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EU watch: no lack of ambition

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At the European Commission, President-elect Ursula von der Leyen announced her new cabinet and the respective portfolios of each cabinet member, on 10 September.

The former Italian prime minister, Paolo Gentiloni, was appointed commissioner for taxation, succeeding Pierre Moscovici. In her appointment letter to Gentiloni, Ursula tasked him with the following priorities:

  • on digital taxation, lead efforts for an OECD solution but if this is not found in 2020, take forward a European digital tax;
  • environmental taxation, including carbon border tax and revising the Energy Tax Directive;
  • finalise the common consolidated corporate tax base (CCCTB) and introduce overall simplifications to the tax system;
  • focus on anti-avoidance, with an emphasis on VAT and better administrative cooperation;
  • progress on third country tax havens and so-called list of non-cooperative jurisdictions; and
  • abandon unanimity on tax decision making and move to qualified majority voting.

With Gentiloni, Frans Timmermans (in charge of the climate agenda) will coordinate work on environmental taxes. Margrethe Vestager (competition and digitalisation) will coordinate on digital taxation. Both commissioners, as executive vice-presidents, are above Gentiloni in the commissioner hierarchy.

And finally, the Commission scored what was seen by many as a victory in its tax state aid cases. The EU’s General Court ruled against the European Commission in a case against Starbucks, which was accused by the Commission of enjoying illegal state aid in the form of a tax ruling granted by the Netherlands. However, in another case, the court found that Fiat Chrysler did enjoy preferential tax treatment from Luxembourg in a way that breached state aid rules. Despite being overturned in the Starbucks case, the Commission expressed overall happiness about the rulings, because in neither case did the court question the Commission’s power in principle to investigate whether taxation arrangements between different entities of the same group lead to an unfair tax advantage.

Meanwhile, at the European Parliament, the leads (‘coordinators’) of the economic affairs Committee (ECON) approved the setting up of a permanent sub-committee for taxation, on 16 September. This committee would replace the several ad-hoc tax committees we have seen in past years. It will keep tax prominently on the European Parliament’s agenda for the whole of the new term. The committee’s exact mandate is yet to be decided, but the Greens at least would like it to also include anti-money laundering.

Although the Parliament has little formal powers on tax, it demonstrated during the last term its ability to set the agenda and harness public opinion and pressure. A few measures can be traced back to the Parliament’s advocacy, such as the tax intermediaries Directive, public country by country reporting (CBCR) and the whistleblower protection Directive.

And finally in the Council, EU member states held first discussions about future sustainable taxation plans and the financial transaction tax (FTT). Moreover, there is some renewed movement around tax transparency and public country by country reporting (CBCR).

On the FTT, there was little progress at a working party meeting on 20 September. At a technical level, things have been progressing somewhat but the absence of governments in both Spain and Belgium has stalled negotiations for now.

On public CBCR, the Finnish presidency of the Council has confirmed that it will try to unlock the current block on the file in the next few months. Germany’s finance minister Olaf Scholz has announced that he is now in favour of public CBCR. It remains to be seen whether these two developments will be sufficient to move things forward. 

Issue: 1459
Categories: In brief
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