On 15 July 2020, the European Commission (EC) published a new Tax Package whose scope is to make taxation within the European Union “fairer, greener and fit for the modern economy, and contributing to long-term, sustainable, inclusive growth.”
Thus, in this regard, the below points represent the key components of the new provisions:
- An Action Plan for fair and simple taxation supporting the recovery;
- A proposal to amend EU Directive 2011/16 on administrative cooperation in the field of taxation in the EU (DAC7). This is to include the exchange of information from online platforms (referred to as “DAC 7”);
- A communication on tax good governance “in the EU and internationally.”
The Action Plan
The annex to the action plan communication gathers 25 tax initiatives to be implemented in a timeframe between 2020 and 2024. The new provisions are aimed to simplify European economic life in terms of registration, reporting, payments, reconciliation and dispute resolution.
In other words, the first point of the new EU directive is about less administrative burdens, fighting tax fraud and easing the reporting procedure.
The proposal on administrative cooperation (DAC 7)
The second point of the EU directive is aimed around transparency and digitality. Thus, the online sellers will “pay their fair share of tax too” from the sale of goods and services on platforms.
In addition to that, the taxpayers residing in the Member States will automatically exchange information regarding their revenues from online selling of goods and services throughout a platform.
The Communication on tax good governance
The third resolution regarding the EU directive is pointing out about promoting fair taxation, eliminating unfair tax competition at both EU and non-EU level, which is why the European Commission suggests to reformulate the Code of conduct in this regard.
Thus, the main areas for action will include:
- Code of Conduct reform regarding business taxation;
- Update the EU list of non-cooperative jurisdictions regarding tax matters;
- Improvements to reinforce tax good governance vis-à-vis EU funds and improved coordinated defensive measures by Member States;
- Supporting developing countries in this area;
In conclusion, the EU agenda for the coming years regarding tax issues seems promising. The challenges of the digital economy is one of the principle issues to be solved and. Today’s Package addresses mostly to multinational companies have a more transparent financial behavior.
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Andreea is a Tax Consultant specialized in Environmental Fund , VAT compliance and Intrastat reporting. She holds a BA in Finance and International Economic Relations from the Academy of Economic Studies in Bucharest and she is fluent in English. Andreea assists the clients in the process of VAT registration, VAT compliance and Environmental fund issues as well as other various advisory matters.