To mark the 2023 rentrée, Director-General for Taxation and Customs Union at the European Commission, Gerassimos Thomas, issued a newsletter setting out some of the more notable EU tax policy developments to track this year.

The newsletter sets out the following files to watch in 2023:

• In March 2023, the Commission will table a proposal for reform of the EU Customs Union seeking to strengthen its integrity by more effectively enforcing EU rules and standards at external border for goods;
• The much-anticipated BEFIT proposal will be unveiled, with a view to reducing remaining obstacles for cross-border investment in the Single Market as part of a broader effort to accompany the EU’s economy through the twin digital and green transition and reforming and simplifying business taxation within the EU;
• A proposal seeking to implement the Pillar 1 global tax deal into EU law will be introduced once sufficient progress has been made at international level;
• A legislative initiative to clamp down on enablers of tax abuse will be introduced;
• A proposal to improve withholding tax relief procedures for cross-border businesses in the EU will be introduced.

Other proposals under negotiation at Council level to watch in 2023 include:

• VAT in the Digital Age proposals – seeking to align VAT rules with the digital economy and simplify VAT registration and e-invoicing throughout the EU;
• DAC8 proposal – seeking to increase reporting and transparency requirements for crypto-assets and transactions;
• Unshell proposal – seeking to reduce the use of shell companies in the EU.

In the newsletter, Mr Gerassimos notes that the Pillar 2 Directive on minimum effective tax rates in the EU was agreed in late December. Member states have until the end of 2023 to transpose the Directive into national legislation. Gerassimos in the newsletter states that the directive “will undoubtedly have a lasting effect on base erosion and profit shifting, and enhance the fairness of taxation globally”.

In relation to the Carbon Border Adjustment Mechanism (CBAM), also agreed in late December, Gerassimos said that “CBAM is the first of its kind in the world. It will put a fair price on the carbon emitted during the production of carbon intensive goods that are entering the EU, and thereby reduce the risk of carbon leakage while encouraging cleaner industrial production in non-EU countries.”

Also of note for 2023, EU Member states by the end of June must implement Directive 2021/2101 amending Directive 2013/34/EU as regards disclosure of income tax information by certain undertakings and branches, better known as Public Country-by-Country Reporting.

OECD Appoints New Director of Centre for Tax Policy & Administration 

The OECD has appointed Ms. Manal Corwin as the new Director of its Centre for Tax Policy and Administration, taking over the role from Pascal Saint-Amans, who served as Director for 12 years.

Manal Corwin is presently the Partner-in-charge of the National Tax Office and Lead Director of the Board of Directors for KPMG, LLP in the United States and previously worked in the Office of Tax Policy in the US Department of Treasury as Deputy Assistant Secretary for International Tax Affairs, working on Base Erosion and Profit Shifting initiative and headed up the US delegation for various tax treaty negotiations. As delegate to the OECD Committee on Fiscal Affairs, Ms Corwin also participated on the Protocol amending the Convention on Mutual Administrative Assistance in Tax Matters, the Forum on Harmful Tax Practices, the Report on the Transfer Pricing Aspects of Business Restructurings, and the launch of the work to address aggressive tax planning.

Ms Corwin will take up her duties from 1 April 2023, relieving Grace Perez-Navarro, who served in the role on an interim basis after Pascal Saint-Amans’ departure and who will retire at the end of March 2023.

ECOFIN: Swedish Presidency Priorities 

At the first meeting of the Economic and Financial Affairs Council for 2023, Finance Ministers discussed the priorities for the Swedish Presidency of the Council of the European Union from 1 January until 30 June 2023. The Swedish Presidency priorities as concerns taxation are as follows:

A review of the Energy Taxation Directive is under way, as the current directive is outdated and is not coordinated with other EU measures. The Presidency will continue discussions in the Council. The Presidency will also continue the work on the proposal for new VAT rules for the digital age.

In the area of direct taxation, priority will be given to measures aiming to prevent tax evasion, tax avoidance, aggressive tax planning and harmful tax competition, such as updating the EU list of non-cooperative jurisdictions. In addition, the Presidency will work to ensure greater tax transparency and to reinforce the exchange of relevant information within the EU. The Presidency stands ready to advance the work on further strengthening EU administrative cooperation on taxation. 

In the financial area, the Presidency will seek to continue the fight against international crime by advancing the efforts to tackle money laundering and the financing of terrorism. This will involve advancing the negotiations on establishing a new EU body in this area and on the ‘rulebook’.

Ministers also discussed the economic and financial impact of Russia’s aggression against Ukraine and the Recovery and Resilience Facility.

Updated OECD Pillar 1 & 2 Analysis