On Tuesday 11 October 2016 the Council will discuss the VAT aspects of a proposal addressing fraud against the EU budget by means of criminal law. It is expected to adopt conclusions on tax transparency and to approve a taxation agreement with Monaco.
VAT aspects
The Council will be briefed on negotiations on a proposal against fraud ("PIF directive"), three days ahead of a debate by the Justice and Home Affairs Council.
It will hold an exchange of views.
The draft directive sets out to address fraud against the EU's budget by means of criminal law.
The JHA Council is primarily responsible for the dossier. The Economic and Financial Affairs Council will discuss VAT-related aspects.
When the proposal was tabled in 2012, a majority of member states considered that VAT fraud should be excluded from its scope. Protection mechanisms are in place at national level and only a small portion of VAT revenues are transferred to the EU budget. However, in a 2015 judgement (C-105/14 Ivo Taricco and others), the Court of Justice confirmed that VAT represents a source for the EU budget.
Recent discussions have shown that including at least serious forms of VAT fraud in the scope of the directive is now more generally accepted within the Council. However, a number of member states are still opposed.
Tax transparency
The Council is expected to adopt, without discussion, conclusions on further measures to enhance tax transparency and prevent tax abuse.
The conclusions come in response to a July 2016 Commission communication on possible EU action following the April 2016 Panama Papers revelations.
They highlight the need to prevent the large-scale concealment of funds, which hinders efforts to clamp down on tax evasion, money laundering and terrorist financing.
Tax evasion and tax avoidance deprive public budgets of billions of euros in revenues each year, distort competition between businesses and erode fairness in tax systems. SMEs, which are the main source of employment in Europe, end up paying proportionately more taxes than larger companies that engage in aggressive tax planning. Tax avoidance can also increase the tax burden on labour, as governments compensate for the lost revenue by increasing taxes elsewhere.
The Commission recommends a coordinated approach to tackling tax abuse, at both EU and international levels. It cites progress made so far, which is already improving the tax environment for citizens and businesses in Europe.
Loopholes remain however and further action envisaged by the Commission includes:
- harnessing the link between measures to prevent money laundering and tax transparency rules;
- improving information exchange on beneficial ownership, so as to increase transparency about who owns companies and trusts;
- increased oversight of enablers and promoters of aggressive tax planning;
- promoting good tax governance standards worldwide;
- improving the protection of whistle-blowers.
The G20 in July 2016 called on the OECD and the Financial Action Task Force (FATF) to make
proposals to improve implementation of international transparency standards. The FATF is an
international body working on money laundering and terrorist financing issues.
Taxation agreement - Monaco
The Council is expected to approve, without discussion, the conclusion of an agreement with Monaco aimed at improving tax compliance by private savers. The agreement will require EU member states and Monaco to exchange information automatically as a means of preventing tax evasion.
It will give their tax administrations improved cross-border access to information on the financial accounts of each other's residents. The agreement upgrades a 2004 agreement that obliged Monaco to apply measures equivalent to those in an EU directive on the taxation of savings income. The agreement was signed in Brussels on 12 July 2016.
Bron: Economic and Financial Affairs Council
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