Taxation issues

Taxation issues

VAT

In July 2020, the European Commission published an Action Plan for fair and simple taxation which laid down a set of 25 initiatives to implement by 2024. The Commission is planning, among others, to update and simplify VAT rules for financial services in Q4 of 2021, with the aim to ensure a level playing field within the Union and the international competitiveness of EU companies.

The existing VAT Directive lays down the rules on the VAT treatment of financial and insurance services. These rules were introduced in 1977 and provide for an exemption of financial and insurance services, including related services performed by insurance brokers and insurance agents.

In October 2020, the Commission published for consultation a roadmap on the review of VAT rules for financial and insurance services to describe the problems to be tackled and explain why EU action is needed. Following the roadmap, the Commission launched in February 2021 a consultation on the VAT rules for financial and insurance services to obtain the views of stakeholders and public authorities of the Member States on the current VAT rules for financial and insurance services and their functioning as well as on possible changes to these rules.

BIPAR responded to these consultations. BIPAR key messages were:

  • maintaining the VAT exemptions for financial and insurance services would be preferable;
  • any changes to the VAT treatment of financial and insurance services should always be considered in conjunction with other taxes applicable (e.g insurance premium tax, government tax incentives, social security measures) to avoid double taxation;
  • Only an activity-based approach would ensure legal certainty as well as a “tax” level playing field among the operators.

The answers provided to the consultations will feed into the review of the relevant provisions of the VAT Directive and will contribute to a possible future legislative proposal expected from the Commission during Q4 of 2021.

Revision of the Administrative Cooperation Directive

In July 2020, the European Commission delivered a proposal for a Council directive amending the Directive on administrative cooperation in the field of taxation -DAC7- (Directive 2011/16/EU). This proposal aimed at introducing an automatic exchange of information between Member States’ tax administrations for income/revenues generated by sellers on digital platforms. The Council Directive 2021/514 of 22 March 2021 amending Directive 2011/16/EU on administrative cooperation in the field of taxation was published in the EU Official Journal on 25 March 2021.

The Directive on administrative cooperation in the field of taxation -DAC6- entered into force on 25 June 2018 and introduces an obligation on qualifying “intermediaries” and relevant taxpayers to disclose to national tax authorities certain cross-border tax arrangements perceived as potentially aggressive.

The Commission is now consulting on the possibility to amend DAC6 as regards measures to strengthen existing rules and expand the exchange of information framework in the field of taxation to include crypto-assets and e-money.

- Published in June 2021 -

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