ETAF ANNUAL REPORT 2019 INDEX 02 FOREWORD 08 The Directive on Administrative Cooperation 09 What could make digital taxation more efficient? 10 ETAF’s engagement in the VAT Expert Group 03 PROFESSIONAL LAW 03 ETAF rejects general suspicion against tax advisers 04 Commission consults ETAF on Internal Market Policy 11 EVENTS 11 “Future Trends of Taxation” - Conference 12 “Future dynamics of EU tax policy” - Conference 05 TAX LAW 13 ETAF Board renewed 05 Qualified majority voting in tax matters 14 Our “DNA” – what is at stake? 06 How to strengthen the European Commission’s communication tools 15 ETAF ACTIVITIES 2019 07 ETAF feedbacks on forms standardization for dispute resolution and administrative cooperation Philippe Arraou, President of ETAF 1 ETAF ANNUAL REPORT 2019 Foreword of the President FOREWORD Dear ETAF Members, Dear friends, Tax policy has become an essential part of the political versations on how to shape future policies and how to agenda of decision-makers at EU-level and is covering strengthen the profession. the front pages of newspapers around Europe. It is no longer treated as a side issue and almost every political 2019 was a busy and yet productive year. In March we group in the European Parliament has made tax a priority invited decision-makers and representatives of various in their programmes and committed itself to work towards stakeholders to discuss future trends of taxation and the tax transparency goals during the mandate of 2019-2024. possible implications of qualified majority voting in tax matters and what European tax policy would look like af- With the impact of climate change on our economies, ter Brexit. the call for more sustainable and green economic sys- tems intensified. The idea of using tax as a powerful In December we held another conference on how the dif- tool to help reach climate neutrality is gaining more and ferent EU institutions influence each other and especially more ground. As the European Commission is determi- how the OECD comes into play in European tax policy. ned to raise the EU’s climate ambition and get all Mem- The rapid development of technology and the increasing ber States on board to reach climate-neutrality as early digitalization of our economies has led the OECD to work as 2050 this will most certainly shape our future tax sys- on a plan on how to fairly tax digital activities. This is tems. certainly one area where we can observe a significant in- fluence of the OECD on tax matters in Europe. Our profession has a crucial role to play. As intermediaries between tax authorities and the businesses we contribute The digitalization and growth of technology has already to the tax collecting process and make sure our clients a clear impact on the way we carry out our work, surely comply with existing tax rules. Following the EU’s sustai- influencing our interaction with clients and tax adminis- nability agenda, tax professionals will become even more trations. This topic has kept us busy in 2019 and will instrumental: we advise our clients in the economy and ex- continue to do so in 2020. ETAF will closely observe all plain complex tax rules thus raising acceptance for taxes. new developments in this regard and will remain on the forefront of all discussions to make sure our profession’s It is therefore of utmost importance that we maintain concerns are heard. ETAF’s job is to act in the interest of high professional standards to be able to provide highly all tax professionals, and in the public interest, as well. qualified tax advice. In the past year, part of our work was to ensure a high visibility of tax advisers and gua- I hope you will enjoy reading our Annual Report 2019! rantee that our concerns were heard on EU-level. We met various decision-makers in the European institu- Yours sincerely, tions and had numerous fruitful and constructive con- Philippe Arraou 2 ETAF ANNUAL REPORT 2019 Professional Law PROFESSIONAL LAW ETAF rejects general suspicion against tax advisers Philippe Arraou President of ETAF, Marek Belka (Member of the European Parliament, S&D, Poland), Maria Teresa Fabregas Fernandez (Director Indirect Taxation and Tax Administration at DG TAXUD, European Commission) In March 2019, our profession had to endure some very We pointed out, harsh attacks coming from the Special Committee on Fi- however, that tax nancial Crimes, Tax Evasion and Tax Avoidance (TAX3) of advisers are also the European Parliament. The MEPs drafted a report that committed to act included recommendations for the European Commis- in the public inte- sion on how to tackle money laundering, tax evasion and rest. tax avoidance. The TAX3 report mentioned among other Due to this dual things that intermediaries played a crucial role in facilita- function, tax ad- ting money laundering and the financing of terrorism. It visers have an im- also implied that professional secrecy was being used by portant role in the intermediaries for the purpose of protecting or covering tax collection pro- up illegal practices. cess and contri- Michael Korth (DStV and ETAF Board Member) bute significant- at the ETAF Conference We strongly rejected this general suspicion under which ly to the safeguar- our profession was put in that report and argued for safe- ding of fiscal revenues in Europe. The tax authorities de- guarding the professional secrecy which is a ground pillar pend on tax declarations to be correctly and fully com- of our work and ensures a high quality in our tax advice. pleted. This task in its well-proven quality can only be ETAF represents tax professionals that are regulated and guaranteed by tax advisers, since only tax advisers have therefore already subject to limits in the use of the profes- the legal obligation to perform conscientiously and in full sional secrecy principle. compliance. Tax evasion is highly damaging to the common good and Therefore – and quite contrary to the report – tax advisers must therefore be fought with full power. ETAF supports help to ensure that small and medium-sized enterprises any reasonable and targeted measures to do this. (SMEs) duly pay their fair share of taxes. 3 ETAF ANNUAL REPORT 2019 Professional Law Commission consults ETAF on Internal Market Policy Volker Kaiser (BStBK and ETAF Board Member) at the ETAF Conference the necessary conditions are fulfilled. Concerning the arguments of the Commis- sion on the generation of growth, ETAF pointed out that the Member States with a relatively high degree of regulation do not neces- sarily belong to the “low The European Commission’s Directorate-General for In- performers” in the EU. Rather the opposite is the case ternal Market, Industry, Entrepreneurship and SMEs (DG if we look at France, Germany, Belgium, Austria and Italy, GROW) launched a new bottom-up approach, engaging for example. This fact should be taken into account when in an in-depth and inclusive debate with the Member developing future internal market policies. Moreover, States and various stakeholders. In an effort to gather ETAF pointed out that the existing regulatory require- insights on reforming and defining future internal market ments of the Services Directive and the Professional policies, especially regarding the Services Market, the Qualifications Directive have been fully implemented in Directorate General held intensive exchange of views. the ETAF Member States. On 9 September 2019, ETAF was invited by the European Commission to join a meeting in this regard and discuss Complementarily, ETAF explained the role of the profes- current market policies, concerns of the profession and sion, the advantages it brings to our societies, namely by how to improve the Internal Market for Services. securing tax revenues, and how professional regulations can make a worthy contribution in the fight against tax ETAF welcomes this new approach as it will result in evasion. more targeted and effective policies and lead to a broa- der acceptance of EU-legislation. During the meeting, Asked about a “key-message” to the new Commissio- ETAF highlighted that the services market in the EU is ner, ETAF asked to respect the principle of subsidiarity in principle open. Anyone can access to the profession and, especially when it comes to Services, to follow the of a tax adviser, an expert-comptable or a dottore com- strategy of “Unity in Diversity” – as the European Union mercialista in the respective Member State as long as generally is. 4 ETAF ANNUAL REPORT 2019 Tax Law TAX LAW TAX LAW Qualified majority voting in tax matters – what is at stake? used. Tax policy is in fact one of the last remaining political areas where unanimity is obligatory. On this basis, the arguments of the Commission should not be entirely dismissed: the unanimity principle stems from a time when the Union was smaller and unanimity therefore easier to achieve. In particular, in today’s EU, the progress in tax policy is sometimes hampered by the unanimity requirement which makes it often difficult for the Union to keep pace with rapid economic, societal and technological developments. In its feedback to the con- sultation, ETAF highlighted that qualified majority voting could help advancing tax proposals such as the Common Consolidated Corporate Tax Base and reduce the influ- ence of certain Member States that are blocking reforms in European tax policy. At the same time however, ETAF pointed out that the ob- Speaker Patrice Pillet (Head of Unit Indirect Taxation at DG TAXUD, European Commission) jections raised by several national governments – name- ly the concern of losing fiscal sovereignty rights – shall neither be ignored. The national power of choosing tax strategies which meet the specific economic reality and On 20 December 2018, the European Commission pu- the needs of that Member State should be a valid reason blished a Roadmap to explore how EU decision-making and thus taken seriously and carefully into consideration.