Weekly Tax News – 15 October 2018

Digital tax proposal keeps dividing opinions within the European Institutions

On Tuesday 9 Ocotber the EP-rapporteurs of the Commission’s digital services tax MEP Dariusz Rosati and MEP Paul Tang presented their reports on both the comprehensive solution and the interim tax. As Rosati’s report does not raise substantial changes to the original proposal, he pleads for clearer definitions and a control mechanism for correct application of the directive within all Member States.

MEP Tang however, recommends an increase of the tax rate from 3% to 5%, as well as the broadening of the directive’s scope to cover video, audio and text content using digital interface. He also proposes to cover the online sales of goods or services via e-commerce platforms. The vote in the ECON committee is scheduled for 3 December before voting in the Plenary in January 2019.

The proposal seems to unite more and more Member States in the Council. The Austrian Presidency is hoping to reach a political agreement by the end of the year, especially now that the French government’s proposal of a sunset clause gained popularity among some reluctant Member States.

Ireland, Finland and the Czech Republic are still amongst those who consider an EU-specific digital tax as problematic and plead for a global digital tax.

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Council adopts tough new rules on money laundering

On 11 October the Council for Justice and Home Affairs has adopted a complementary directive to the already existing directive on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing.

The new rules include a punishment by an imprisonment of maximum 4 years for money laundering activities. In addition it will be possible to hold legal entities liable for certain money laundering activities. Last but not least the Council removed obstacles to cross-border judicial and police cooperation.

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EU blacklist of tax havens might include EU members in the future

On 10 October the Head of the Code of Conduct Group on Business Taxation, Fabrizia Lapecorella, was invited for an exchange of views to the TAX3 Committee of the Parliament. Lapecorella was attacked by almost all political parties for the lack of transparency regarding her group’s work. MEPs were also criticizing the fact that the EU’s blacklist of tax havens was limited to non-EU countries. Lapecorella informed the MEPs that they were currently discussing endeavours to screen EU Member States with the same criteria than non-Members. The Austrian Presidency is reviewing the mandate of the Code of Conduct Group for better tackling tax competition.

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Danish State aid request approved by Commission

The Commission found that the extension of the Danish tonnage tax scheme to new types of vessels was in line with EU State aid rules and approved it. Competition Commissioner Margrethe Vestager is hoping that this will help the Danish shipping industry to remain competitive by reserving jobs and promoting high environmental standards at the same time.

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