy two months to react.
On 17 September 2014, the Court of Justice of the EU (CJEU) has rendered its judgment on the case Skandia (C-7/13) concerning the question whether services supplied by a main company with its seat in a third country to its branch belonging to a VAT group within an EU member state are taxable. The Court confirmed this where the branch belongs to a group of persons whom it is possible to regard as a single taxable person for VAT purposes.
On 25 September 2014, the European Commission has decided to refer the Netherlands to the EU Court of Justice for failing to fully comply with EU rules on VAT exemptions for water sports activities. According to the Commission, Dutch legislation is too strict to the extent that it exempts sport or physical education services by non-profit organisations from VAT only if these services are provided by volunteers, and too wide to the extent that they exempt the letting of berths and moorings for vessels provided by these water sport organisations even when it is not linked to sport activities.
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19 May 2014
1- New BEPS webcast on 26 May
The OECD is planning a webcast on 26 May 2014, 13:00 – 14:00 h CET, providing an update on its BEPS (base erosion and profit shifting) Action Plan, notably on the recent consultations on
– Transfer Pricing Documentation and Country-by-Country Reporting (Action 13)
– Tax Treaty Abuse (Action 6)
– The Tax Challenges of the Digital Economy (Action 1)
– Hybrid Mismatch Arrangements (Action 2).
On-line registration is required.
2- OECD reports progress on tax agenda
The OECD has released a document providing an overview on the progress achieved and the next steps in various OECD tax dossiers, namely BEPS, exchange of information and tax and development.
3- ECJ: National law may not deny right to reduction of VAT taxable amount in case of cancellation, refusal, non-payment or price reduction after supply
On 15 May 2014, the European Court of Justice delivered its judgment in preliminary ruling case C‑337/13, Almos, upon reference from the Hungarian Supreme Court (Kúria), stating that taxable persons may rely on the VAT Directive before national courts against the Member State to obtain a reduction of their taxable amount for VAT in case of cancellation, refusal, non-payment or price reduction after the supply takes place. National law may impose formalities which serve to prove that the conditions for the reduction have been met, to the extent these proofs are necessary.
12 May 2014
1- No agreement in Council on subject to tax clause in Parent-Subsidiary proposal
The EU Ecofin Council on 6 May 2014 failed to reach agreement on the subject to tax clause in the proposal for a revised Parent-Subsidiary Directive. The Greek Council presidency had proposed splitting the dossier into the elements of (1) the subject to tax clause and (2) the harmonised general anti abuse rule, in order to allow swift adoption of the former. Opposition to the subject to tax clause came from Sweden. Commissioner Šemeta wants to give additional assurance to the country to ensure unanimous adoption of the clause at the Council meeting on 20 June 2014.
2- OECD members and further countries endorse declaration for automatic exchange of information
On 6 May 2014, the 34 OECD member states plus 13 further countries including EU countries Latvia and Lithuania as well as Brazil, China and India, have made a joint “Declaration on Automatic Exchange of Information in Tax Matters”, confirming their willingness to implement the OECD information exchange standard presented on 13 February 2014 into national law. Information would be exchanged on a reciprocal basis and subject to “certain confidentiality requirements”. Technical details of this standard are currently being elaborated and are due to be presented in September 2014. On 19 March 2014, there had already been a statement of a smaller group of “early adopters” of the standard.
3- OECD public consultation on country by country reporting and transfer pricing documentation
The OECD will host a public consultation meeting on country reporting and transfer pricing documentation (BEPS Action 13) on 19 May. The meeting can be followed online.
4- OECD publishes comments received on hybrid mismatches
The OECD has published the comments received to its public consultation on “neutralising the effects of hybrid mismatch arrangements” (BEPS Action 2). The 457 pages received include an Opinion Statement of CFE.
5- Financial Transaction Tax to be introduced progressively
The 11 countries willing to introduce a Financial Transaction Tax by way of enhanced cooperation informed the EU Council of their intention to work on a progressive implementation, focusing
initially on the taxation of shares and some derivatives. The first steps would be implemented at the latest on 1 January 2016.
5 May 2014
1- ECJ dismisses UK action against EU-11 Financial Transaction Tax
On 30 April 2014, the European Court of Justice has dismissed the UK´s action against the EU Council´s decision to authorise 11 member states to introduce a financial transaction tax (FTT) by way of enhanced cooperation. The UK argues that the FTT will have extraterritorial effects and impose costs on non-participating countries like the UK. The Court considers the action against the Council´s decision as premature, as the Council´s authorisation did not concern the content of the FTT Directive itself and does not (yet) impose any obligations on the UK.
2- Commission expert group on individuals’ cross-border tax problems: Deadline extended
The European Commission has extended its deadline for applications of organisations to the expert group on individuals’ cross-border tax problems. The new deadline is 23 May 2014.
3- Member States expected to split Parent-Subsidiary proposal
EU member states, at their Ecofin Council meeting on 6 May 2014, are expected to decide on splitting the European Commission´s proposal of 25 November 2013 for a revised Parent-Subsidiary-Directive. The proposal essentially contains two parts, a harmonised anti-abuse rule and a subject to tax clause designed at preventing double-non taxation of hybrid loan payments from subsidiaries to parent companies in another EU member state. While reportedly, agreement is more realistic on the second element, the anti-abuse rule appears to have little chances of reaching unanimity.
4- Article: “BEPS – Current reality and planning in anticipation”
Members of the CFE Fiscal Committee will receive attached an article from the International Transfer Pricing Journal March/April 2014 by Cym Lowell and Matthew Herrington as recommended reading.
5- Article: “Transparency in financial reporting: Is country-by-country reporting suitable to combat international profit shifting?”
Members of the CFE Fiscal Committee will receive attached an article by Maria Theresia Evers, Ina Meier and Christoph Spengel from the International Bulletin on Taxation issue 6-7/2014 as recommended reading.
28 April 2014
1- OECD public consultation meetings on BEPS Actions 1, 6 and 13
Recordings of the OECD public consultation meetings on BEPS Actions 1 (tax challenges of the digital economy) on 14/15 April and on BEPS Action 6 (preventing treaty abuse) on 23 April 2014, are now available online.
A public consultation meeting on transfer pricing documentation and country-by-country reporting (BEPS Action 13) will be held on 19 May 2014. Registration is possible until 9 May.
2- OECD Global Forum issues 12 new transparency reports
On 24 April 2014, the Global Forum on Transparency and Exchange of Information for Tax Purposes issued 12 new reports to assess the extent to which jurisdictions have implemented the international standard for exchange of information on request in their legal framework (phase 1 reviews) and practice (phase 2 reviews). The new reports include 3 EU member states, Latvia (phase 1), Slovakia and Slovenia (both phase 2), bringing the total number of jurisdictions assessed to 132 (phase 1) / 54 (phases 1 + 2).
3- Registration for Luxembourg VAT conference open
Registration for the conference on the 2015 VAT changes (mini-one-stop-shop for e-services, telecom and broadcasting), hosted by the European Commission and the Luxembourg Chamber of Commerce on 15 May 2014, is now open. Participation is free of charge.
4- Article on the Parent-Subsidiary proposal
Members of the CFE Fiscal Committee will receive attached the article by Christoph Marchgraber “Tacking deduction and non-inclusion schemes – the proposal of the European Commission” from European Taxation, April 2014, on the proposal for a revision of the Parent-Subsidiary Directive.
5- E-versions of the 2010-2013 CFE Forum Reports available
The CFE Forum Reports on European Taxation contain contributions related to the topics of the CFE Forums, provided by Forum speaker and other authors, edited by Servaas van Thiel.
21 April 2014
1- Commission requests business input for draft explanatory notes on the VAT treatment of services connected with immovable property
The European Commission is planning to issue explanatory notes on the VAT treatment of services connected with immovable property in mid-2015, to help applying the changes to the place of supply rules included in Regulation 1042/2013/EU which will be effective as of 1 January 2017. Business is invited to submit any issues identified in this area and suggestions for solution by 23 May 2014.
2- Commission sees discrimination in Dutch treatment of Dutch-sourced dividends paid to EU/EEA insurance companies
On 16 April 2014, the European Commission requested the Netherlands to end the discriminatory taxation of dividends received on shares held by insurance companies established in another Member State or in an EEA country. Dutch insurance companies are effectively not taxed on dividends received on shares held in the framework of unit-linked insurances. They can deduct the increase of the obligation to pay the dividends on to their policyholders from the dividends received. This reduces the corporate tax base concerning these dividends to zero, while any withholding tax is credited. However, insurance companies established in the EU or the EEA receiving Dutch dividends on shares held in the framework of unit-linked insurance on the gross dividends are taxed, without the possibility of a credit. The request takes the form of a reasoned opinion.
3- OECD VAT/GST guidelines endorsed by 86 countries
At the OECD´s Global Forum on VAT on 17-18 April 2014, the governments of 86 countries have endorsed the first three chapters of the OECD VAT/GST guidelines for cross-border trade, as adopted by the OECD in January 2014. These Guidelines set standards in two key areas: VAT neutrality and making taxes on B2B trade in services and intangibles destination-based.
4- OECD publishes comments received on BEPS Action 1 –Tax challenges of the digital economy
Comments had to be submitted by 14 April 2014. The input received was published on 16 April.
5- EP votes on country-by-country reporting of tax payments and criminal law rules concerning VAT fraud
On 15 and 16 April 2014, in its last working week before the elections, the plenary of the European Parliament adopted the Directive on “Disclosure of non-financial and diversity information by certain large companies and groups”, and a Directive on “Fight against fraud to the Union’s financial interests by means of criminal law”. The former introduces a number of reporting duties of large companies. While the vote on this Directive follows a compromise reached with the EU Council in February 2014 (it was agreed that country-by-country reporting of tax payments will not be introduced at this stage) and is likely to be adopted by the Council at one of its next meetings, the positions of the EP and the Council still differ in the latter dossier which contains harmonisation of certain criminal offences and penalties: Unlike the Council, the EP wants that Directive to apply also on VAT fraud.
– Disclosure of non-financial and diversity information by certain large companies and groups (p.312 ff)
14 April 2014
1- Commission consults on inheritance and other cross-border tax problems of individuals
On 10 April 2014, the European Commission has opened two public consultations, both until 3 July 2014:
One is a questionnaire gathering information on tax obstacles experienced by citizens, solution mechanisms in place and views on best practices and possible solutions at EU level.
The other consultation is a follow-up to the Commission´s Recommendation 2011/856/EU on double taxation in inheritance tax. The Commission consults on double tax problems experienced, the effectiveness of relief measures, progress since the adoption of aforementioned Recommendation and the stakeholders´ opinion on the principles included therein.
Inheritance tax problems within the EU:
Tax problems of citizens crossing borders:
2- Commission creates expert group on tax problems of individuals
In parallel to the above-mentioned public consultations, the Commission announced the creation of an expert group on removing tax problems facing individuals who are active across borders within the EU. These may include personal income tax as well as inheritance or gift tax. Its (one-year) mandate will be to assist the Commission in the formulation of policy initiatives. Work is scheduled to start already in June 2014. Experts on these fields can apply to the Commission by 2 May 2014.
3- ECJ: Member state may not exclude dividends paid by nationally established companies to an investment fund in a non-Member State from a tax exemption if there is an obligation of mutual administrative assistance
As the European Court of Justice in its judgment of 10 April 2014 on the Polish preliminary ruling case C-190/12, Emerging Markets Series of DFA Investment Trust Company, further pointed out, it is for the national court to examine whether the agreed mechanism for the exchange of information enables the tax authorities to verify the information provided by the investment fund.
4- OECD publishes comments received on BEPS Action 6 –Tax treaty abuse
The OECD has published the comments received on its public discussion draft “Preventing the granting of treaty benefits in inappropriate circumstances”, part of Action 6 of its “Base Erosion and Profit Shifting” Action Plan. The consultation was open until 9 April 2014.
5- High level group on business services calls for EU double tax agreement and mandatory tax arbitration
On 9 April 2014, the High Level Group on business services, inaugurated by Commissioners Antonio Tajani and Michel Barnier, presented their final report on how the EU can increase innovation and productivity gains in services. In tax matters, the group recommends “a multilateral EU-wide double tax agreement” and a legislative proposal containing “a requirement on tax authorities to settle between them a dispute, when a business is subject to demands on the same money stream from two or more given authorities”.
Fiscal Committee 31 March 2014
1- Release of the discussion draft on Action 1 (Tax Challenges of the Digital Economy) of the BEPS Action Plan
On March 24th, the OECD released the discussion draft on Action 1 (Tax Challenges of the Digital Economy) of the BEPS Action Plan.
Public comments are invited on a discussion draft that includes the proposals produced with respect to Action 1 (Tax Challenges of the Digital Economy) of the BEPS Action Plan.
2- OECD Secretary-General welcomes international progress towards automatic exchange of information
On March 24th, OECD Secretary-General Angel Gurría has welcomed moves by more than 40 countries – reinforced by EU leaders – to commit to a detailed timetable to step up the fight against tax evasion.
3- Council adopts new rules on the taxation of savings income
On March 24th, the EU Savings Tax Directive was formally adopted by Member States, strengthening EU rules on the exchange of information on savings incomes.
Commission services’ presentation.
4- Commission orders Luxembourg to deliver information on tax practices
The European Commission has called on Luxembourg to submit information that the Commission needs in order to assess whether certain tax practices favour certain companies, in breach of EU state aid rules.
5- CFE Albert Rädler Medal
On March 27th, for the first time, the Confédération Fiscale Européenne (CFE) awarded the Albert J. Rädler Medal to encourage academic excellence in European taxation.
24 February 2014
1- BEPS timetable update
On 20 February, the OECD has updated its timetable indicating when it intends to deliver the outcomes of its BEPS (base erosion and profit shifting) Action Plan.
2- United States´ Inland Revenue Service releases Transfer Pricing Audit Roadmap
The document has been designed as a practical toolkit to provide transfer pricing practitioners with
audit techniques and tools to assist with the planning, execution and resolution of transfer pricing examinations.
3- Anti Money Laundering: EP Committees vote for public registers on beneficial owners
On 20 February 2014, the ECON and LIBE Committees of the European Parliament voted on the proposal for a 4th Anti Money Laundering Directive. MEPs favoured the introduction of public registers of ultimate beneficial owners of companies, foundations and trusts established in the EU. A consolidated version of the voted text is not yet available. The EP plenary will vote on the proposal in March.
– EP press release: http://www.europarl.europa.eu/news/de/news-room/content/20140210IPR35562/html/Money-laundering-MEPs-vote-to-end-anonymity-of-owners-of-companies-and-trusts
4- Commission further pursues two infringement cases against Luxembourg, in VAT and reinvestment of property income
On 20 February 2014, the European Commission has decided to take Luxembourg to the European Court of Justice concerning the country’s VAT regime applicable to independent groups of persons. As the Commission explains, 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, a condition which the Luxembourg rule providing for a ceiling for taxed operations does not fulfil.
Another case concerns the country´s discriminatory tax treatment of taxpayers who reinvest property income in another EU/EEA country. The Commission has issued a reasoned opinion, giving Luxembourg two months to react.
– February infringement package: http://europa.eu/rapid/press-release_MEMO-14-116_en.htm
5- OECD publishes comments received on technical changes to Model Convention
The OECD has published the comments received on a discussion draft on technical changes to be included in the next update to the Model Tax Convention. The consultation ended on 15 January 2014.
20 January 2014
1- OECD publishes comments received on the Tax Challenges of the Digital Economy
13/01/2014 -On 22 November 2013, a request for input on the tax challenges of the digital economy was published on the OECD website, with a deadline of 22 December 2013.
The OECD is grateful to the commentators for their input which will be discussed by delegates to the Task Force on the Digital Economy at its February 2014 meeting.
2- Save the date – OECD Live Webcast: “BEPS Action Plan: Update on 2014 Deliverables”
Date: Thursday, 23 January 2014
Time: 3:00pm – 4:00pm CET
Join the OECD on Thursday, 23 January 2014 from 3:00pm – 4:00pm CET when senior members from the OECD’s Centre for Tax Policy and Administration (CTPA) will give you the latest update on:
The webcast will be available for viewing on the website (http://www.oecd.org/tax/beps-webcasts.htm) 1-2 days after the live broadcast.
3- Disclosure non-financial information – consolidated report of EP JURI committee
Please find attached the final consolidated report of the EP Legal Affairs Committee.
Please see here below the link to access the EU Report date January 13th, 2013 on MS VAT Rates.
5- Ecofin report on tax issues 2013/2
The report on tax issues of the EU Ecofin Council of 12 December 2013 has been published. The text prepared for the December European Council summarises the progress reached in the most important EU tax legislative and policy projects during the Lithuanian EU Council presidency.