By Davide Anghileri, University of Lausanne
The EU Code of Conduct Group will focus its efforts on addressing non-cooperative, non-EU, tax jurisdictions; monitoring EU implementation of the modified nexus approach for patent boxes; and assessing EU countries’ standstill and rollback of harmful tax measures, according to a work plan released by the EU Council on 15 February.
The Council also released new procedural guidelines concerning the EU list of non-cooperative jurisdictions.
Non-cooperative jurisdictions
According to the work plan, the Code of Conduct Group will continue to follow the Council conclusions of 5 December 2017 on the EU list of non-cooperative jurisdictions for tax purposes.
The group will begin monitoring countries’ commitments to improve their tax regimes and will prepare a progress report to the ECOFIN Council on this matter before summer 2018. For this purpose, procedural guidelines on monitoring commitments were also released.
Under these new guidelines, the process is divided into three steps. Jurisdictions are expected to provide the Code of Conduct Group with a precise timeline and description of the steps for the implementation of the commitments that they have made by 9 March 2018 (phase 1).
The phase 2 foresees countries providing information in due time regarding each of the steps mentioned in phase 1, including, where relevant, an English translation of the draft legislation as presented to Parliament, so as to enable an early analysis and feedback by the Code of Conduct Group.
Finally, in phase 3, the jurisdiction must advise the Group of final measure(s) as enacted by the agreed deadline.
The Code of Conduct Group will undertake further work to monitor whether and how the defensive measures agreed on 5 December 2017 are applied and will explore further coordinated defensive measures in the tax area.
Consolidated list of non-cooperative countries
The General Secretariat of the Council released also the consolidated version of the EU list of non-cooperative jurisdictions for tax purposes as modified by the Council on 23 January 2018 and the consolidated version of the state of play of the cooperation with the EU with respect to commitments taken to implement tax good governance principles.
The first list highlights the reasons why jurisdictions are considered non-cooperative on a country-by-country basis, while the second list points out which countries must improve transparency, fair taxation, or implement BEPS minimum standards.
Standstill and rollback
According to the agreed work program, the Code of Conduct Group will monitor developments in administrative practices of Member States and review the tax measures announced by Member States under the standstill and rollback process for the year ending on 31 December 2017, giving priority to notional interest deduction regimes.
Moreover, the Group will monitor whether Member States that have not yet modified their IP regimes to comply with the modified nexus approach have begun to amend their patent box regimes to comply as soon as possible and, in any case, no later than end 2018.
Relationship with third countries
According to the work plan, the Group will also monitor the implementation by Liechtenstein of the amendments to its preferential regimes where the Code of Conduct Group has identified deficiencies, with particular focus on the tax-exempt corporate income-dividends and capital gains regime and on the interest deduction on equity (allowance for corporate equity – ACE).
Furthermore, the Group seeks agreement on draft Council conclusions on the update of the existing EU standard provisions on good governance in tax matters.
Finally, the Code of Conduct Group plans to issue a report on its progress before the end of the Bulgarian Presidency, namely, by 30 June.
Davide Anghileri
Davide Anghileri is a PhD candidate at the University of Lausanne, where he is writing his thesis on the attribution of profits to PEs. He researches transfer pricing issues and lectures for the Master of Advanced Studies in International Taxation and Executive Program on Transfer Pricing.
Anghileri, a Contributing Editor at MNE Tax, previously worked as a policy advisor to the Swiss government on BEPS issues.
Davide can be reached at [email protected].
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