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Council of Economic and Finance Ministers (ECOFIN)

Preparation of Economic and Finance Ministers Council (ECOFIN)

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ECOFINOn 9 December in Brussels, Vice President Georgieva, Vice President Katainen, Commissioner Hill and Commissioner Moscovici will participate in the meeting of the EU's Council of Economic and Finance Ministers.

On the agenda are several legislative proposals in the field of taxation: the Council is due to reach political agreement on the anti-abuse clause of the Parent Subsidiary Directive and shall decide on the mandatory exchange of information in the field of taxation. Ministers will be also updated of the work on the common Financial Transaction Tax. The Council will be called on to agree on a draft regulation determining the contributions to be paid by banks to the EU's single resolution fund. On the non-legislative activities front the Commission will present to the Council Investment Plan for Europe, as well as the work of the joint Commission-European Investment Bank task force set up in September to identify potentially viable investment projects.

The Commission will also present to the Council the Annual Growth Survey 2015 and the Alert Mechanism Report 2014, which mark respectively the launch of the European Semester and the launch of the Macro-imbalances monitoring cycle. The Court of Auditors’ annual report on the implementation of the EU budget for 2013 will be also presented to the Ministers. A press conference will be concluding the event.

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#SustainableFinance - Commission expert group calls for feedback on EU-wide classification system

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The Technical Expert Group on Sustainable Finance set up by the Commission in July 2018 has launched a call for feedback on EU action to develop a unified EU-wide classification system – or taxonomy – for environmentally sustainable economic activities.

The announcement stems from the EU Sustainable Finance Action Plan that the Commission published in March 2018 and follows up on the Commission's legislative proposal on an EU taxonomy presented in May 2018. Step by step, the Commission will identify activities which qualify as ‘sustainable', taking into account existing market practices and initiatives and drawing on the advice of the Technical Expert Group.

In a first initiative, the group is sharing its preliminary results on how such a classification system could be put in place, and at the same time asks for technical input from interested stakeholders and experts. Participants will be invited to comment on the first proposed activities that contribute substantially to climate change mitigation and to answer questions on the usability of the taxonomy.

The ultimate aim is to develop a system that provides businesses and investors with clarity on which activities are considered sustainable so they take more informed decisions. A number of workshops to gather technical expertise from interested parties is also envisaged. The invitation for feedback should help the technical expert group to engage with a broad range of stakeholders and experts and will close on 22 February 2019.

More information available here.

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Council of Economic and Finance Ministers (ECOFIN)

#ECOFIN - Commission welcomes progress achieved on the road to a reformed EU VAT system

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The European Commission has welcomed the progress made by member states on much-needed improvements to how Value Added Tax (VAT) works in the EU.

The meeting of EU finance ministers in Luxembourg saw agreements on a number of files in this field, all of which should help in the day-to-day running of an EU VAT system which is in urgent need of further far-reaching reform.

"New figures released by the Commission just weeks ago show that member states are still losing €150 billion in VAT each year. Today's agreements are another step towards addressing that problem and changing VAT rules for the better. Now is the time to seize the momentum and agree on solutions for the more fundamental problems facing the system today," said Economic and Financial Affairs, Taxation and Customs Commissioner Pierre Moscovici following the agreements.

The measures agreed include:

­-        New rules to improve the day-to-day functioning of the current VAT system until the overall VAT reform strategy has been implemented. These so-called 'quick fixes' should reduce compliance costs and increase legal certainty for businesses. Once the European Parliament has published its report on this file, the new rules should be enforceable by 2020.

-        A new measure to allow member states to align the VAT rates they set for e‑publications, currently taxed at the standard rate in most member states, with the more favourable regime currently in force for traditional printed publications. The decision is the final step to ensure that the unequal treatment of the two products - paper versus digital - becomes a thing of the past. This agreement bodes well for upcoming discussions on the Commission's latest proposal to ensure that member states have more flexibility to set VAT rates as they see fit.

-        Formal adoption of new rules to exchange more information and boost co-operation on criminal VAT fraud between national tax authorities and law enforcement authorities. VAT information and intelligence on organized gangs involved in the most serious cases of VAT fraud will now be shared systematically with EU enforcement bodies. Improved investigative co-ordination between member states themselves and with EU bodies will ensure that fast-moving criminal activity is tracked and tackled more quickly and more effectively.

Separately, ministers today formally adopted reinforced rules to control illicit cash flows in and out of the EU, a key measure in the fight against the financing of terrorism. Today's formal adoption will tighten cash controls on people entering or leaving the EU with €10,000 or more in cash, enable authorities to act on amounts lower than the declaration threshold of €10,000 where there are suspicions of criminal activity and extend customs controls to cash sent in postal parcels or freight shipments, to prepaid cards and to precious commodities such as gold. Once the European Parliament has also ratified the agreed rules, the legislation will be published in the Official Journal of the European Union and will enter into force 20 days later.

Background

The common Value Added Tax (VAT) system plays an important role in Europe's Single Market. VAT is a major and growing source of revenue in the EU, raising over €1 trillion in 2015, which corresponds to 7% of EU GDP. One of the EU's own resources is also based on VAT. Recent studies have indicated that around €150 billion in VAT revenues goes missing every year due to problems with VAT collection and VAT fraud.

The measures agreed today follow up on the VAT Action Plan towards a single EU VAT area presented in April 2016 and the Commission's proposals for a deep reform of the EU VAT system presented in October 2017.

Member States should now move forward and agree as soon as possible on the much broader reform to cut down on VAT fraud in the EU's system, as proposed last year by the Commission. The reboot would improve and modernize the system for governments and businesses alike, making the system more robust and simpler to use for companies.

At the same time, the Commission has this year also proposed new reforms to enable member states to set VAT rates as they see fit.

More information

VAT Digital Single Market Package

VAT Action Plan

Press release on administrative co-operation

Press release on the quick fixes

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Council of Economic and Finance Ministers (ECOFIN)

Agreement on three important tax files expected from last #Ecofin of Estonian EU presidency

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EU finance ministers are gathering in Brussels to endorse EU Council conclusions on taxation of the digital economy, adopt a cross-border e-commerce VAT package and to confirm the list of non-co-operative jurisdictions on tax issues.

These files have all been Estonian EU council presidency priorities. The Ecofin Council is also the last of the Estonian EU presidency.

Toomas Tõniste, Estonian minister of finance, chairing the meeting stressed the importance of the conclusions on the taxation of profits in the age of digital economy.

"Taxation of the digital economy is not just another change in tax rules, we are looking for a ground breaking consensus that will take taxation rules to the digital age,“ said Tõniste. "Estonia has made clear that it is one of our priorities and hopefully the European Commission and the OECD can move forward on the basis of today’s conclusions. What we need next, is a global approach."

Two other taxation topics are also on the agenda: the list of non-cooperative jurisdictions and cross-border e-commerce VAT package. "The list of jurisdictions is a clear call for everyone to follow the international agreed rules of fair taxation," said Tõniste.

The e-commerce VAT package is expected to be adopted without discussion. The main objectives of the package are to make cross-border e-commerce easier for small and medium size enterprises and ensure fair competition within the EU.

Two banking union reports will also be discussed by ministers and handed over to the incoming Bulgarian presidency. Issues related to the European semester process and budgetary policies of Romania and the UK are also on the agenda.

More information.

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