On September 23, 2021 the key decisions of the European Commission’s September infringements package were published. The key decisions include a.o. 3 letters of formal notice.
· In the first one the Commission calls on Cyprus to amend its legislation transposing EU anti-tax avoidance rules on the grounds of incorrect transposition of the interest limitation rule of the Anti-Tax Avoidance Directive (Article 4 of the Council Directive (EU) 2016/1164);
· In the second letter of formal notice the Commission requests that the Czech Republic communicates all required national measures fully implementing Council Directive (EU) 2017/952 of 29 May 2017 amending Directive 2016/1164 (ATAD1) as regards hybrid mismatches with third countries (ATAD2); and
· The third letter was sent to Greece for not applying properly EU rules on second-hand vehicles purchased in other EU Member States.
Next to the letters of formal notice the European Commission also sent a reasoned opinion to Italy for failing to notify measures for the transposition into national law of Directive (EU) 2018/1910 (the VAT ‘Quick Fixes' Directive).
Letters of formal notice
The Commission calls on Cyprus to amend its legislation transposing EU anti-tax avoidance rules
The Commission has today decided to send a letter of formal notice to Cyprus on the grounds of incorrect transposition of the interest limitation rule of the Anti-Tax Avoidance Directive (Article 4 of the Council Directive (EU) 2016/1164). Cyprus makes use of the possibility to exempt financial undertakings from the interest limitation rules in the Anti-Tax Avoidance Directive. However, the respective domestic legislation goes beyond the allowed exemptions and provides unlimited deductibility of interest for the purpose of Corporate Income Tax for securitisation entities, which do not qualify as ‘financial undertakings' under Art. 2(5) of the Directive. If Cyprus does not act within the next two months, the Commission may decide to send a reasoned opinion.
The Commission requests that the Czech Republic communicates all measures to implement EU anti-tax avoidance rules
The Commission has today decided to send a letter of formal notice to the Czech Republic for failure to communicate all required national measures fully implementing Council Directive (EU) 2017/952 of 29 May 2017 amending Directive 2016/1164 (ATAD1) as regards hybrid mismatches with third countries (ATAD2). The deadline for the communication of the measures was 31 December 2019. The Czech Republic notified the relevant measures only partially and now has two months to act and take the further necessary measures. Otherwise, the Commission may issue a reasoned opinion.
The Commission takes action against Greece for failure to comply with EU rules on car taxation
The Commission has today decided, under Article 258 TFEU, to send a letter of formal notice to Greece for not applying properly EU rules on second-hand vehicles purchased in other EU Member States. The national tax registration procedure discourages second-hand vehicles being placed into circulation in Greece in favour of the sale of similar products available on the domestic market. In addition, Greece prohibits the registration of specific categories of second-hand vehicles purchased in other EU Member States. Greece has therefore failed to fulfil its obligations related to the free movement of goods and the prohibition to introduce discriminatory fiscal treatment for products (Articles 34, 36 and 110 TFEU). Greece has two months to reply to this letter of formal notice. If Greece does not act within the next two months, the Commission may decide to send a reasoned opinion.
Reasoned opinion
The Commission urges Italy to transpose rules to improve the functioning of the current VAT system
The Commission has today decided to send a reasoned opinion to Italy for failing to notify measures for the transposition into national law of Directive (EU) 2018/1910 (the VAT ‘Quick Fixes' Directive). This Directive harmonises and improves certain Value Added Tax (VAT) rules. It provides clarifications and intends to ‘quickly fix' certain situations that have been treated differently by Member States in order to avoid possible double taxation or non-taxation, and to enhance legal certainty for businesses. The new provisions simplify trade between Member States and are based on the principle of taxation in the Member State of destination. Member States were supposed to adopt and publish the necessary national provisions by 31 December 2019. If Italy does not act within the next two months, the Commission may decide to refer the case to the Court of Justice of the European Union.
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