International Tax Review is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

EU: IP regimes under scrutiny in Europe

van-der-made.jpg

Bob van der Made

The EU's Code of Conduct Group for business taxation is reviewing the existing intellectual property (IP) regimes in nine EU member states from a harmful tax practices viewpoint, particularly with regard to the point of substantial economic activity in the member state that grants the relief (the third criterion of the Code Group). At the request of the ECOFIN Council of June 20 2014, the Code Group continues to analyse the third criterion and assess or consider all existing patent boxes in the EU, including those already assessed or considered before, by the end of 2014 "against the background of international developments" including the OECD's BEPS initiative. The European Commission, which assists the work of the Code Group, meanwhile has gathered information already under EU state aid law with respect to one member state and written informally to others. The OECD has started looking into harmful tax practices again under BEPS Action 5 as well, and the Code Group is now looking to fall in behind the OECD work on the same topic, where possible.

The next Code Group meeting will be held on September 16 2014, and will discuss progress on this issue. If no broad consensus can be reached within the Code Group with the European Commission, however, on how to deal with the IP regimes which are considered harmful by the Commission, the issue is likely to be moved up to the ECOFIN Council (EU-28 Finance Ministers). Spurred in particular by strong and unrelenting voices of concern from Germany about the use of IP boxes in the EU, a fierce political debate might ensue in ECOFIN in October or November on the sustainability of IP regimes in Europe altogether. Germany's Minister of Finance, Wolfgang Schäuble, was quoted by Reuters in July 2013 already as saying: "We have to look at this practice and discuss it in Europe (…). That's no European spirit. You could get the idea they are doing it just to attract companies."

The Code Group brings together the 28 directors-general of the national ministries of Finance, national fiscal attachés based in Brussels, and European Commission officials, on a two-monthly basis. Its recommendations are soft law based on broad consensus and are politically binding on the member states. The Code Group has been quite successful ever since its establishment in 2007 owing to its continued opacity and non-transparency. The only real substantial reporting on the Code Group are six-monthly EU presidency progress reports to the ECOFIN Council. No other formal announcements other than meeting agendas are published.

Bob van der Made (bob.van.der.made@nl.pwc.com)

PwC

Tel: +31 88 792 3696

Website: www.pwc.com

more across site & bottom lb ros

More from across our site

PwC publishes detailed accounts of its behaviour in the tax scandal in Australia, while another tax trial looms for pop star Shakira.
The winners of the ITR Europe, Middle East, and Africa Tax Awards 2023 have been announced!
The winners of the ITR Asia-Pacific Tax Awards 2023 have been announced!
Mauro Faggion appeared cautiously optimistic as the European Commission waits to see whether all 27 member states will accept its proposal.
The global minimum rate also won’t entirely stop a race to the bottom, according to a tax director speaking at an ITR conference in London.
The country’s tax authorities are not interested in seeing transfer pricing studies any more, it was claimed at an ITR industry conference in London.
The controversial measure is being watered down after criticism from the European Central Bank.
More than 600 such requests were made in 2022, while HMRC has also bolstered its fraud service, it has been revealed.
The General Court reverses its position taken four years ago, while the UN discusses tax policy in New York.
Discussion on amount B under the first part of the OECD's two-pronged approach to international tax reform is far from over, if the latest consultation is anything go by.