New EU tax package

On 15 July, the European Commission adopted a new Tax Package for fair and simple taxation. The Tax Package aimed at reinforcing the fight against tax abuse, help tax administrations to keep pace with the evolving economy and ease administrative burdens for citizens and companies. The Commission intends to lead the transition into a more fair, efficient and sustainable taxation while ensuring that European Union ("EU") tax policy supports the EU’s economic recovery from the COVID-19 crisis and long-term sustainable growth through sufficient public revenue.

The tax package contains the following three complementary initiatives:

• An Action Plan for fair and simple taxation supporting recovery: the Action Plan sets out 25 actions (as included in its annex) to be implemented by 2024, with the aim to (i) reduce tax obstacles for businesses in the Single Market and enhance competitiveness and economic growth, and (ii) help Member States enforce existing tax rules and improve tax compliance.
• A legislative proposal for the revision of the EU Mutual Assistance Directive (2011/16) on administrative cooperation in the field of taxation (DAC7): the proposal introduces the automatic exchange of information between Member States’ tax administrations for income/revenues generated by sellers on digital platforms. It aims at increasing efficiency and effectiveness of administrative cooperation with the introduction of simplifications in order to ease the burden of tax administrations and with the introduction of other measures such as  the creation of a legal framework to allow joint tax audits between two or more Member States.
• A communication on Tax Good Governance in the EU and beyond: this communication aims to further promote transparency and fair taxation. It includes a proposal for the reform of the Code of Conduct on Business Taxation (scope, criteria and governance) and improvements to the EU list of non-cooperative jurisdictions (geographical scope, criteria, transparency and accountability, strengthen tax good governance in agreements with third countries) to address tax competition and tackle harmful tax practices within the EU.

The Tax Package is the first part of a comprehensive and ambitious EU tax agenda for the coming years. The Commission announced that it will work to set out the rules of a new modernised approach to business taxation ensuring that all multinationals pay their fair share. It is expected that the Commission will present a dedicated action plan on business taxation by the end of the year addressing the digitalised economy building up on conclusions reached at international level on this topic. The Commission will also make proposals in the context of the Green Deal to ensure that taxation supports the EU’s objective of climate neutrality by 2050. Based on the press release, this multi-leveled tax reform aims to make taxation “fairer, greener and fit for the modern economy, thus contributing to long- term, sustainable, inclusive growth”.