The next Eurogroup meeting is taking place on December 5, 2016 and the next ECOFIN Council is taking place on December 6, 2016. On November 28, 2016 the Dutch Minister of Finance sent an annotated agenda for these meetings to the Dutch House of Representatives. According to this annotated agenda several tax topics will be discussed during the ECOFIN Council of December 6, 2016.
According to the Dutch Minister of Finance a.o. the following tax subjects are going to be discussed during the upcoming ECOFIN Council:
· Proposal for a Council Directive amending Directive (EU) 2016/1164 as regards hybrid mismatches with third countries
· Enhanced cooperation for a Financial Transaction Tax
· Report of the Code of Conduct Group on Business Taxation
· VAT package on a Digital Single Market
Proposal for a Council Directive amending Directive (EU) 2016/1164 as regards hybrid mismatches with third countries
In accordance with the ambitions to reach an agreement in 2016 as expressed by the Council in June, the Slovak Presidency intends to conclude the discussions on the Proposal for a Council Directive amending Directive (EU) 2016/1164 as regards hybrid mismatches with third countries ('ATAD2´).
During the first discussions most Member States have emphasized that the directive should be consistent with the conclusions of Action 2 of the OECD BEPS project. The Netherlands is also of the opinion that the conclusions of Action 2 of the BEPS project should form the basis of ATAD2. In that respect, the Netherlands can support general outlines of the revised proposal as presented by the Presidency and that was prepared with input from the OECD. The Netherlands is going for a later implementation date (January 1, 2024) in order to provide non-EU Member States with sufficient time to take action against hybrid mismatches and to fulfil the commitments made in the OECD. Furthermore companies must get sufficient time to adapt to the directive. The Dutch government wants these companies opportunities for taking action by having a later implementation date.
Enhanced cooperation for a Financial Transaction Tax
According to the Dutch Minister of Finance the ECOFIN Council is expected to discuss the state of play regarding the enhanced cooperation for a Financial Transaction Tax (FTT). Initially the subject was on the agenda of the November ECOFIN Council of November 2016. However since the president of the FTT Group, the Austrian Minister of Finance, was not able to attend the November ECOFIN Council it was decided to move the subject to the December ECOFIN Council.
According to the Dutch Minister at the time of drafting his annotated agenda no document on the agreements reached regarding the FTT was available yet.
In his agenda the Dutch Minister a.o. furthermore states that the proposal as made by the Commission does not meet the conditions the Dutch government has set for joining the FTT. Furthermore the Minister states that for the Netherlands it is important that an enhanced cooperation for a FTT does not infringes the rights of non-participating Member States.
Report of the Code of Conduct Group on Business Taxation
According to the Dutch Minister this part of the meeting will be not public.
The Code of Conduct Group investigates tax measures that potentially constitute potentially damaging tax competition and to which therefore the EU code of Conduct (on business taxation) applies. The Code of Conduct Group therefore tests these tax measures against 5 criteria to determine whether these measures actually constitute damaging tax competition.
The Dutch Minister states that the Code of Conduct Group is investigating whether all EU-Member States that have a patent/innovation box have adjusted their patent/innovation boxes to the so-called nexus approach in accordance with previous made agreements in the Code of Conduct Group. Member States have previously agreed that they would report on the adjustments they have made to their patent/innovation boxes. According to the Dutch Minister by now all Member States except France have reported in this respect. De Code of Conduct Group has thereupon concluded that France has not lived up to the earlier made agreement and has confirmed once again that like all other patent/innovation boxes also the French patent box will be checked against the criteria of the Code of Conduct.
The Dutch Minister furthermore a.o. states that 2 subcommittees the Code of Conduct Group have been working on compiling an EU-list of non-cooperative jurisdictions and to further clarifying the 3rd and 4th criteria of the Code of Conduct. He furthermore states that he expects that during the December council the ECOFIN to will come to conclusion on these criteria. In these the council will a.o. conclude that the nexus approach can serve as the basis for work to be conducted by the Code of Conduct Group in other areas than that of patent/innovation boxes to judges whether there is sufficient substance. Furthermore the ECOFIN will speak out its appreciation for the work conducted by the OECD in the area of transfer prices and the council is expected to concluded that the adjustments implemented by the OECD in this respect are important for the interpretation of the arm’s length principle which on its turn is important for the interpretation of the 4th criterion of the Code of Conduct.
VAT package on a Digital Single Market
Furthermore the Dutch Minister of Finance states that the European Commission is expected to give a presentation regarding the VAT package on the Digital Single Market that still has to be published. The package is expected to a.o. contain new proposals as announced in the VAT Action Plan as presented by the European Commission in April 2016.
Click here to download the annotated agenda for the December 2016 Eurogroup meeting and the December 2016 ECOFIN Council that the Dutch Ministry of Finance has sent to the Dutch House of Representatives from the website of the Dutch Ministry of Finance. (The annotated agenda is only available in Dutch)
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