On February 6, 2017 the European Council released a Draft EU-BEPS Roadmap by the Maltese Presidency of the Council. The roadmap intends to set out how the Maltese Presidency will conduct work related to the challenges in the area of BEPS, taking into account views expressed by Member States in informal bilateral contacts and against the background of recent Commission initiatives, as well as the results of the OECD work on BEPS.
The Roadmap has been divided in 2 parts:
I Short-term work
II Medium-term work
Short-term work
In the part short-term work a.o. the following subjects are being discussed:
· Hybrid mismatches (ATAD 2)
· Proposal for Improvement of Dispute Resolution Mechanism within the EU
· EU list of third country non-cooperative jurisdictions
· Proposal for a renewed Common (Consolidated) Corporate Tax Base
· Interest and Royalties Directive (IRD)
· Good Governance in Tax Matters clause in EU agreements with third countries
· Agreements with five European third countries to counter fraud and all other illegal activities to the detriment of public financial interests ("EU anti-fraud agreements")
· OECD BEPS issues in Double Taxation Agreements
Hybrid mismatches (ATAD 2)
In this respect a.o. the following is noted in the roadmap:
“… During the ECOFIN meeting on 6 December 2016 the text was generally agreed to except on two items i.e. Articles 9(4)(b) and (c), and the date of entry into force.
The Maltese Presidency intends to work on the pending aspects of ATAD 2 with a view to finding agreement as swiftly as possible.
As a result, given the priority to be given to hard law, the work on hybrid mismatches in the context of the Code of Conduct subgroup on hybrid mismatches will continue to be put momentarily on hold.”
Proposal for Improvement of Dispute Resolution Mechanism within the EU
In this respect a.o. the following is noted in the roadmap:
“… On 6 December 2016 the Council concurred “that current international tax rules can, in some cases, lead to double taxation and double non-taxation that should be eliminated through coordinated EU measures” (see doc. 15315/16). It also acknowledged that “there is a need to review existing dispute resolution mechanisms to enhance tax certainty for business in the EU”
The Maltese Presidency considers that the introduction of an effective and efficient framework for resolution of tax disputes that would ensure legal certainty and a business friendly environment for investments is very important in the quest to achieve a fair and efficient tax system in the EU, and therefore regards this proposal as a priority aiming at reaching agreement by the end of June 2017.”
EU list of third country non-cooperative jurisdictions
In this respect the following is noted in the roadmap:
“On 25 May 2016, the Council adopted conclusions on the Commission Communication on an External Strategy for Effective Taxation and Commission Recommendation on the implementation of measures against tax treaty abuse. The Council agreed on the establishment by the Council of an EU list of third country non-cooperative jurisdictions and to explore coordinated defensive measures at EU level without prejudice to Member State competence. In doing so, it stressed the need to work closely and in parallel with the OECD to draw the international criteria in this area and to take into account the work of the Global Forum when developing the EU list of non-cooperative jurisdictions
On 8 November 2016 the Council adopted conclusions on the criteria for and process leading to the establishment of the EU list of non-cooperative jurisdictions for tax purposes, which set out:
a) the criteria for screening jurisdictions with a view to establishing an EU list of noncooperative jurisdictions, and
b) guidelines for the process of screening of jurisdictions with a view to establishing an EU list of non-cooperative jurisdictions for tax purposes.
The Council mandated the Code of Conduct Group (Business Taxation), supported by the General Secretariat of the Council of the European Union, to conduct and oversee the analysis (the screening process). The European Commission services will assist the Code of Conduct Group (Business Taxation) by carrying out the necessary preparatory work for the screening process. The Code of Conduct Group (Business Taxation was also tasked by the Council with the following:
a) to finalise its work on the selection of jurisdictions for screening on the basis of the European Commission's Scoreboard;
b) to define, based on objective criteria, the duration of the reasonable timeframe, referred to in criterion 1.3;
c) to define the scope of application of criterion 2.2 and to evaluate, in the context of criterion 2.2, the absence of a corporate tax system or applying a nominal corporate tax rate equal to zero or almost zero as a possible indicator;
d) further develop the appropriate arrangements on the practical methods and modalities on implementing the screening guidelines with a view to effective implementation of the screening process of jurisdictions with a view to the establishment by the Council of an EU list of non-cooperative jurisdictions for tax purposes;
e) to continue exploring defensive measures at EU level to be endorsed by the Council, in line with the Council Conclusions of May 2016
While the Code of Conduct Group (Business Taxation) during the term of the Slovak Presidency has concluded work on points a) and b) above and made significant progress on other issues, the Maltese Presidency is to continue work in the relevant sub-group of the Code of Conduct Group, and, as appropriate, in the Council and its preparatory bodies with the aim of completing the task under point c) and to continue work under points d) and e) above
The Maltese Presidency’s intention is that during its term the work outlined above in the context of Council conclusions of May 2016 and November 2016 is carried out in accordance with the timeline agreed by the Council.”
Proposal for a renewed Common (Consolidated) Corporate Tax Base
In this respect a.o. the following is noted in the roadmap:
“… On 6 December 2016, the Council noted the two step approach proposed by the Commission concerning the proposals on a Common Corporate Tax Base (CCTB) and on a Common Consolidated Corporate Tax Base (CCCTB) and supported the view that work should focus as a priority on the elements of a common tax base (doc. 15315/16). It also invited Member States to, as a start, “concentrate their efforts on the rules for calculating the tax base and, in particular, on the new elements of the relaunched initiative (chapters I to V)”.
The Maltese Presidency intends to start the examination of the CCTB proposals with a view to stabilise the text on the novel aspects of the CCTB by the end of June 2017.”
Interest and Royalties Directive (IRD)
In this respect the following is noted in the roadmap:
“In June 2015, the Latvian Presidency proposed a split of the proposal concentrating work first on the insertion of an anti-abuse provision similar to the one in the Parent-Subsidiary Directive (Articles 1(2) to 1(4) of Directive 2011/96/EU) and to discuss later the remaining provisions. It was clear that the examination of the provisions of the future directive was finalised and technically ready in case the split would be decided. The ECOFIN Council on 19 June 2015 could not however reach political agreement as some Member States insisted on the inclusion of a provision setting up a minimum effective level of taxation which was not foreseen in the original proposal of the Commission.
During the last three Presidencies, substantial work was devoted to make progress in examining different alternatives to include a minimum effective taxation (MET) clause in the IRD.
The Slovak Presidency explored in particular additional measures that could be considered, in particular the so-called "ownership/base erosion test", which is a test incorporated into the OECD BEPS 'Limitation of Benefits' (LOB) clause. As an alternative, the WPTQ discussed whether measures adopted on a unilateral basis by Member States could be a suitable way to identify and limit the instances of abuse of IRD. It was concluded that further work would be needed on these issues.
Taking into account the input received from bilateral discussions with Member States, the Maltese Presidency will follow up on the above and explore other options with the aim to reach agreement on the IRD taking account of discussions so far.”
Good Governance in Tax Matters clause in EU agreements with third countries
In this respect a.o. the following is noted in the roadmap:
“… The aim of the Maltese Presidency is to seek agreement on these key elements, on the basis of the proposal presented by the Commission in Annex 2 of its External Strategy Communication of 28 January 2016.”
Agreements with five European third countries to counter fraud and all other illegal activities to the detriment of public financial interests ("EU anti-fraud agreements")
In this respect the following is noted in the roadmap:
“An exchange of views through the HLWP is foreseen in order to assess the need for updating the mandate of negotiations for EU anti-fraud agreements with the Principality of Andorra, the Principality of Monaco, the Republic of San Marino and the Swiss Confederation (doc. 11640/09) and for a possible relaunch of the negotiations on the EU anti-fraud agreement with the Principality of Liechtenstein (doc. 16990/2/09 REV 2), following the repeal of the Savings taxation directive, the adoption of DAC2, and the completion of all agreements on automatic exchange of information with the five European third countries.”
OECD BEPS issues in Double Taxation Agreements
In this respect a.o. the following is noted in the roadmap:
“An exchange of views through the HLWP is foreseen with a view to the signature of the OECD multilateral instrument to modify tax treaties, expected in June 2017.”
Medium-term work
In the part medium-term work a.o. the following subjects are being discussed:
· Patent Boxes
· Implementation of the Council Conclusions on the future of the Code of Conduct (Business Taxation)
· Outbound payments
· Transparency: Mandatory disclosure rules
Patent Boxes
In this respect the following is noted in the roadmap:
“The Maltese Presidency will support the Code of Conduct Group in its task to continue monitoring the legislative process necessary to change existing patent box regimes following the agreement reached on the interpretation of the third criterion of the Code of Conduct (modified nexus approach, see doc. 16553/14 Annex 1) and Member States' subsequent commitment to report on the progress made through the annual standstill and rollback reports.”
Implementation of the Council Conclusions on the future of the Code of Conduct (Business Taxation)
In this respect a.o. the following is noted in the roadmap:
“… The Maltese Presidency will support work of the Code of Conduct Group and subgroups in this area with a view to develop guidance on the interpretation of these items as required.
The Maltese Presidency also intends to continue exploring possible ways forward as regards the revision of the mandate (gateway criterion) of the Code of Conduct.”
Outbound payments
In this respect the following is noted in the roadmap:
“The Code of Conduct Group included outbound payments in its Work Package 2015. The initial work of the Code of Conduct Group with regard to this issue will involve the identification of potential problems which arise when payments are made from the EU to a third country.”
Transparency: Mandatory disclosure rules
In this respect a.o. the following is noted in the roadmap:
“… at the informal ECOFIN on 22/23 April 2016 and in its conclusions adopted on 25 May 2016, the Council invited the Commission "to consider legislative initiatives on Mandatory Disclosure Rules inspired by Action 12 of the OECD BEPS project with a view to introducing more effective disincentives for intermediaries who assist in tax evasion or avoidance schemes".
On 10 November 2016, The European Commission launched a public consultation to gather feedback on the way forward for EU action on advisers and intermediaries who facilitate tax evasion and tax avoidance.
Against this backdrop the EU Council could reflect during the Maltese Presidency on the possible approaches with regard to mandatory disclosure rules that the Commission is considering in preparation for possible future EU legislative initiatives by the Commission.”
Click here to be forwarded to the roadmap as available on the website of the European Council/Council of the European Union.
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