(June 19, 2015)
Today the EU European Economic and Financial Affairs (ECOFIN) Council met. During this meeting several tax issues were discussed.
The proposed recast of Directive 2003/49/EC
Where some might have expected that the ECOFIN Council might reach political agreement a proposed recast of Directive 2003/49/EC on taxation applicable to cross-border interest and royalty payments between associated companies it looks like there is no white smoke with respect to this issue yet.
In a document titled ‘Outcome of the Council Meeting’ in this respect the following is mentioned:
“The Council discussed a proposed recast of directive 2003/49/EC on taxation applicable to cross-border interest and royalty payments between associated companies.
It discussed in particular the possible adoption, as a first step, of an anti-abuse clause to prevent the directive being used by multinational companies for tax avoidance and aggressive tax planning. A "de minimis" rule, the clause would prevent member states from granting the benefits of the directive to arrangements that are not "genuine", i.e. that have been put into place to obtain a tax advantage without reflecting economic reality.
In order to make progress on this 2011 proposal, the presidency proposed to agree first on the anti-abuse clause. Work in the Council would continue however on remaining elements, including effective taxation as part of a proposed review of the directive.
Whilst a broad majority of member states supported the presidency's proposal to split the proposal in this manner in order to move beyond the status quo, some member states noted their preference for a more ambitious approach.
The directive requires unanimity for adoption by the Council, after consulting the European Parliament. (Legal basis: article 115 of the Treaty on the Functioning of the EU.)”
Automatic exchange of information about advance cross-border tax rulings
The Council also discussed a proposal to amend directive 2011/16/EU so as to require member states to exchange information automatically about advance cross-border tax rulings, as well as advance pricing arrangements.
According to the document ‘Outcome of the Council Meeting’ the Council noted good progress during the two months since the proposal was presented, and all member states supported the main objectives set out by the Commission. It furthermore states that work will continue at technical level so as to enable the Council to reach an agreement in autumn 2015.
The ‘Outcome of the Council Meeting’ also notes that the Council provided guidance for further technical work on the following issues.
- the scope of the information to be exchanged;
- the timing for the start of exchange of information;
- the role the Commission could play in the context of exchange of information between member states.
Code of conduct on business taxation
The Council endorsed a working group report on implementation of a code of conduct aimed at eliminating situations of harmful tax competition.
The Council adopted the following conclusions:
"With regard to the Code of Conduct (Business Taxation), the Council:
– welcomes the progress achieved by the Code Group during the Latvian Presidency as set out in its report (doc. 9620/15 FISC 60 ECOFIN 443);
– invites the Group to continue its discussion on the future of the Group;
– asks the Group to continue monitoring standstill and the implementation of the rollback as well as its work under the Work Package 2011;
– invites the Commission to continue the dialogue with Liechtenstein on the application of the principles of the Code of Conduct, as set out in the report;
– invites the Group to continue to monitor the alignment of the Patent boxes regimes in line with the compromise on the nexus approach;
– invites the Group to report back on its work to the Council by the end of the Luxembourg Presidency."
More information regarding the meeting of the ECOFIN Council from June 19, 2015 can be found here. On that page you can also find the document ‘Outcome of the Council Meeting’ to which we refer above.
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