Latest documents

Summary : This report examines the role of Foreign Direct Investment (FDI) in tax havens. About 40-45% of the global FDI stock is hosted in tax havens, while their share in the world economy is only around 4½%. These abnormal FDI patterns suggest that FDI and international corporate tax avoidance are closely related. Traditional tax havens are attractive because of zero tax rates and uncooperative behaviour. For European tax havens it is rather a mix of policies related to improving the investment climate and this mix differs by country.

Authors : Arjan LEJOUR

Summary : This report examines the role of Foreign Direct Investment (FDI) in tax havens. About 40-45% of the global FDI stock is hosted in tax havens, while their share in the world economy is only around 4½%. These abnormal FDI patterns suggest that FDI and international corporate tax avoidance are closely related. Traditional tax havens are attractive because of zero tax rates and uncooperative behaviour. For European tax havens it is rather a mix of policies related to improving the investment climate and this mix differs by country.

Authors : Arjan LEJOUR

Summary : The Monthly highlights publication provides an overview, at a glance, on the on-going work of the policy departments, including a selection of the latest and forthcoming publications, and a list of future events.

Authors : ANDRZEJ SANDERSKI, ANNA MANGINI

Summary : This research paper provides a comprehensive analysis of the impact of national tax measures implemented in response to the COVID-19 pandemic, with the aim of ensuring an appropriate assessment and providing policy recommendations to effectively address future crises. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the Subcommittee on Tax Matters (FISC).

Authors : Niccolò BALDESI, Irene BRUSINI & Paola PROFETAN (Corresponding author)

Summary : This study analyses the design and functioning of windfall profit taxes for energy suppliers in the EU. Based on profit data from 2021, the estimated revenue gains from the solidarity contribution amount to 4.4 bn EUR for the selected sample of firms. Applying the revenue cap to power prices of 2022 suggests a tax revenue of 106 bn EUR. The actual tax revenue might diverge substantially from these numbers due to different energy price levels during the application period. The revenue can be redistributed according to the member states’ priorities to face hardship of the energy crisis. Despite efficiency in theory, investment distortions might arise if investors expect the tax instrument to be extended to other sectors.

Authors : Katharina NICOLAY, Daniela STEINBRENNER, Nikolas WOELFING, Julia SPIX

Summary : This study aims at quantifying and comparing tax compliance costs burdening private businesses in the European Union by reviewing the available empirical literature and data with a focus on small and medium-sized enterprises. Data as well as methodological challenges are discussed and used to identify best-practice tax systems in Europe. We highlight differences in compliance costs met by firms of differing sizes, engaging or not in cross-border trade and for different tax types.

Authors : Diego D’ANDRIA, and Mareike HEINEMANN

Summary : The Monthly Highlights publication provides an overview, at a glance, of the on-going work of the policy departments, including a selection of the latest and forthcoming publications, and a list of future events.

Summary : This study provides estimates of the size and development of the shadow economy in the EU up to 2022 and analyses the main factors that drive economic agents to enter the shadow economy activities (part 1). Moreover, the study reviews and elaborates on the main driving forces and the policy measures implemented to reduce the shadow economy in six EU countries (Germany, Austria, Italy, Denmark, Romania and Greece) (part 2).

Authors : Prof. Dr. Friedrich SCHNEIDER, and Dr. Alban ASLLANI

Summary : The Monthly Highlights publication provides an overview, at a glance, of the on-going work of the policy departments, including a selection of the latest and forthcoming publications, and a list of future events.

Summary : This study provides an overview of the regulatory environment of tax intermediaries. It presents a comparative analysis of five selected countries (4 EU, 1 Non-EU). For each country, it provides an understanding of the landscape of the tax profession, the current regulatory framework and its impact on tax compliance and draws attention to some weaknesses across this regulatory space. It also highlights some proposed remedies and direction for further in-depth research in this area. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the Economic and Monetary Affairs' Subcommittee on Tax Matters (FISC).

Authors : Emer MULLIGAN (co-authors: Edidiong BASSEY, Dennis DE WIDT, Marco GREGGI, Dirk KIESEWETTER and Lynne OATS)

Summary : The coexistence of 27 different national tax systems in the European Union brings about significant obstacles to cross border business activity in the European Single Market. The objective of this study is to show the context and developments in European secondary law that have led to the current situation or, at least, have not yet resolved it. In addition, perspectives are shown as to how the described obstacles to cross border investment in the Internal Market can be countered both in the short and long term, both at the fundamental and also at the procedural or administrative level. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies for the Subcommittee on Tax Matters (FISC).

Authors : Jost Henrich HECKEMEYER

Summary : The Monthly Highlights publication provides an overview, at a glance, of the on-going work of the policy departments, including a selection of the latest and forthcoming publications, and a list of future events.

Summary : This study aims to provide an overview of the recently implemented anti-tax avoidance and evasion measures, notably the ATAD and DAC 6. It reviews the implementation of these directives across different Member States and assesses the problems that arise with regard to the interpretation of some of the directives’ provisions. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the Economic and Monetary Affairs Subcommittee on tax matters (FISC).

Authors : Dirk VERBEKEN

Summary : Economic globalisation and integration led to an increase in the mobility of taxpayers and aggravated tax competition in the area of personal income and wealth taxation. This study sheds light on the two main instruments used to compete for mobile taxpayers – (top) tax rates and preferential tax arrangements. In addition, this study reviews the evidence on tax-induced mobility. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the Economic and Monetary Affairs Subcommittee on tax matters (FISC).

Authors : Dirk VERBEKEN

Summary : The Monthly Highlights publication provides an overview, at a glance, of the on-going work of the policy departments, including a selection of the latest and forthcoming publications, and a list of future events.

Summary : This research paper explores the opportunities and challenges faced by the EU from the rapid emergence of new technologies such as Artificial Intelligence, Machine Learning, Data Analytics and Blockchain in the area of taxation .These technologies enable a transformation of the way that tax administration interact with taxpayers and can move tax compliance into real time. At the same time they raise practical and legal challenges for both the Member States and the European Union. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the Subcommittee on Tax Matters (FISC).

Authors : Dirk VERBEKEN

Summary : This study scrutinises the tax treatment of professional football players' remuneration throughout the European Union. It does so on the basis of a comparative analysis of selected country schemes. It draws conclusions and formulates suggestions for a future European Union approach.

Authors : Prof.dr. Robby Houben, Prof.dr. Anne Van de Vijver, Prof.dr. Niels Appermont and Gertjan Verachtert

Summary : This study analyses the gaps and challenges in the EU corporate income tax (CIT) legislation, and evaluate the European Added Value (EAV) of potential policy options to address these challenges. A thorough comparative economic analysis is made of the EAV of a series of scenarios, based upon the policy options identified. The results confirm that complexity remains by far the greatest factor behind both the CIT gap and the high level of compliance costs for businesses. Insufficient transparency, lack of administrative effectiveness and lack of efficient enforcement are also of particular relevance for businesses as they have a relatively large impact on compliance costs. As expected, the move towards digitalisation of the tax administration also appears as an option to reduce both the CIT gap and compliance costs in all scenarios, but probably to a lesser extent than what is sometimes assumed. The study finds an EAV of around €30 billion for a scenario of agreement in the G7/OECD plus limited implementation of the Commission's 'Business in Europe: Framework for income taxation' (BEFIT) proposals, as well as reinforced and extended cooperation. A slightly higher EAV of around €45 billion is found for a scenario of G7/OECD agreement + ambitious BEFIT and reinforced cooperation. Finally, a higher EAV of €76 billion is found with the most ambitious scenario of an EU treasury, qualified voting majority (QVM) in Council and CIT administered at EU level. The most ambitious scenario is however still rather unlikely to gather sufficient support at the current juncture as it would require substantial Treaty changes. It can be concluded that the two other alternatives are more likely to be implemented in the coming period.

Authors : JEROME LEON SAULNIER

Summary : Member States have agreed that the definitive VAT reform in the EU should proceed only if it can be demonstrated that its impact on reducing the VAT gap is substantial and if the burden on businesses is also reduced. This study analyses these issues in detail, with a view to identifying possible challenges for the EU and on evaluating the European Added Value (EAV) of potential policy options to address these challenges. The study also includes a thorough comparative economic analysis of the EAV of a series of scenarios based upon the policy options identified. The results confirm that complexity remains the main factor behind both the VAT gap and the high level of compliance costs for businesses in all scenarios. Regarding the impact of each scenario compared to the baseline in 2025, the study finds an EAV of around €39 billion for the scenario of extended cooperation with exchange of information and a one-stop shop. This can be broken down into a reduction of the VAT gap of around €29 billion, and a reduction of the compliance costs for businesses of almost €10 billion. A slightly higher EAV of around €45 billion is found for the scenario of extended cooperation with a definitive VAT regime and a one-stop shop. Finally, a higher EAV of €71 billion is found for the most ambitious scenario, including establishment of an EU treasury and VAT administered at EU level. This most ambitious scenario is, however, rather unlikely to gather sufficient support at the current juncture and would also require substantial Treaty change. As the definitive VAT regime continues to be delayed, this evaluation also emphasises the potential for a scenario of extended cooperation through reinforced exchange of information and a one-stop shop. However, the extent to which Member States are likely to coordinate a concerted move, as assumed by some commentators, remains to be demonstrated at this stage.

Authors : JEROME LEON SAULNIER

Summary : In November 2020, the European Parliament's Subcommittee on Tax Matters requested authorisation to draw up an implementation report on the implementation of the Sixth VAT Directive. Olivier Chastel (Renew Europe, Belgium) has been appointed as rapporteur for the report. To further support the Subcommittee on Tax Matters in its scrutiny work on the subject, the Ex-Post Evaluation Unit within the European Parliamentary Research Service has drawn up the present European implementation assessment. It focuses on the causes underlying the huge gap between the VAT projected and de facto collected, by looking at factors such as the Member States' disparate VAT systems and at the effects of reduced VAT rates on businesses and consumers.

Authors : ECKHARD BINDER

Summary : The purpose of the present study is to provide a tool for understanding the phenomenon of harmful tax competition within the EU, as well as making an in-depth assessment and proposing solutions. It contains policy recommendations for future EU standards. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the subcommittee on Tax Matters (FISC).

Authors : Prof. dr. Elly VAN DE VELDE and Dr. Francesco CANNAS

Summary : “Agreements concluded by the Union are binding upon the institutions of the Union and on its Member States.” (Article 216(2) TFEU). According to the Case-law of the Court of Justice of the European Union (CJEU), International law takes precedence over (secondary) EU law: “It should also be pointed out that, by virtue of Article 216(2) TFEU, where international agreements are concluded by the European Union they are binding upon its institutions and, consequently, they prevail over acts of the European Union (see, to this effect, Case C‑61/94 Commission v Germany [1996] ECR I‑3989, paragraph 52; Case C‑311/04 Algemene Scheeps Agentuur Dordrecht [2006] ECR I‑609, paragraph 25; Case C‑308/06 Intertanko and Others [2008] ECR I‑4057, paragraph 42; and Joined Cases C‑402/05 P and C‑415/05 P Kadi and Al Barakaat International Foundation v Council and Commission [2008] ECR I‑6351, paragraph 307)” . Arguably, acts adopted by bodies established by the EU-UK TCA could also enjoy primacy: “7 It follows [...] that decisions of the EEC-Turkey Association Council are measures adopted by a body provided for by the Agreement and empowered by the Contracting Parties to adopt such measures. 18 In so far as they implement the objectives set by the Agreement, such decisions are directly connected with the Agreement and, as a result of the second sentence of Article 22(1) thereof, have the effect of binding the Contracting Parties. 19 By virtue of the Agreement, the Contracting Parties agreed to be bound by such decisions and if those parties were to withdraw from that commitment, that would constitute a breach of the Agreement itself.

Authors : Andreas Huber at Al.