Special TAXE 2 Committee debates upcoming priorities

Together with the Netherlands Presidency, it debated the implementation of the BEPS package, reform of the Code of Conduct group, country-by-country reporting and patent box systems.

By Linnea Richardson

02 Mar 2016

Alain Lamassoure (EPP, FR), Chair of the Committee, began the meeting by summarising decisions taken by the Coordinators regarding the Committee’s upcoming activities. Firstly, an overriding majority of the Coordinators had elected to produce a report, rather than a resolution. The co-rapporteurs of the report will be Jeppe Kofod (S&D, DK) and Michael Theurer (ALDE, DE). He explained that the decision to produce a report means that the Committee will require more time for its work than it was initially allotted. That is why he will be asking the Conference of Presidents for a two-month technical extension of the TAXE 2 Committee, in order to be able to complete the report. He was confident that this will be approved, and if so, the draft report will be presented to the Committee on May 24 after which it will be voted in the Committee on June 20 and taken up at the July Plenary session.

Furthermore, he outlined the Committees upcoming work on hearings and delegations. Two joint hearings with the ECON Committee and Commissioner Moscovici have already been held, and today’s discussion will feature the Netherlands Presidency. If the TAXE 2 Committee’s mandate is extended, he suggested another hearing with the Presidency be held at the end of its mandate to evaluate progress. The Committee also intends to hold two additional hearings with the Commission, one with Commissioner Vestager on April 4, and one with Commissioner Hill. These hearings would provide the Committee with an opportunity to discuss the Commission’s recent actions on state aid proceedings, as well as explore how banks are advising their customers on certain fiscal arrangements. He explained that no date has been set for the hearing with Commissioner Hill, as this will depend on when the country-by-country reporting text is approved by the College of Commissioners. Coordination with the ECON and JURI Committees is also needed as they will be involved in this hearing.

In order to exchange views with representatives of different tax jurisdictions, the Coordinators have decided to hold a meeting with representatives from Guernsey and Jersey on March 14, and with representatives of Andorra, Lichtenstein, and Monaco on March 15. He commented that it would be interesting to hear more about tax regulation in these countries and what impact the OECD recommendations and the BEPS Action Plan will have.

The Coordinators have also chosen to invite a number of multinationals, although he noted that the Committee was experiencing the same difficulties with its invitations as for the TAXE 1 Committee. As only a small number of invitations can be sent out, the Coordinators chose to focus on companies that are subject to Commission or national proceedings. Invitations have already been sent to Google and Apple, both of whom have accepted. Fiat, IKEA, and McDonald’s have also been invited, though have not yet issued a reply. Starbucks were invited, but turned down the invitation. He commented that this list of companies is not exhaustive and may be added to in the future.

As regards the banking and finance sector, it has been decided that, together with the European Parliament Policy Department A, a joint workshop will be organised to present the academic findings on the role of the financial sector in aggressive tax planning. This workshop will be followed by an exchange of views with representatives from banks and financial institutions. Now, the Committee wished to discuss the banks’ relationship with their clients and how they can better fulfil their advisory role. The Coordinators have agreed on a list of banks to invite, but he said he preferred not to disclose this list until all the invitations have been sent out.

Concerning delegations and visits abroad, he informed the Committee that one visit to Cyprus will take place on April 15. Additionally, a delegation will visit Washington D.C. on May 16. This delegation hopes to meeting with different U.S. authorities, including the Treasury, the Congress, and the Senate Finance Committee. The subject of taxation is being hotly debated, especially since this is a U.S. election year, so these joint meetings will be very important. Furthermore, the U.S. is a main partner for the EU so it is important to discuss the follow-up to the BEPS Action Plan.

Also related to the BEPS follow-up, he explained that the Coordinators have decided to hold three interparliamentary meetings. One will take place on April 18 with representatives from the 28 national parliaments of the EU and will discuss the Commission’s recently presented legislative package. On May 2 in Paris, a joint event will be organised with the OECD and TAXE 2, which will be attended by national parliamentarians of the OECD countries. A third meeting (date tbc) will be jointly organised with the DEVE Committee, to which parliamentary representatives from developing countries will be invited to discuss the damage resulting from overly aggressive tax planning.

Mentioning other decisions taken by the Coordinators, he said that the Committee is trying to finalise the documentation it has requested from the Commission. He hoped the Council would also be more accommodating in the future regarding access to documents, especially minutes from the Code of Conduct group.

Sven Giegold (Greens/EFA, DE) commented that following an exchange with the Commission and DG COMP, the Committee had learned that the Commission’s resources to follow-up on illegal state aid cases is very limited, which means that there is no systematic investigation into these cases. This goes against what the Committee voted in its first report and means that some companies have to repay state aid, whereas others do not. This lack of equality before the law cannot be accepted, he said.

Alain Lamassoure (EPP, FR) introduced the Dutch State Secretary for Finance, and said that the Committee is very interested to hear the Netherlands Presidency’s priorities for this semester, as well as its views of the Commission’s proposals following the recommendations of the BEPS Action Plan. He would also like to hear the Netherlands’ position on the CCCTB, and its views on the recommendations of the TAXE 1 Committee.

Eric Wiebes, Dutch State Secretary for Finance, representing the Netherlands Presidency of the Council, began by stating that, as underlined in the TAXE 1 report, addressing aggressive tax planning is high on the agenda of both the EU Member States, but also the OECD and the G20. The Netherlands Presidency will continue the work started by the Luxembourg Presidency on addressing tax evasion, fraud and avoidance and these issues remain high on the agenda of the ECOFIN Council. The Council has indicated it wants to concentrate on implementing the BEPS Action Plan, and where possible, priority should be given to doing this through hard law, i.e. EU legislation. The Commission replied to this call by presenting the Anti-Tax Avoidance Package (ATAP) in January. To structure the Council’s work, the Netherlands Presidency has prepared a roadmap setting out concrete actions to be taken forward in the short-, medium- and long-term.

On the Presidency’s priorities, he said that it is seeking rapid progress on the Anti-Tax Avoidance Directive (ATAD), and on automatic exchange of information (DAC 4), and reform of the Code of Conduct for business taxation. Recent ECOFIN discussions have highlighted how challenging tax policy can be, and he emphasised the importance of collective tax revenue while also ensuring the EU remains attractive for investments.

Going into further detail, he commented on a few specific files:

  • Country-by-country reporting and the DAC 4 Directive – the Netherlands intends to reach an early an agreement on this file and is devoting considerable effort to this end. Its intention is to submit this file to the March ECOFIN Council with a view of reaching a political agreement then.
  • Anti-Tax Avoidance Directive (ATAD) – the Presidency also desires a swift agreement here. The technical examination has started and an agreement will hopefully be found before the summer.
  • Interest and Royalties Directive – the Presidency intends to continue discussions on the possible inclusion of a minimum effective taxation clause in this Directive.
  • Code of Conduct group – the Council is continuing to reflect on the future of the Code, its governance and its working methods. The Netherlands will propose measures to enhance transparency of the Code in the future, taking into account the ECOFIN’s wish to find a balance between improving transparency and maintaining the ability to discretely discuss issues to ensure that result-oriented discussions can take place.

Another issue the Presidency has placed on its agenda is VAT fraud. Innovative measures to tackle VAT fraud are worth looking into, he said, mentioning the potential use of transaction network analysis which uses data in a smart way without creating additional burdens, and offers the possibility to track fraud before it happens. The Presidency is also willing to look at other anti-fraud measures, and may even consider pilot projects, he said. 

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