EU: EU leaders reach conclusions on EU tax policy

Bob van der Made

EU leaders reached the following conclusions in respect of EU tax policy at their meeting on December 19 – 20 2013 in Brussels:

• Recalling its conclusions of May 2013, the European Council calls for further progress at the global and EU levels in the fight against tax fraud and evasion, aggressive tax planning, BEPS and money laundering.
• The European Council welcomes work undertaken in the OECD and other international fora to respond to the challenge of taxation and ensure fairness and effectiveness of tax systems, in particular the development of a global standard for automatic exchange of information, so as to ensure a level playing-field.
• Building on the momentum towards more transparency in tax matters, the European Council calls on the Council to reach unanimous political agreement on the Directive on administrative cooperation in early 2014.
• It calls for speeding up the negotiations with European third countries and asks the Commission to present a progress report to its March meeting. In the light of this, the revised Directive on the taxation of savings income will be adopted by March 2014.
• The European Council also takes note of the Council progress report to EU leaders on tax issues, welcomes the establishment by the Commission of an EU high level expert group on taxation of the digital economy, and invites the Commission to take into account the (parallel) work at the OECD, and report back to the Council as soon as possible.
• Progress should also be made quickly towards agreement on amending the EU Parent-Subsidiary Directive.
• The European Council calls for further progress on the disclosure of non-financial information by large groups.

As to the Parent-Subsidiary Directive: outgoing EU Tax Commissioner Algirdas Semeta is eager to reach unanimous political agreement in the ECOFIN Council by May or June 2014. However, for this to happen it is understood that the Commission will need to drop its proposed introduction of a common general anti-avoidance rule, as there seems no unanimous support among member states for this. It is understood that the other main strand of the Commission's proposal to neutralise the distorting effects of mismatches resulting from differences in the tax treatment of hybrid loans between member states, should be successful and might be adopted by ECOFIN before the summer or in the second half of 2014. This largely depends on whether the European Parliament can issue its Opinion before the European elections.

As to the proposed Directive on disclosure of non-financial information by large groups, a number of member states who were against the proposed inclusion in this Directive of an obligation for large companies to also disclose country-by-country profits, taxes and subsidies received where they operate, were successful in keeping any reference to tax reporting out of the European Council's conclusions. Two days before the European Council meeting, a majority of the members of the EU Parliament (MEPs) in the Legal Affairs Committee dealing with this issue from the Parliament's side, agreed with the opposing member states that when reviewing this Directive in 2018, the Commission should consider introducing such an obligation, despite the fact that some MEPs wanted to propose including such a requirement immediately. It remains to be seen what comes out of the trilogue compromise negotiations between the Commission, Council and Parliament on country-by-country reporting, in the light of the ongoing international work on this topic at the OECD, as commissioned by the G8/G20.

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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