EU Fiscal Policy

 

Two EU Action Plans on Taxation

2nd on Corporate Taxation to be presented on 2015-06-17
1st Action Plan (2015-03-18): “Tax Transparency Package”  including Tax Rulings  (Specialized Taxation Decisions-Regulations) 

 

 

Website: http://ec.europa.eu/taxation_customs/taxation/company_tax/transparency/index_en.htm

 

Excerpts:

Tax Transparency Package

 

"A key element of this Tax Transparency Package is a proposal to introduce the automatic exchange of information between Member States on their tax rulings.

 

Other elements:

Assessing possible new transparency requirements for multinationals

Reviewing the Code of Conduct on Business Taxation

Repealing the Savings Tax Directive

Quantifying the scale of tax evasion and avoidance "

 

The next step: The next step will be an Action Plan on corporate taxation, which will be presented before the summer. It will include launch of a debate on the Common Consolidated Corporate Tax Base (CCCTB) and ideas for integrating new OECD/G20 BEPS actions at EU level."

 

 

From the OECD site: http://www.oecd.org/tax/beps-about.htm

About BEPS: Base erosion and profit shifting (BEPS) is a global problem which requires global solutions. BEPS refers to tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is little or no economic activity, resulting in little or no overall corporate tax being paid. BEPS is of major significance for developing countries due to their heavy reliance on corporate income tax, particularly from multinational enterprises (MNEs).

 

 

 

European Commission‏@EU_Commission

2015-05-27
#taxation@EU_Commission prepares an Action Plan for fairer & more growth-friendly tax systems http://europa.eu/!nf99uM @VDombrovskis

 
 
European Commission‏@EU_Commission
2015-03-18
#TaxTransparency - Combatting corporate tax avoidance- europa.eu/!dy73nHpic.twitter.com/gCTHD6kxlR
 
Combatting corporate tax avoidance: Commission presents Tax Transparency Package
Excerpt:
"A key element of this Tax Transparency Package is a proposal to introduce the automatic exchange of information between Member States on their tax rulings."
 

Section 2.7 - Example 2 and Introductory Comments

 

A non EU company that has subsidiaries in EU Member States creates a management center company in a EU Member State X. It consists of one part-time employee that provides management services to the subsidiary companies. How is the EU Member State X to tax this company?

The company suggests to the tax authorities that the profits that the management centre makes are taxed 30% in the EU Member State and 70% in the non-EU country.

A decision, a regulation, a ruling is sought.

The Member State X gives that ruling.

 

 

“The management centre (which consists of one part-time employee) then provides "management services" to all the group's companies in other Member States and charges them 20% of their total turnover for these services. As a result, large amounts of the group's revenue is shifted to Member State X, which applies a low tax rate to just 30% of these profits. The rest of the profits are shifted to the holding company in the non EU-country and remain untaxed.
 
The Member States in which the other companies are established are not aware of Member State X's tax ruling, nor do they have enough information to challenge the high price that the tiny management centre in Member State X is charging the companies in their jurisdictions.
 
With the automatic exchange of information, the other Member States would be made aware of the tax ruling and the fact that only 30% of the management centre's profits are being taxed by Member State X. They would then be allowed to request more information if they believed that this ruling, and the company's set-up was impacting their taxing rights or eroding their tax base.”

 
 
 
European Commission‏@EU_Commission
2015-05-27
Fighting tax evasion: EU and Switzerland sign historic #taxtransparency agreement http://europa.eu/!FP97Jg pic.twitter.com/aOM3OK82XT

 
EU Publication on Taxation
http://bookshop.europa.eu/en/taxation-pbNA0115038/?CatalogCategoryID=sciep2OwkgkAAAE.xjhtLxJz