Regulatory

Read the Council decision in the Official Journal of the European Union no. L 309/25 November 2010

Under Directive 2008/9, EU businesses must, from 1 January 2010, apply for a refund of VAT incurred in another Member State through an electronic portal in the Member State of establishment, before 30 September of the following year.

Read the Council Directive

The Council reached political agreement on a draft decision aimed at enabling certain member states to better tackle fraud with regard to the payment of value-added tax (VAT) on mobile telephones and integrated circuit devices and their components.

Read the European Council press release

The European Commission published four press releases on 30 September concerning infringement procedures in the field of taxation against six EU Member States.

For each case, the Member State(s) involved and the area(s) of taxation are briefly mentioned below:

Belgium, successions, gifts and collective investment
Read the press release

Germany, fiscal unity regime for companies
Read the press release

Greece, withholding taxes on outbound dividends
Read the press release

Latvia, excise duty on bio-fuel
Read the press release

The Netherlands, successions, charities and foreign companies
Read the press release

United Kingdom, reimbursement of taxes paid in violation of EU law
Read the press release 

Following the invitation contained in the October 2009 Council Conclusions, a majority of Member States included in their respective 2009-2010 Stability and Convergence Programmes (SCPs) information related to the reform of domestic fiscal frameworks.

Specifically, 21 EU countries reported recent and/or future changes to be implemented in the next years. However, detailed information on the scope of these measures and/or an

implementation calendar was only provided in 10 cases.

By type of measure, changes to the existing budgetary procedures were the most frequent

policy initiatives and were foreseen by 19 Member States. As for reforms related to numerical fiscal rules, they were envisaged in 13 SCPs, and the amendment of MTBFs or the

introduction of new frameworks was reported by 10 countries. Finally, policy initiatives in

relation to independent institutions were limited to 3 Member States.

Read the official document

The European Council approved a draft directive that will allow member states to implement a temporary reversal of liability for the payment of VAT on greenhouse gas emission allowances. The aim is to close off certain forms of tax fraud, in particular so-called carousel schemes whereby supplies are traded several times by different suppliers without VAT being paid to the tax authorities. Applying a "reverse charge" principle, the draft directive would allow, until 30 June 2015, liability for the payment of VAT on emission allowances and services to be shifted from the supplier (as normally required by EU rules) to the customer. The Council will continue to work on other elements of the proposal as regards the application of the reverse charge mechanism to mobile phones and electronic circuit devices with a view to reaching an agreement as soon as possible, aiming to present a proposal for a derogation before June 2010.

We believe these two developments are important for EU-based energy and telecommunication groups with a presence in Romania. Please note that in Romania, the tax treatment of granted and acquired emission allowances is uncertain yet (commodities versus securities), as the decision taken in April 2009 by the National Commission of Securities to categorize ETRs as securities was suspended in June.

Read the official document

The objective of this initiative is to clarify existing legislation while extending its benefits to a wider range of companies by: including other legal forms of companies enjoying the Directive; reducing the threshold to be considered associated company; taking account of indirect shareholdings to compute the total holding; alternatively, extending the exemption to payments between unrelated parties.

Read the release

European Commission recommends Member States to grant WHT relief at source at the time of payment of securities income. Alternatively, Member States must make the WHT refund procedure quicker (grant refunds within 6 months ) and simpler, i.e. allow authorized financial intermediaries (banks) in a custody chain to act as information and withholding tax agents on behalf of the investors, create a single contact point for the introduction and handling of all the refund applications , publish on a website all of the relevant information on refund procedures, use common formats for refund applications, allow electronic filing of refund applications and alternative proofs to certificates of residence in connection with refund claims, e.g. self-certification.

We believe this recommendation to be further evidence that the EC considers withholding taxes, which impose tax and cash-flow disadvantages to non-residents, to be present restrictions to the fundamental freedoms and should be eliminated. Changes to the Fiscal code valid as of January 2010 enact in Romania some of these recommendations.

Read the official document
Read the press release
F.A.Q.
Impact study

The revised Code of Conduct for the Arbitration Convention is the result of a monitoring exercise on the application of the existing Code of Conduct. The topics specifically identified were: 
-  serious penalties;
-  scope of the Arbitration Convention - triangular transfer pricing and thin cap cases;
-  interest charged/credited by tax administrations when a case is dealt with under the Arbitration Convention;
-  functioning of the AC: rules on the deadline for setting up the advisory commission, criteria for establishing the independence of independent persons of standing, the date from which a case is admissible under the AC;
-  interactions between the Arbitration Convention and domestic litigation.

We believe this new development to be important and of relevance to Romanian taxpayers because on November 27 the European Parliament published in the EU Official Journal a legislative resolution approving a recommended decision of the European Commission on the accession of Bulgaria and Romania to the EU transfer pricing Arbitration Convention.

Read the report, the summary, the communication

VAT fraud is a major concern for Member States' revenues and the correct functioning of the Internal Market. A common and particularly severe form of this fraud is VAT carousel fraud. This particular fraud costs billions of Euros to the EU finances every year. It is often organised on a large scale, sometimes by criminal organisations. Carousel fraud is traditionally organised with small goods of high value. In order to allow Member States to take rapid action against this kind of fraud, the Commission has adopted a proposal for a Directive allowing the application of a reverse charge mechanism on supply of five categories of particularly fraud sensitive goods and services, namely: computer chips, mobile phones, precious metals, perfumes and greenhouse gas emission allowances.

We believe it is important to note that this new directive would allow the possibility for all Member States to opt for the application of reverse charge under the same conditions to a limited list of goods and services.

Read the directive proposal, the communication

 Protocol II of the Bilateral Agreement on the Free Movement of Persons between Switzerland and the EU extends the agreement to cover Romania and Bulgaria.

Read the Alert