Despite the best efforts of the current Spanish Council Presidency, EU member states did not reach an agreement on the Unshell proposal in November. Negotiations are continuing, but reportedly the differences in opinion are still significant. Same is true for the FASTER proposal, which was supposed to introduce a EU-wide system for withholding tax relief. Here again, disagreements on the fine details persist with no obvious way forward. DEBRA, aiming to address the debt-equity bias, seems to be in the freezer for the time being. And negotiations on BEFIT, one of the Commission’s latest flagship proposals launched in September, will not begin seriously until early 2024.
In the meanwhile, the Commission is entering its so-called ‘cut-off period’ prior to the June elections during which it will issue no new legislative proposals. This means that SAFE, the tax enablers initiative that was expected for months now, is very unlikely to come out at least before the new Commission has been set up in autumn 2024 and even then, its fate will depend on the political priorities of the new Commissioners.
All this to say that the momentum of EU’s tax legislation seems to be slowing down and a ‘calmer period’ of at least a year or so is to be expected. But as always with such predictions, things can change fast if sudden political compromises are reached or new tax leaks emerge that compel the Commission and member states to take action.
Moreover, in the area of indirect taxation a glimmer of hope remains. Belgium will take up the Council’s six-month rotating presidency in January. Reportedly, one of Belgium’s ambitions is to reach an agreement on the VAT in the Digital Age (ViDA) file during its term. This initiative aims to introduce more real-time reporting, electronic invoicing, adjusted rules for online platforms and more. Its impact – and the potential benefits for EU companies – should not be underestimated.
And tax will of course continue to be a highly political topic. Speaking at a conference in November, a senior Commission tax official confirmed that the Commission and member states will continue to engage intensely with the OECD to ensure maximum progress on Pillar One. The official confirmed that the Commission does not intend to propose EU legislation to implement Pillar One – unlike with Pillar Two – and thus leaving it to the member states alone. However, the same official warned that in the absence of a Pillar One agreement, an ‘avalanche’ of ‘national and regional’ digital services taxes should be expected.
Finally, the Parliament elections will no doubt maintain tax on the political agenda, with many candidates likely to campaign on tax justice, green taxation and tax burden agendas. Thus the upcoming year will by no means be boring on the tax front.
Home >Articles > EU watch: window of opportunity for new tax laws closing
EU watch: window of opportunity for new tax laws closing
Despite the best efforts of the current Spanish Council Presidency, EU member states did not reach an agreement on the Unshell proposal in November. Negotiations are continuing, but reportedly the differences in opinion are still significant. Same is true for the FASTER proposal, which was supposed to introduce a EU-wide system for withholding tax relief. Here again, disagreements on the fine details persist with no obvious way forward. DEBRA, aiming to address the debt-equity bias, seems to be in the freezer for the time being. And negotiations on BEFIT, one of the Commission’s latest flagship proposals launched in September, will not begin seriously until early 2024.
In the meanwhile, the Commission is entering its so-called ‘cut-off period’ prior to the June elections during which it will issue no new legislative proposals. This means that SAFE, the tax enablers initiative that was expected for months now, is very unlikely to come out at least before the new Commission has been set up in autumn 2024 and even then, its fate will depend on the political priorities of the new Commissioners.
All this to say that the momentum of EU’s tax legislation seems to be slowing down and a ‘calmer period’ of at least a year or so is to be expected. But as always with such predictions, things can change fast if sudden political compromises are reached or new tax leaks emerge that compel the Commission and member states to take action.
Moreover, in the area of indirect taxation a glimmer of hope remains. Belgium will take up the Council’s six-month rotating presidency in January. Reportedly, one of Belgium’s ambitions is to reach an agreement on the VAT in the Digital Age (ViDA) file during its term. This initiative aims to introduce more real-time reporting, electronic invoicing, adjusted rules for online platforms and more. Its impact – and the potential benefits for EU companies – should not be underestimated.
And tax will of course continue to be a highly political topic. Speaking at a conference in November, a senior Commission tax official confirmed that the Commission and member states will continue to engage intensely with the OECD to ensure maximum progress on Pillar One. The official confirmed that the Commission does not intend to propose EU legislation to implement Pillar One – unlike with Pillar Two – and thus leaving it to the member states alone. However, the same official warned that in the absence of a Pillar One agreement, an ‘avalanche’ of ‘national and regional’ digital services taxes should be expected.
Finally, the Parliament elections will no doubt maintain tax on the political agenda, with many candidates likely to campaign on tax justice, green taxation and tax burden agendas. Thus the upcoming year will by no means be boring on the tax front.
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