EU: Update on the EU Code of Conduct Group (Business Taxation)

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EU: Update on the EU Code of Conduct Group (Business Taxation)

van-der-made.jpg

Bob van der Made

The Lithuanian EU Presidency presented its end-of-term six-monthly progress report on the EU Code of Conduct Group (Business Taxation) to the ECOFIN Council. With regard to the code group, the ECOFIN Council (the EU-28 finance ministers) of December 10 2013 subsequently:

  • Welcomed the progress achieved by the code group during the Lithuanian Presidency as set out in its six-monthly progress report;

  • Asked the group to continue monitoring standstill and the implementation of the rollback as well as its work under the Work Package 2011;

  • Invited the Commission to continue and conclude the dialogue with Switzerland by June 30 2014;

  • Invited the group to continue its consideration of the draft guidance on hybrid entity and hybrid permanent establishment mismatches;

  • Invited the group to analyse the third criterion of the Code of Conduct (presence or not of real economic activity) by the end of June 2014;

  • Invited the group to assess or consider all patent boxes in the EU, including those already assessed or considered before, by the end of 2014, ensuring consistency with the principle of equal treatment, against the background of BEPS;

  • Invited the group to report back on its work to the Council by the end of the Greek Presidency in June 2014.

The code group is a political, inter-governmental peer pressure group which brings together on a fairly regular basis the 28 directors-general of the national Ministries of Finance, Brussels-based national fiscal attachés, as well as direct tax officials from the European Commission.

The code group is therefore not a formal EU institutional / Council legislative working group. Decision-making is based on consensus minus one (if necessary) to ensure that progress can be made. While its recommendations are soft law, they are nevertheless quite binding on member states. As an illustration of the code group's prowess, for instance, the political agreement reached in the code group in 2010 on tackling hybrid loan mismatches (PPLs) will now be codified in the revised EU Parent-Subsidiary (legislative) Directive this year. The code remains essentially under the radar as an obscure, opaque process and that is exactly why it is so successful. The only real substantial reporting on this group are six-monthly progress reports to the EU's finance ministers by each outgoing EU Presidency, and even these reports are usually only made available to the general public after three weeks or so. No other formal announcements and no official minutes of the code group are published.

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

PwC

Tel: +31 88 792 3696

Website: www.pwc.com

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