2022-12-23-KPMG_s_EU_Tax_Centre-Euro_Tax_Flash_from_KPMG_s_EU_Tax_Centre_12页_430kb

EU Minimum Tax Directive (Pillar Two)

• Overview: EU-wide minimum tax to prevent BEPS (Base Erosion and Profit Shifting). Based on OECD's GloBE Model Rules.
• Status: Final text agreed by the EU Council on December 15, 2022, effective December 23, 2022. Member states had until Dec 31, 2023, to transpose rules.
  • Income Inclusion Rule (IIR) effective from fiscal years starting Dec 31, 2023.
  • Undertaxed Profits Rule (UTPR) effective from fiscal years starting Dec 31, 2024.
  • Deferable for countries with <=12 EU Parent Entities (UPEs), potentially until Dec 31, 2029.
• Key Considerations:
  • Monitor national implementation details (optional domestic top-up tax, deferral, specific OECD framework points, filing procedures).
  • Potential simplification of domestic tax regimes via reforms (including R&D credits).
  • Watch deferral deadlines, filing processes (centralized, automatic exchange), interactions with bilateral agreements.

EU Implementation of Pillar One

• Overview: OECD/G20 Inclusive Framework developing rules via "building blocks" in response to the deadlock with Pillar Two, focusing on reallocation of profits ("Amount A", mainly revenue sourcing and tax base).
• Status: Influenced partially by the Minimum Tax Directive. EC committed to reporting on Pillar One implementation by June 30, 2023.
  • Pillar One agreement (BEPS 2.0) still pending as of Jan 2023.
  • If unsupported, potential EU initiatives include codifying the 2018 Digital PE concept or harmonizing unilateral DSTs.
• Key Considerations:
  • Depends on global agreement. Monitor progress; KPMG hints at possible revival of previous EU digital-specific proposals if bilateral agreement fails.

Proposal to Prevent Use of Shell Entities (ATAD3/Unshell)

• Overview: EC proposal to target entities lacking substance for tax purposes via three "gateways" (passive income, cross-border activity, day-to-day operations decision-making location). Seventy priority entities with no treaty carve-out must self-certify substance or be deemed shells.
• Status: Requires unanimous EU approval. Discussions in 2022 ongoing, particularly on design and tax repercussions. Proposed transposition deadline: June 30, 2023, application date: Jan 1, 2024.
• Key Considerations:
  • Monitor Unshell negotiation/completion timeline. Although EC's initial parameters might change, the 2021 proposal is a useful benchmark.
  • Exercise caution regarding the benefits derived doctrine and substance, as anti-treaty avoidance measures may evolve.

Securing the Activity Framework of Enablers (SAFE)

• Overview: EC initiative to curb intermediaries (tax advisors) facilitating tax evasion via aggressive planning or other unacceptable practices (requires due diligence/potential registration for some solutions).
• Status: Under Consultation/Proposal stage (indicative timing first quarter 2023). Seen as complementary but facing potential delays due to Unshell talks.
• Key Considerations:
  • Monitor SAFE proposal completion. May lead to stricter due diligence obligations for tax advisors in the EU regardless of employment status (in-company or freelance).

Business in Europe: Framework for Income Taxation (BEFIT)

• Overview: EC proposal (Call for Evidence Oct 2022) for a unified, modern EU tax system (formulary apportionment, one-stop-shop filing, dispute resolution). Could incorporate debt-equity bias reduction rules (DEBRA). Timeline remaining unclear.
• Status: Public consultation requests feedback by Jan 26, 2023. EC plans adoption Q3 2023 if moving forward.
• Key Considerations:
  • Interactions with Minimum Tax Directive, Pillar One, national reforms (R&D etc.). BEFIT likely requires a directive with unanimous vote in the Council.

Proposal for a Debt-Equity Bias Reduction Allowance (DEBRA)

• Overview: EC proposal (May 2022) aiming to broaden tax base via CFC-like allowances and new interest deduction limitations.
• Status: Transposition deadline June 30, 2023 (originally Dec 31, 2023), application Jan 1, 2024, initially placed on hold pending BEFIT progress at EC level.
• Key Considerations:
  • Likely to be included in BEFIT. Might impact interests in non-industrial companies (the "thin capitalization effect").

EU Public CbCR Implementation

• Overview: Revised EU Directive entered into force Dec 21, 2021, setting calendar for mandatory public disclosure of minimum books-and-records information in EU CbCR reports.
• Status: Transposition by EU member states by June 22, 2023, reporting latest Jan 1, 2024 (early adoption possible, e.g., Romania Jan 1, 2023). Member states can opt-out partially.
• Key Considerations:
  • It will be complex due to varying national implementations and opt-out options. Monitor timelines and scope differences between member states (e.g., Hungary → more detailed disclosures).

Reporting Obligations for Platform Operators (DAC7)

• Overview: Enacted member state law; EXISTENCE status deadline for transposition was Dec 31, 2022, application date: Jan 1, 2023 (reporting data Jan 31, 2024).
  • Applies to EU and non-EU operators facilitating reportable activities (specific services/good sales) related to EU sellers. Need due diligence and reporting.
  • Deadline risk (some member states not fully ready, potential EC action needed).
• Status: Now in force as of Jan 1, 2023 (member states had to transpose by Dec 31, 2022). Implementation ongoing.
• Key Considerations:
  • Assess scope for EU/non-EU operators.
  • Perform gap analysis on existing data systems.
  • Consider impact on cash flows due to upfront collection.

Extending CbCR Scope (DAC8)

• Overview: EC proposal to harmonize penalties, include high-wealth individuals in automatic information exchange (cross-border rulings), require new due diligence for crypto-asset service providers, and update DAC6.
  • Goal: Enhanced tax certainty, reporting of crypto transactions, stricter penalties for non-compliance.
• Status: Subject to unanimous vote. Public consultation ongoing until fully translated. Binding date (Jan 1, 2026) is tentative.
• Key Considerations:
  • New financial penalties framework potentially impacting many sectors (cross-border rulings, DAC7, etc.).
  • Assess impact on individuals holding cross-border rulings and crypto-asset service providers.
  • Monitor progress in amending DAC6 aligning with CJEU rulings.

Faster and Safer Tax Excess Refund (FASTER)

• Overview: Proposed EU-wide system to simplify withholding tax (WHT) refund procedures for dividends and interest, developed by the EC through a study.
• Status: Aimed for Commission proposal by Spring/Summer 2023. EC received wide feedback but concerns remain about the ambition and timing.
• Key Considerations:
  • Potentially significant reform streamlining WHT relief, monitoring the ongoing procedure.

Other Direct Tax Initiatives

• Effective Tax Rate (ETR) Disclosure: Proposed rule for large EU companies; potential backdating imminence due to overlap with Minimum Tax Directive but legal basis question (tax vs procedural).
• State Aid: Case outcomes pending before CJEU likely influencing relevant national tax measures (potentially impacting taxpayers via less profitable competitors).
• Code of Conduct Group (CoCG): Will start review of features potentially taxing distortions effective Jan 1, 2024.
• EU List of Non-Cooperative Jurisdictions: Expected Feb 2023 update, focused on criteria related to automatic information exchange (AEOI), foreign income, substance (CIVs), CbCR.
• Solidarity Contribution (Energy Crisis): Member states to implement/finalize by Dec 31, 2022.

ETC Comment/Closing

• EU Presidency in 2023 focused on preventing tax evasion/avoidance, transparency, administrative cooperation.
• Expected continued political pressure on implementation/completion of structural reforms (Unshell, SAFE, BEFIT). High chance for further activity in direct tax harmonization efforts.

> *Internal Note: This summary structure reflects the key areas, status, and considerations mentioned in the provided KPMG report text.*