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Germany Issues EU Presidency Tax Priorities

Tuesday, September 29, 2020

On September 22, 2020, Germany provided further details about the government's tax policy priorities for its presidency of the European Union.

The new document fleshes out the tax proposals included in Germany's program for the presidency released earlier this year.

The document says the EU will seek to implement the new recommendations from the OECD on the taxation of the digital economy, including the reallocation of taxing rights and the introduction of an effective global minimum corporate tax.

While the OECD's recommendations are unlikely to be implemented in the EU before the end of Germany's six-month presidency on December 31, 2020, the document states that Germany wants use its presidency to "pave the way" for the introduction of uniform minimum tax rules.

Germany is also seeking to update the mandate of the Code of Conduct Group on Business Taxation, to "reflect its diverse responsibilities." Established in 1997, the Code Group was established to monitor harmful tax regimes in the EU, although its remit has since expanded to cover harmful tax regimes in third countries. In particular, Germany wants to update the Code Group's mandate so that it is more consistent with the final recommendations of the OECD's BEPS Action Plan, released in October 2015.

Additionally, Germany intends to take forward the European Commission's proposal to introduce a new Directive on Administrative Cooperation (DAC7), which will set out a framework for member states to automatically exchange the information they receive on the taxable activities of business users of online platforms. The German presidency will also seek to strengthen existing rules on administrative cooperation to allow for the introduction of joint tax audits.

Finally, Germany will continue to push for an EU financial transactions tax (FTT), based on the existing French rules. Under proposals issued in January 2020, this would entail a tax of no less than 0.2 percent being imposed on the purchase of shares in domestically listed companies with a market capitalization in excess of EUR1bn (USD1.2bn). The tax would also apply to depositary receipts issued domestically and abroad and which are backed by shares in these companies. Initial share offerings would be excluded from the FTT.

According to the document, the German Presidency hopes to negotiate a political agreement between participating member states allowing for the legislative process to introduce an FTT to begin. 10 member states are still discussing the FTT on the basis of enhanced cooperation, a legislative mechanism used when the required consensus on proposed EU laws cannot be reached. These member states are Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia, and Spain.