European Union

Source : © European Union, 2015 - EP

On 8 December 2015, the European Union and San Marino signed an agreement aimed at improving tax compliance by private savers. 

The agreement will contribute to efforts to clamp down on tax evasion, by requiring the EU member states and San Marino to exchange information automatically. 

This will allow their tax administrations improved cross-border access to information on the financial accounts of each other's residents. 

Upgrade

The agreement upgrades a 2004 agreement that ensured that San Marino applied measures equivalent to those in an EU directive on the taxation of savings income. The aim is to extend the automatic exchange of information on financial accounts in order to prevent taxpayers from hiding capital representing income or assets for which tax has not been paid.

"The sharing of information between national tax authorities remains one of the fundamental elements of an effective fight against tax fraud and tax evasion. The EU is undoubtedly a leader in this field."

Pierre Gramegna, Minister for Finance of Luxembourg

The text was signed in Brussels: 

• on behalf of the EU, by Pierre Gramegna, minister for finance of Luxembourg and president of the Council;
• on behalf of San Marino, by Antonella Benedettini, ambassador, head of mission.

The signature took place in the presence of Pierre Moscovici, commissioner for economic and financial affairs, taxation and customs, who also signed the document. 

Decision 

The Council adopted a decision on 8 December 2015 to authorise the signature on behalf of the EU.

"The sharing of information between national tax authorities remains one of the fundamental elements of an effective fight against tax fraud and tax evasion", Mr Gramegna said. "The EU is undoubtedly a leader in this field."

The EU and the OECD 

The agreement ensures that San Marino applies strengthened measures that are equivalent to measures in force in the EU. However, whereas the 2004 agreement was based on the EU's taxation savings directive, that directive has now been repealed. Directive 2003/48/EC was repealed on 10 November 2015 in order to eliminate an overlap with directive 2014/107/EU, which includes strengthened provisions to prevent tax evasion. 

The agreement also complies with the automatic exchange of financial account information promoted by a 2014 OECD global standard. 

The EU signed similar agreements with Switzerland, on 27 May 2015, and with Liechtenstein on 28 October 2015. It approved the conclusion of those agreements on 8 December 2015. 

Coverage 

It sets out to limit the opportunities for taxpayers to avoid being reported to the tax authorities by shifting assets. Information to be exchanged concerns not only income such as interest and dividends, but also account balances and proceeds from the sale of financial assets.

Tax administrations in the member states and in San Marino will be able to:

• identify correctly and unequivocally the taxpayers concerned;
• administer and enforce their tax laws in cross-border situations;
• assess the likelihood of tax evasion being perpetrated;
• avoid unnecessary further investigations.

The EU and San Marino must now ratify or approve the agreement in time to enable its entry into force. Provisional application is scheduled for 1 January 2016.

The Council:  

1. NOTES that effective corporate taxation can be undermined by base erosion and profit shifting;
2. STRESSES that unfair tax competition between Member States as well as between the latter and third countries could affect the functioning of the Single Market, whilst acknowledging the importance of taxation for competitiveness;
3. RECALLS and CONFIRMS the European Council conclusions of 18 December 2014 stating the urgent need to advance efforts in the fight against tax avoidance and aggressive tax planning, both at the global and EU levels;
4. RECALLS the European Council Conclusions of 13 and 14 March 2013 on the need for close cooperation with the OECD and the G20 to develop internationally agreed standards for the prevention of BEPS and in particular its call for the European Union to coordinate its positions;
5. HIGHLIGHTS the recent political agreement reached by the Council on automatic exchange of information of tax rulings and the pioneer role of the European Union in this field in fully implementing OECD BEPS conclusions on Action 5 (harmful tax practices);
6. WELCOMES the conclusions of the OECD Base Erosion and Profit Shifting (BEPS) Action Plan, as recently endorsed by G20 Finance Ministers in Lima, Peru, on 8 October 2015 and G20 Heads of State in Antalya, Turkey, on 15-16 November 2015;
   
   Implementation of OECD BEPS conclusions
   
   
7. NOTES that G20 Finance Ministers renewed on 8 October 2015 a commitment for swift, global and efficient implementation of BEPS conclusions and asked the OECD to prepare an inclusive monitoring framework by early-2016;
8. INDICATES that several legislative proposals linked to the BEPS agenda are currently under discussion in the Council, notably the proposal for a Common Consolidated Corporate Tax Base (CCCTB) and the recast of the Interest and Royalties Directive (IRD);
9. UNDERLINES furthermore that the Code of Conduct Group on business taxation established in 1998 continues to perform important non-legislative work in combating BEPS phenomena both inside the European Union and towards third countries;
10. STRESSES therefore the need to find common, yet flexible, solutions at the EU level consistent with OECD BEPS conclusions, paying specific attention to compliance with EU Treaty freedoms and competences and SUPPORTS an effective, swift and coordinated implementation by Member States of the anti-BEPS measures to be adopted at EU level;
11. OBSERVES that OECD BEPS conclusions often propose different options for implementing certain of its recommendations and that a common approach at EU level in favour of certain options would bring value with a view to ensure the proper functioning of the Single Market;
12. CONSIDERS that EU directives should be, where appropriate, the preferred vehicle for implementing OECD BEPS conclusions in the EU in order to ensure both legal certainty and proportionality in the level of harmonisation required by the Single Market;
13. AGREES in this respect that where the implementation of an OECD BEPS conclusion is foreseen through EU legislation this process is given priority over possible parallel soft-law discussions;
14. UNDERLINES at the same time the role that can be played by the Code of Conduct Group in providing guidance to Member States for implementing certain other OECD BEPS conclusions;
15. INVITES the Council's High Level Working Party on Tax Questions (HLWP) to closely monitor the implementation of the anti-BEPS actions at EU level and, more generally, to play a central role in overseeing work in this field, as it has done so far, including through 6-monthly Presidency BEPS roadmaps when presented;
    
    Implementation of BEPS conclusions through EU legislation
    
    
16. TAKES NOTE of the Commission's expert group final report on the taxation of the digital economy (May 2014) and of the subsequent OECD BEPS conclusions on Action 1, as well as of the Commission's intention to revise in 2016 value added tax (VAT) rules in the context of its 'Digital Agenda for Europe' initiative;
17. RECALLS that OECD BEPS conclusions on Actions 2 (hybrid mismatches), 3 (Controlled Foreign Company rules), 4 (interest limitation rules), 6 (general anti-abuse rule), 7 (permanent establishment status) and 13 (country by country reporting) might be implemented, following further technical analysis, through legislative proposals focusing on international anti-BEPS aspects, without precluding the application by Member States of domestic or agreement-based provisions aimed at preventing BEPS;
18. INVITES therefore the Commission to come forward with a proposal on these international aspects which takes fully into account the work done on these issues in the frame of the on-going legislative files, notably CCCTB;
19. NOTES that the insertion of a common anti-abuse clause is envisaged in the context of the recast of the Interest and Royalties Directive, following the insertion of a similar clause in the Parent-Subsidiary Directive, on the basis notably of OECD BEPS conclusions on Action 6;
20. ACKNOWLEDGES the need for further discussion on the concept of minimum effective taxation, in particular within the recast of the Interest and Royalties Directive;
21. INVITES the Commission to reflect on possibilities to improve the availability of corporate taxation data and statistics at the EU level on the basis of OECD BEPS conclusions on Action 11;
    
    A complementary 'soft law' approach
    
    
22. NOTES that OECD BEPS conclusions on OECD Action 2 (neutralising the effects of hybrid mismatch arrangements) are being taken into account for ongoing works of the subgroup on hybrid mismatches of the Code of Conduct Group and  INVITES the Code of Conduct Group and the Subgroup to discuss the forms of hybrid mismatches which are not addressed  through EU legislation;
23. RECALLS its previous endorsement of the modified nexus approach (doc. 16846/14) and INVITES the Code of Conduct Group to follow this approach, as outlined in OECD BEPS conclusions on Action 5 (harmful tax practices), for monitoring the legislative processes necessary for Member States to change their existing 'patent box' regimes;
24. INVITES the Code of Conduct Group to assess the opportunity, in the light of the fourth criterion, of developing EU guidance for implementing OECD BEPS conclusions on Actions 8-9-10 (aligning transfer pricing outcomes with value creation) and on Action 13 (Guidance on transfer pricing Documentation), with the support of the Commission and its advisory bodies, notably the EU Joint Transfer Pricing Forum;
25. INVITES equally the Code of Conduct Group to assess the opportunity of developing EU guidance for implementing OECD BEPS conclusions on Action 12 (disclosure of aggressive tax planning), notably with a view to facilitate exchange of such information between tax authorities;
    
    Other implementation issues
    
    
26. NOTES that certain OECD BEPS conclusions concern bilateral double taxation agreements entered into by Member States and CONSIDERS that some form of exchange of views through the HLWP would in this respect be useful;
27. STRESSES the need for a swift and efficient implementation of OECD BEPS conclusions also at global level and LOOKS FORWARD to the multilateral instrument to modify tax treaties envisaged under OECD BEPS conclusions on Action 15 expected by the end of 2016;
28. UNDERLINES the importance of involving a maximum number of countries, including developing countries, in order to ensure a level playing field in the area of BEPS. 

European Council meeting will take place on 17-18 December 2015 in Justus Lipsius building in Brussels. 

Journalists who have not yet applied for accreditation may apply online for last-minute accreditation:

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Considering the time and resources needed for these verifications, not all requests may be processed. Media are therefore advised to avoid sending representatives falling into these categories. 

General : Recent events in Europe have brought the issues of marginalisation and extremism to the forefront of public debate. On 7 December Parliament's culture committee adopted a report on the role of intercultural dialogue, cultural diversity and education in promoting EU fundamental values. Ahead of the vote, we spoke to report author Julie Ward, a UK member of the S&D: "We have one world and we have to find some way of being mutually respectful and tolerant of each other."

Source : © European Union, 2015 - EP

General : Recent events in Europe have brought the issues of marginalisation and extremism to the forefront of public debate. On 7 December Parliament's culture committee adopted a report on the role of intercultural dialogue, cultural diversity and education in promoting EU fundamental values. Ahead of the vote, we spoke to report author Julie Ward, a UK member of the S&D: "We have one world and we have to find some way of being mutually respectful and tolerant of each other."

Source : © European Union, 2015 - EP

The Council: 

1. RECALLS its determination to combat tax fraud, tax evasion and aggressive tax planning at EU and global level;
2. RECALLS the adoption by the Council and the representatives of the Governments of the Member States, meeting within the Council, in December 1997 of a resolution on a Code of conduct for business taxation (hereafter "the Code");
3. RECALLS the subsequent establishment in March 1998 of a Code of Conduct Group (hereafter "the Group") to assess the tax measures falling within the scope of the Code and oversee the provision of information on these measures;
4. UNDERLINES that the May 2013 European Council conclusions noted that “it is important to continue work within the EU on the elimination of harmful tax measures. To that end, work should be carried out on the strengthening of the Code of Conduct on business taxation on the basis of its existing mandate”;
5. RECALLS  the usefulness and the efficiency of the work done under the Code of Conduct so far to assess Member States individual tax measures;
6. CONFIRMS that work on the future of the Code of Conduct and its reinforcement should focus on making better use of the existing mandate of the Code; on examining the possibilities and modalities to extend the mandate and to update the criteria and on the possible need to adjust the governance of the Code accordingly;
7. ENDORSES the Group's new Work Package, and ENCOURAGES the Group to continue its work on that basis;
8. CONFIRMS its invitation to the Group to develop general guidance to prevent tax avoidance, base erosion and profit shifting (BEPS);
9. INVITES the High Level Working Party on Taxation (HLWP) to discuss a revision to the mandate in relation to the concept that profits are subject, as appropriate, to an effective level of tax within the EU, notwithstanding the competencies of Member States in the area of taxation;
10. AGREES that the rollback and standstill procedures foreseen in paragraphs C and D of the Code should cover existing and future general guidance notes developed by the Group;
11. INVITES in this respect the Group to ensure through such general guidance an effective implementation at the EU level of the relevant OECD BEPS Project conclusions when not covered by the EU legislation, and in accordance with the Group's new Work Program;
12. AGREES that the Code Group should clarify the third criterion by developing guidance on the basis of the OECD BEPS conclusion on  Action 5;
13. AGREES that the Code Group should clarify the fourth criterion by developing guidance  in the light of OECD Transfer Pricing Guidelines, as amended by OECD BEPS conclusions on Actions 8-9-10;
14. INVITES the Group to further develop, where appropriate, guidance notes on the interpretation of the criteria of the Code, including the gateway criterion, and their application;
15. CONFIRMS the importance that the principles of the Code of Conduct are applied on as broad geographical basis as possible, WELCOMES in this respect the recent Joint Statement with Switzerland and ongoing dialogue with Liechtenstein and INVITES the Group to open dialogues with relevant third countries, as well as to monitor the implementation of past agreements;
16. EXPRESSES the wish to improve the visibility of the work of the Code of Conduct Group and AGREES therefore that its results, in particular its 6-monthly reports, are systematically made available to the public;
17. INSISTS however on the confidentiality of the Group's deliberations with a view to protect the public interest as regards the economic policy of Member States, maintain the efficiency of the assessment process and counter related risks of aggressive tax planning;
18. INVITES the High Level Working Party on Taxation (HLWP) to conclude on the need to enhance the overall governance, transparency and working methods and to finalise the reform of the Group during the Dutch Presidency.

Luxembourg's Pierre Gramegna, chair of Tuesday's meeting, calls the session to order

With the festive season comes all kinds of traditions in Brussels: mulled wine, Saint Nicholas, and another deadline for nations to strike a deal on a financial transactions tax.

But while last year ministers found themselves empty handed when a December deadline for an agreement rolled around, this year it’s different. Sort of.

As Bruxellois bought their sapins de noel (Christmas trees) on the pavement outside the EU summit building, inside another Sapin (Michel), the French finance minister who has been one of the tax’s biggest champions, was full of holiday cheer.

During a meeting of EU finance ministers, Sapin (the minister) hailed a breakthrough moment in the nearly three-year slog for an FTT, which would issue a levy on all stock and a derivative trades in the ten EU countries who are part of the scheme.

Could this Christmas miracle really be true? Could there really be a deal?

In practice, it’s more like half of a deal. Pierre Moscovici, the EU commissioner in charge of tax issues, found a convoluted combination of tenses to sum it up: “We have now the main parameters of what this FTT should be, and hopefully will be.”

Read more

The President of the European Council, Donald Tusk received the letters of credentials of the following Ambassadors:

H. E. Mr Haymandoyal DILLUM, Ambassador, Head of the Mission of the Republic of Mauritius to the European Union
H.E. Mrs Oda Helen SLETNES, Ambassador, Head of the Mission of the Kingdom of Norway to the European Union
H.E. Mr Jawad Khadim Jawad AL-CHLAIHAWI, Ambassador, Head of the Mission of the Republic of Iraq to the European Union

Refugees crossing Greece's border with Macedonia wait to enter a camp earlier this week

The EU’s debate over how to deal with the ongoing refugee crisis has been so full of jargon and euphemisms that in can be nearly impossible for anyone outside the Brussels bubble to know what, exactly, leaders are actually discussing.

Such is the case with a draft communiqué for next week’s EU summit, circulated to national capitals on Monday. The document (which Brussels Blog got its hands on and has posted here) includes seven measures leaders would agree, if the draft is adopted. But all seven may be impossible to understand to those not following every twist and turn in the debate.

As a public service, Brussels Blog hereby offers a translation from eurocrat-ese into English of the migration section of the draft communiqué.

Read more

http://tvnewsroom.consilium.europa.eu/uploads/council-images/thumbs/uploads/council-images/remote/http_7e18a1c646f5450b9d6d-a75424f262e53e74f9539145894f4378.r8.cf3.rackcdn.com/6581d11e-9dc2-11e5-9a4f-bc764e08d9b2_1.4_thumb_169_1449664451_1449664364_129_97shar_c1.jpg

The establishment of official relations between the Republic of San Marino and the European Community dates back to February 1983. The European Community and San Marino signed an  Agreement on monetary relations in 2000. It entitles San Marino, inter alia to use the Euro as its official currency.

Download this video here.

On Monday 7 December, the European Commission (EC) released its long-term strategy for the European aviation sector. The document touches on many elements including connectivity, competitiveness, safety and security.

The package is wide-ranging, despite the fact that the only legislative proposal contained is a revision of the Regulation on the powers of the European Aviation Safety Agency (EASA). It would in fact seem to be less a “package” of legislative measures, as the Commission had originally announced in December 2014, but rather a ‘roadmap’ for the next ten to fifteen years. This change of direction may be due to the fact that many of the actions needed for the European aviation sector are already under way with the focus being on proper implementation rather than new legislative proposals, especially on the internal market front. Alternatively, the Commission may be using the strategy to set the stage for stronger competitiveness measures in the future, responding to the rising nervousness of EU airlines towards competition from non-EU airlines.

Why does it matter to business?

The strategy does not, on first viewing, put forward concrete proposals to address some of the urgently identified needs from industry. For example, for the cost of infrastructure and the fragmentation national taxes, the Commission only proposes to work on an inventory and does not provide a timeline. The strategy might be described as a collection of good intentions and soft approaches, rather than a legislative hammer to resolve the challenges faced by European aviation. However, there are elements of significant business impact, the most notable perhaps being:

• The strategy brings forward significant proposals regarding external aviation policy, such as relaxing of ownership rules, and defensive measures against perceived unfair competition. These policy shifts will be taken step-by-step, and would seemingly indicate an effort to respond to the particular priorities of certain European airlines.
• The revision of the basic EASA regulation will impact both equipment manufacturers and their airline customers. For manufacturers, the revision should streamline some parts of the airworthiness and certification process, expanding and clarifying EASA’s competencies. However, there are areas of concern: any change to rules on environmental protection could result in stronger rules for aircraft in Europe compared to other regions of the world. For customers, the airlines who need access to certified equipment, it should result in more efficient processes and systems that result in higher safety levels.
• More flexible and proportionate safety rules can give more space to entrepreneurship and recognise the difference between various aviation sectors. In addition, with the shift towards a risk and performance-based approach, both Member State authorities and EASA itself will need to be on top of technological developments. The new regulation will interestingly give the possibility for national authorities to delegate “responsibility on implementation of EU legislation” to EASA on a voluntary basis.
• EASA looks set to acquire competence for the regulation of drones, which will be embedded in a new regulatory framework. This could represent a positive opportunity for the manufacturing sector, especially small and medium enterprises as well as for non-aviation businesses, which may be able to integrate drones in their activities.

What comes next?

• 2015: Council’s decision on mandates to the EC for negotiating bilateral agreements with third-countries.
• 2015: Revision of basic aviation safety regulation N° 216/2008 amending the powers of EASA, including introduction of provisions on drones
• 2016: Revision of Slots Regulation 549/2009
• 2016: Potential non-binding own-initiative report by the European Parliament’s Transport committee
• 2016/7: Evaluation of the Airport Charges Directive 2009/12/EC
• 2017: Evaluation of Groundhandling services Directive 96/67/EC
• 2017: Revision (Implementing act) of the air traffic management network functions, including the selection of the Network Manager
• 2019: Revision of performance scheme (gate-to-gate)

Stakeholders will likely be active in the coming months seeking to engage with the European institutions on potential future initiatives in the framework of the present strategy.

Download our assessment and summary here.

 

The Paris climate change agreement should not leave out aviation and shipping, two sectors whose emissions are rocketing and, if left unregulated, could account for up to 40% of all global emissions by 2050, (according to a European Parliament study), said the EP delegation on Tuesday. MEPs also advocate earmarking carbon market revenues as a possible solution for financing climate efforts.
Committee on the Environment, Public Health and Food Safety

Source : © European Union, 2015 - EP