European Union actions for harmonising taxation in 2014
European Union has not been a big player regarding taxation within member states. EU has considered that taxation is something the states should be complying with by themselves. The easiest way to see this is by looking the spectrum of different tax systems inside the European Union. However, the Union is taking steps towards harmonising certain fields of taxation. Lithuanian commissioner Algirdas Semeta talked in General Assembly of the Intra-European Organisation of Tax Administrations about future EU proposals.
The first one is standard VAT return that would harmonise the information that is required for declaring VAT. The idea is that the VAT-return process would be the same in every member state of European Union. Semeta believes that this would encourage smaller companies to expand cross-border. He also believes that this would encourage people to act according the tax legislation, as it would be much clearer. Semeta thinks that European Union will find the agreement regarding standard VAT return by end of the year.
Another project European Union is also currently working on is European Taxpayers’ Code. This would define basic rules of the community for relations between taxpayers and tax administrations. European Union wants to act for the current situation that taxation legislation is different inside the European Union. Taxpayers’ Code is aimed for citizens and companies to understand their rights in different states of European Union and make easier to comply with the obligations arising from cross border situations. The aim would be related to European Union’s single market objective.
European Union is also currently working with a European Taxpayer Identification Number. The identification number would help Member States to collect taxes correctly and avoid double taxation. Currently European Commission is considering whether to take next steps with the identification number.
European Union has also changed the Savings Directive in 2014. The most significant new amendments are following:
- A new look-through approach; it is based on ‘customer due diligence’ and prevents individuals from avoiding the directive by using foundations or trusts situated in a non-EU country which does not ensure effective taxation of those mentioned above.
- Extending the scope; now the scope of the directive includes financial products that have similar characteristics to debt claims, but are not legally classified as debt claims
Also Member States are changing the Parent-Subsidiary Directive, to remove the possibility for companies to use hybrid loans (combination loan that consist a fixed-rate loan and an adjustable-rate loan) to avoid taxes.
Tony Koivula, lawyer of the Gencs Valters Law Firm in Tallinn.
Practising in fields of Value Added Tax Law .
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