Weekly Tax News – 12 October 2020

European Commission to turn VAT Committee into comitology committee

On 2 October, the European Commission published a roadmap on its initiative to turns the VAT committee into a “comitology committee”, thus empowering the Commission to adopt implementing acts on VAT. At present, the VAT Committee is an advisory committee made up of representatives of the Member States and of the Commission without any competence in the procedure of adoption of implementing measures. The common interpretation of EU VAT law laid down in the guidelines agreed by the VAT Committee is often not put into practice because it is not binding for the Member States. The Commission will propose a change to the VAT Directive in order to provide for empowerments for the Commission to adopt, within a precise scope, implementing acts. Outside the defined empowerment of the Commission, the Council would retain its competence to adopt implementing rules in the field of VAT.

OECD to release an update on international tax reform

On 12 October, the OECD Secretary-General Angel Gurria and Pascal Saint-Amans, (Director of the OECD Centre for Tax Policy and Administration) will present an update on the negotiations currently in place to reach an agreement on the international tax reform. The outcome of the discussion at the OECD will have a direct impact on the future tax policy of the European Union. The Tax Commissioner Paolo Gentiloni has remarked on several occasions that the European Commission will be ready to launch a proposal in early 2021, if an agreement at global level will not be reached by the end of 2020.

Cayman Islands and Oman removed from the EU tax blacklist

On 6 October, the Council has decided to remove the Cayman Islands and Oman from the EU list of non-cooperative jurisdictions for tax purposes, while adding Anguilla and Barbados. The decision of removing the Cayman Islands triggered the reaction of some Members of the European Parliament: the Chair of the FISC Committee, Paul Tang (S&D, the Netherlands) stated that EU Finance Ministers are undermining the main tool to fight tax avoidance. Pedro Marques (S&D, Portugal) asked for the FISC Committee to prioritize a review of the blacklist criteria. These changes to the blacklist bring the number of countries to twelve: American Samoa, Fiji, Guam, Samoa, Trinidad and Tobago, the US Virgin Islands, Vanuatu, Palau, Panama, the Seychelles, Barbados, and Anguilla.

European Parliament approves reduced tax rates on traditional rum for French outermost regions

On 5 October, the European Parliament approved by a large majority (681 votes in favour, 5 against and 3 abstentions) the adoption of a report by MEP Younous Omarjee (GUE/NGL, France) on the Council decision to allow a derogation from EU rules for the production of traditional rum in French outermost regions. The derogation will apply over the period 2021-2027 authorising France to reduce the excise duty and social security contribution on ‘traditional’ rum produced in Guadeloupe, French Guiana, Martinique, and Réunion and sold in mainland France, by up to 50% compared to the normal rate. In addition, two other reports by MEP Omarjee were adopted on the same day: they concern the exemption on the AIEM (Arbitrio sobre Importaciones y Entregas de Mercancías en las Islas Canarias) for the Canary Islands and on “dock dues” tax on imports of goods into the French outermost regions.

Spain to launch FTT and Digital Tax

On 7 October, the Spanish Senate has approved the so-called financial transaction tax and a tax on digital services which will come into force in January 2021. The digital tax will consist of a 3% rate to be applied on the income of digital companies with a turnover of more than EUR 750 million worldwide, or EUR 3 million in Spain alone. The financial transaction tax sets a rate of 0,2% on the purchase and sale of shares in Spanish companies with a market capitalisation of more than EUR 1 billion.