On 15 July, the European Commission published its anticipated tax package. The package consists of a mixture of legislative proposals and non-legislative roadmaps that give indications of the Commission’s future plans. Although there are few surprises, the package demonstrates the Commission's commitment to ambitious tax reforms.
The package consists of three main elements:
The proposed DAC 7 revision extends the scope of EU’s existing tax information exchange rules to digital platforms. It is the only actual legislative proposal of the package.
It aims, on the one hand, to ensure that member states collect and automatically exchange information on the revenues generated by sellers on online platforms. As such, the proposed new rules standardise reporting obligations of platforms across the EU.
On the other hand, DAC 7 aims to clarify the rules in other areas in which member states work together to fight tax abuse, for example with explicit inclusion of joint tax audits and group requests into DAC’s legal text.
The proposals also bring VAT into DAC’s scope by stating that the communicated information between EU member states may also be used for the assessment, administration and enforcement of VAT and other indirect taxes.
As always with tax proposals, EU member states will decide on DAC 7 unanimously, whilst the European Parliament merely provides its non-binding opinion.
The second overarching element of the tax package is the communication on tax good governance in the EU and beyond. The communication is legally non-binding, but it presents the Commission’s ‘soft’ measures to promote good tax governance in the coming years.
These include suggestions for reforming the EU’s code of conduct on business taxation (see last EU Watch edition for details). For example, the Communication states that the OECD’s pillar two minimum tax agreement will be introduced into the EU code, or in the absence of an OECD agreement as a stand-alone EU standard. The Commission also calls for widening the code’s scope to cover more types of regimes, general aspects of the national corporate tax systems and relevant taxes other than corporate tax, including golden visas. This is in stark contrast to the status quo, where the code only looks at specific tax types and regimes.
In addition to the above, the Commission:
The third and final element of the tax package is the so-called action plan on fair and simple taxation. Like the communication, it is legally non-binding but possibly one of the package’s juiciest elements, as it presents 25 actions to make tax simpler, fairer and better adjusted to the modern economy that the Commission intends to take.
Some initiatives to look forward to include the following:
In summary, the Commission has announced a vast and ambitious package of tax reforms, which will keep it – as well as tax specialists and EU policy geeks working on taxation – very busy for the next few years.
On 15 July, the European Commission published its anticipated tax package. The package consists of a mixture of legislative proposals and non-legislative roadmaps that give indications of the Commission’s future plans. Although there are few surprises, the package demonstrates the Commission's commitment to ambitious tax reforms.
The package consists of three main elements:
The proposed DAC 7 revision extends the scope of EU’s existing tax information exchange rules to digital platforms. It is the only actual legislative proposal of the package.
It aims, on the one hand, to ensure that member states collect and automatically exchange information on the revenues generated by sellers on online platforms. As such, the proposed new rules standardise reporting obligations of platforms across the EU.
On the other hand, DAC 7 aims to clarify the rules in other areas in which member states work together to fight tax abuse, for example with explicit inclusion of joint tax audits and group requests into DAC’s legal text.
The proposals also bring VAT into DAC’s scope by stating that the communicated information between EU member states may also be used for the assessment, administration and enforcement of VAT and other indirect taxes.
As always with tax proposals, EU member states will decide on DAC 7 unanimously, whilst the European Parliament merely provides its non-binding opinion.
The second overarching element of the tax package is the communication on tax good governance in the EU and beyond. The communication is legally non-binding, but it presents the Commission’s ‘soft’ measures to promote good tax governance in the coming years.
These include suggestions for reforming the EU’s code of conduct on business taxation (see last EU Watch edition for details). For example, the Communication states that the OECD’s pillar two minimum tax agreement will be introduced into the EU code, or in the absence of an OECD agreement as a stand-alone EU standard. The Commission also calls for widening the code’s scope to cover more types of regimes, general aspects of the national corporate tax systems and relevant taxes other than corporate tax, including golden visas. This is in stark contrast to the status quo, where the code only looks at specific tax types and regimes.
In addition to the above, the Commission:
The third and final element of the tax package is the so-called action plan on fair and simple taxation. Like the communication, it is legally non-binding but possibly one of the package’s juiciest elements, as it presents 25 actions to make tax simpler, fairer and better adjusted to the modern economy that the Commission intends to take.
Some initiatives to look forward to include the following:
In summary, the Commission has announced a vast and ambitious package of tax reforms, which will keep it – as well as tax specialists and EU policy geeks working on taxation – very busy for the next few years.
