The European Parliament adopted by 476 votes to 78, with 129 abstentions, a resolution with recommendations to the Commission on fair and simple taxation supporting the recovery strategy (EP follow-up to the July Commission’s Action Plan and its 25 initiatives in the area of VAT, business and individual taxation).
Members welcomed the action plan and supported its full implementation. The action plan provides for a dual pronged approach combining action to combat tax fraud and tax evasion with simplification of measures to remove unnecessary obstacles and administrative burdens for taxpayers, in particular for citizens and SMEs.
Parliament stressed the need to improve cooperation between EU and national tax authorities in the field of company taxation and to increase transparency in this area with a view to improving tax collection and compliance.
Moreover, the current international rules on corporate taxation are no longer adequate in the context of the digitalisation and globalisation of the economy. The use of technology and digitisation to make more effective use of available data could increase the efficiency and transparency of tax authorities, reduce compliance costs and increase public confidence.
Members also believe that company taxation should be guided by the principle of taxing profits where they are generated, and that a more harmonised and coordinated approach to the corporate tax system across the EU could help to combat unfair competition caused by harmful tax practices.
According to Parliament, a rapid recovery requires a strong economic and fiscal policy response through reforms and investments, including:
- an effective level playing field for taxpayers and businesses, by reducing or eliminating tax benefits that unfairly disadvantage SMEs, including a reduction in red tape, through a simple, fairer, digital and more predictable tax environment;
- ensuring that Member States have the tax revenues to finance recovery, the transition to a carbon-neutral economy, a reduction in their debt-to-GDP ratio and the stimulation of investment; and
- ensuring fair taxation of businesses and citizens, increasing transparency and trust in society and fair competition, based on agreed standards and coordinated and digitalised reporting systems.
Parliament called on the Commission to present to Parliament by 2022/2023 one or more legislative proposals addressing the following recommendations:
(1) Simplification, reducing compliance costs for taxpayers
The resolution called on the Commission to:
- move towards a single EU VAT registration procedure and a single EU VAT number by 2023 to reduce compliance costs, in particular for SMEs operating in the Single Market;
- put in place measures to further reduce the costs and complexity of taxation of SMEs and European Companies (SEs) by 2023. The Commission should explore the possibility of introducing a single pan-European income tax regime for SEs and start-ups.
(2) More certainty for taxpayers and/or Member States' tax administrations
The resolution called on the Commission to:
- identify the remaining gaps in Council Directive (EU) 2017/1852 on tax dispute resolution mechanisms in the European Union,
- present proposals on the definition of tax residence by 2023;
- assess the need for and the most appropriate way to extend automatic information exchange between Member States to other categories of income and assets, such as crypto-assets.
(3) Reducing tax leakage and compliance costs
The report called on the European Commission to:
- put in place, without delay and by 2022 at the latest, a common harmonised standard for e-invoicing across the EU, to reduce the cost of creating fragmented and different systems across the Member States;
- explore the possibility of the gradual introduction of obligatory e-invoicing across the EU by 2023, with a focus on significantly reducing compliance costs, in particular for SMEs;
- propose measures that would significantly reduce the VAT gap, in particular the gap related to the exemption of EU cross-border trade. This includes relaunching the initiative of the definitive regime, which is the most natural and effective way to combat VAT fraud and to simplify compliance with VAT obligations;
- present a legislative proposal on a single harmonised corporate tax (CIT) return to support the BEFIT framework in the EU;
- propose ways to take forward the launch of an EU Tax Observatory as a preparatory action.
(4) A new coordinated European corporate income tax system
The resolution invited the Commission to:
- carry out a thorough impact assessment and include strong anti-avoidance clauses in the forthcoming proposal for a franchise to reduce debt-incentives;
- ensure that different elements of what constitutes real economic activity of businesses are taken into account (sales, labour force, assets) in the context of the future framework for income taxation (BEFIT);
(5) Efficiency of tax administrations, exchange of tax information and data quality
The resolution called on the Commission to strengthen the EU's network of anti-fraud experts, Eurofisc, and to provide sufficient resources to carry out joint risk analyses, coordinate investigations and cooperate with the European Anti-Fraud Office (OLAF), Europol and the European Public Prosecutor's Office (EPPO), in particular to investigate VAT fraud.