The new EU Tax Package: an (over)ambitious plan?

After a strange, dynamic and utterly unexpected first half of 2020, summer is finally here. With the first bulk of global tax compliance deliverables behind us and with the annual peak of statutory audit work completed, it feels refreshing and perhaps also necessary to leave work behind us and to enjoy a well-deserved break. This also means putting the daily bulk of tax news on the back burner for a while.

Before you go on vacation, I would like to point out in this blog that last week the European Commission announced its first steps towards a new Tax Package[1]. On July 15 an ambitious plan aimed at “fair and simple taxation supporting the EU’s recovery” was announced by the EU Commission in Brussels.

Tax compliance as integral part

In my role as Senior Tax Manager Global Compliance in our GCMS[2] practice, it was great to see that the emphasis on tax compliance is an integral part of this package. Normally, the announcement of 25 new EU measures would immediately see a focus on their concepts and content. While this will still happen during the next few months when the measures become clearer, the EU seems to acknowledge the impact on the EU compliance position of European multinationals from the start.

Announcement of an EU cooperative compliance framework

In short, after the introductory remarks about the simplification of the tax system, a large part of the 17-page document focusses on the level of tax compliance costs and the fact that “national rules and procedures in the area of taxation are consistently highlighted by businesses as one of the biggest obstacles they face”. After further mentioning the need to adapt to different national systems and administrations, a full section is dedicated to tax reporting. The most interesting promise in the package for me, as a global compliance specialist, is the EU cooperative compliance framework promised by the Commission somewhere in 2020/2021. It is described as “a clear framework for a preventive dialogue between tax administrations for the common resolution of cross-border tax issues in the area of corporate income tax”. A pilot is expected in 2021.

The fact that the EU now acknowledges complexity and administrative burden as key elements of a new tax system, emphasises the importance of a realistic compliance process. However, the promise to simplify the current EU tax compliance climate will be hard to meet when promising 25 new measures accompanied by an EU cooperative compliance framework that only complements existing programs on cooperative compliance.

What’s next?

For me, the EU Tax Package triggers curiosity. Curiosity about the next steps and its focus on how to deal with EU tax compliance. I look forward to the challenge of keeping our clients informed on the EU’s next steps towards this new tax system, while at the same time helping my clients remain compliant with all their existing EU compliance formalities.

For our clients we can already anticipate upcoming regulations by making sure one cohesive end-to-end compliance process in place for all EU tax returns. An efficient end-to-end tax compliance process from data to last mile reporting is, in my view, the first step to be ready for what is next in the EU Tax Package.

Enjoy your summer.
Frank Metsemakers

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[1]https://ec.europa.eu/taxation_customs/sites/taxation/files/2020_tax_package_tax_action_plan_en.pdf
[2]Global Compliance Management Services. A practice within Meijburg & Co that focusses on the coordination, standardization, and transformation of global tax compliance formalities.