Already on April 28, 2016 that the European Parliament’s Special Committee on Tax Rulings and Other Measures Similar in Nature or Effect (TAXE 2) organized a workshop on TAXE 2 studies to be given by 4 external experts, which were also the authors of the reports. On June 13, 2016 TAXE 2 published a document titled: “International Taxation and Tax Rulings: Policy Issues at Challenging Times - COMPILATION OF NOTES”. The Document is a compilation of the studies/in-depth analyses prepared by respectively: John Vella, Elly van de Velde and Raymond Luja (3 of the experts who were giving the April 28, 2016 Workshop to TAXE 2). Not included in this compilation is the Study “The Financial Sector and Tax Planning” of Karel Volckaert, which was already published at an earlier stage.
Are We Moving in the Right Direction? Public Disclosure of Tax Information & Other EC/EP Proposals to Reduce Aggressive Tax Planning
This study is prepared by John Vella and discusses a.o. the following subjects:
· Brief comments on some proposals made by the European Parliament and the European Commission
o Proposals that ought to affect current aggressive tax planning practices
o Other proposals made by the European Parliament
o Recommendations designed to align taxing rights with economic activity
o Public country-by-country reporting
o Benefits
o Limitations
o Dangers
· Are we heading in the Right Direction?
o General conclusions
o Fundamental structure out-dated
o Structure undermined by tax competition amongst states
o More radical reform
o Other reform options
In the conclusion of this study, the author states the following:
“The proposals put forward by the European Parliament and the European Commission to reform the international tax system fall into two categories. The proposals in the first category patch up the existing system, that in the second category is more radical. The above analysis suggests that reforms in the first category might make a difference to current aggressive tax planning structures, however they will not fix the major flaws of the international tax system. One particular concern is that they might even intensify competition on corporate tax rates. A long-term stable solution thus requires more radical reform. The European Parliament and the European Commission have put forward one such reform option, the CCCTB. This has clear benefits but also some well-known issues. For this reason, the search for radical reform solutions ought to be broadened to include the consideration of other options which have been the subject of academic study over the past few years.”
The Future of Tax Rulings in the EU: Evaluation, Confrontation and Recommendations
This study is prepared by Elly van de Velde and discusses a.o. the following subjects:
· Evaluation of European Commission follow-up of TAXE 1 Resolution and ECON Resolution
o Cross-border impact of purely domestic tax rulings
o Publication of an annual report
o Common and legal framework
o Clearing house
· Confrontation with BEPS Action 5
o Council Directive 2015/2376 vs BEPS Action 5
o Exchange of information on tax rulings
o Which information needs to be exchanged with which country?
o Application of the framework to rulings
o Definition of ruling for purpose of exchange of information
o Best practices: inspiration from BEPS Action 5
· Encouraging cooperative compliance in Member States
In the executive summary of the study a.o. the following is stated:
“The establishment of a common framework at EU level for tax rulings is the ultimate recommendation to achieve the goal of ‘cooperation and coordination of advance tax rulings’. Transparency is very key in the development of an adequate EU framework, but at the same time one should assure that transparency for citizens does not conflict with the protection of tax secrecy of the assessment procedure.”
EU State Aid Law and National Tax Rulings: 2015-2016 Update
This study is prepared by Raymond Luja and discusses a.o. the following subjects:
· Recent decisions as guidance
o A need for a more than marginal review by the EU’s Courts
o Market information and cross-border effects of revising transfer prices
o CUP-shopping
o Tax Treaties
o Recoverable amounts
· The 2017 Tax Ruling Databas
· Recovery in Perspective
o Tax Credits and Restoring the Status Quo
o Alternative recovery methods and anti-tax avoidance legislation
o US-EU relations
o Sanctions
· Prioritizing
· Other pending cases
In the concluding remarks, the author states the following:
“This author has some reservations in respect to the EP’s recommendation to let the Commission issue new guidelines on what constitutes tax-related state aid or not. In the end this is the prerogative of the CJEU. It may indeed be useful to have guidelines like these, but only if it can be guaranteed that the Commission will not put forward its own views on unsettled issues as not to harm the procedural rights of either taxpayers or their competitors, as a notice containing such guidelines could give rise to legitimate expectations preventing recovery. There is also a serious risk of such notice contradicting or not covering past cases, which will raise issues of legal certainty of its own. As for asking the Commission to explain what ‘appropriate’ transfer pricing is, this may go beyond the scope of its state aid powers depending on how detailed this guidance may be.”
Click here to be forwarded to the compilation of the studies/in-depth analyses prepared by repsectively John Vella, Elly van de Velde and Raymond Luja as available on the webpage of TAXE 2, which will open in a new window.
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