ANNEX TO THE RESOLUTION:

RECOMMENDATIONS AS TO THE CONTENT OF THE PROPOSAL REQUESTED

A. Simplification, reduction of compliance costs for taxpayers

Recommendation A1 — Single EU VAT registration procedure and the Single EU VAT number

The European Parliament calls on the Commission to move towards the adoption of a Single EU VAT registration procedure and the Single EU VAT number by 2023.

Such a procedure should:

— Reduce the costs of compliance, notably for SMEs operating in the single market, and propose an identical process for VAT registration across the Union (respecting different conditions for registration in Member States).

— Ensure that registration is easily accessible and use a harmonised online platform(s), that operates in the same manner across the Union, in an agreed minimum number of languages, to allow easier use across the Union.

Recommendation A2 — Simpler taxation for and with European Companies (SEs) / SMEs

The European Parliament calls on the Commission to introduce measures to further reduce costs and complexity of taxation of SMEs and SEs by 2023.

— Several initiatives referred in this report should be proposed by the Commission, which should be quickly followed by concrete proposals to support SMEs in the post COVID-19 economy.

— To further support SEs and start-ups, the European Parliament asks the Commission to assess the option of introducing a unique pan-European income tax regime for SEs and start-ups to minimise the costs associated with tax compliance especially in cases where they operate in more than one Member State. The regime would be optional for SEs (e.g. restricted by the turnover) and could be based on the SE. Tax revenues from the regime would be allocated to the Member States using an agreed formula (e.g. based on the proportion of residents employed).

B. More certainty for taxpayers and/or Member States’ tax administrations

Recommendation B1 — Dispute resolution mechanism for cases where two or more Member States claim tax residency:

The European Parliament calls on the Commission to reflect the experience and identify remaining gaps in the existing Council Directive (EU) 2017/1852 on tax dispute resolution mechanisms in the Union, and propose an efficient way(s) to address the existing conflicts and uncertainties regarding residency for both natural and corporate persons, causing risks of double taxation or/and double non taxation. Invites the Commission to issue proposals on the definition of tax residency by 2023.

The European Parliament also recalls that the outcome of disputes should be made publicly available in the form of a summary, based on the procedure outlined in Article 18 of Directive (EU) 2017/1852 and should include effective tax rates. The regime set out must ensure time limits, reflecting the problems caused by dispute to taxpayers for obtaining a decision will be legally binding and enforced. Given the changes in the post COVID-19 economy, including a move to remote working, the Commission should as soon as possible assess if current legislation is sufficient in reducing the risks of double taxation for taxpayers and, if appropriate, carry out a revision of that Directive, or alternatively, propose new measures. It is also noted that that Directive lacks visibility and more should be done by the Commission to ensure citizens are aware that this mechanism is available.

Recommendation B2 — Extension of automatic exchange of information

The European Parliament calls on the Commission to assess the need and the most appropriate way for the automatic exchange of information between Member States to be extended to include further categories of income and assets such as crypto-assets (DAC8). Since Member States are legally bound to send data only for those categories for which information is already available, there seems to be, as a consequence, a lack of information concerning certain categories of income and assets.

Recommendation B3 — Guidelines on positive tax incentives

The European Parliament calls on the Commission to issue guidelines on tax incentives that do not distort the single market. This is due to the fact that tax certainty for taxpayers and Member States would be reinforced if Member States had a common understanding of what tax incentives boost economic performance in the Union without harming the functioning of the single market.

C. Reduction of tax gap and compliance costs

Recommendation C1 — E-invoicing

The European Parliament calls on the European Commission to:

— Set-up a harmonised common standard for e-invoicing across the Union without delay and by 2022 to reduce the cost of the creation of fragmented, different system across the Member States.

— Establish the role of e-invoicing in real-time reporting.

— Explore the possibility of a gradual introduction of obligatory e-invoicing across the Union by 2023, focusing on a significant reduction of costs of compliance, especially for SMEs. Issuing invoices should be administered only via state-operated/certified ‘system(s)’ with full data protection ensured.

— By 2023, examine the possibility that the system will provide a part (or full) tax compliance data/documents for eligible taxpayers, including the responsibility for the compliance of these returns (or parts of them), especially from the point of view of reducing compliance costs and risk for SMEs.

Recommendation C2 — Alternative to the reduction of the VAT Gap

The European Parliament calls on the Commission, with a view to substantially reducing the VAT gap across the Union, especially in the post COVID-19 economy, to propose measures which would significantly reduce the identified VAT gap, especially the gap associated with the exemption on cross-border Union trade. The request can be fulfilled by one or more of the following initiatives by 2022-2023:

— Relaunch the initiative of the definitive regime as the most natural and efficient way to address VAT tax fraud, costing a significantly large yearly loss.

— Simplify compliance with VAT obligations and receive data for monitoring and tackling tax fraud (1) in order to reduce the administrative VAT burden related to cross-border trade, calls on the Commission to propose gradually but promptly a further extension of the scope of the existing OSS platform from B2C to B2B, especially in relation to B2C supplies of goods for which the person liable for the payment of VAT is not established in the Member State in which the VAT is due, in relation to certain B2B supplies of services when the services supplied are predominantly B2C services and in relation to Article 196 of Directive 2006/112/EC.

— Design and propose a standard for online reporting of data for (in the first instance) cross-border Union trade, preferably by using data from e-invoicing (or from an alternative, but keeping the principle that the data must be provided only once), including efficient and highly secure centralised/decentralised data processing for detection of fraud. The data will replace all existing reporting requirements in this area, and cause the overall costs of compliance to be reduced, notably for SMEs. Data collected should be used with due respect for confidentiality and with consideration of all relevant data protection laws. Use of blockchain (or alternative) technology can be considered and schemes based on common Union standards could be operated by private suppliers.

Recommendation C3 — Single Harmonised Tax Return and OSS

The European Parliament calls on the Commission to bring forward a legislative initiative:

A single and harmonised Corporate Income Tax (CIT) return to support BEFIT in the Union. A standardised approach to the content and format of the tax return could be used to simplify the preparation of the return. Such an option would contribute to simplifying the CIT reporting and to reducing the need to outsource tax compliance work, in particular for SMEs engaging in cross-border business activity.

Recommendation C4 — A Tax Observatory to monitor and quantify trends in European taxation

In 2019, the European Parliament initiated the launch of an EU Tax Observatory as a preparatory action. The European Parliament calls on the Commission to provide an independent assessment of the work done and to propose ways on how to go forward with this initiative.

D. A new coordinated European Corporate Income Tax system

Recommendation D1 — Solving the Debt Equity Bias

The Commission has announced an initiative to mitigate the tax induced debt equity bias in corporate investment decisions induced by the deductibility of interest payments on debt financing.

The European Parliament calls on the Commission:

— To perform a thorough impact assessment and include robust anti-avoidance clauses in the future Debt Equity Bias Reduction Allowance proposal; to consider that such bias can be tackled by either allowing for new deduction of costs related to equity financing or by reducing the interest deduction possibilities and recalls limiting the reduction of the deduction of exceeding borrowing costs to up to 20 % of the taxpayer's earnings before interest, tax, depreciation and amortisation (EBITDA) as another solution to reduce the debt equity bias.

Recommendation D2 — A single tax rulebook for the Union

In the Framework of the future BEFIT, the European Parliament calls on the Commission to:

— Analyse different elements of what constitutes the real economic activity of firms are taken into account (sales, workforce, assets).

— Launch a wide consultation that involves Member States, national parliaments and the European Parliament.

E. Effectiveness of tax administrations, exchange of tax information and quality of data

Recommendation E1 — Eurofisc 2.0

The European Parliament calls on the Commission to:

— Strengthen the Union's network of anti-fraud experts, Eurofisc, and provide sufficient resources to effectively carry out joint risk analyses, coordinate investigations and cooperate with the European Anti-Fraud Office (OLAF), Europol and the European Public Prosecutor's Office, in particular with a view to investigating VAT fraud.

— Come forward with the Eurofisc 2.0 proposal. Reiterates the recommendations from its resolution of 16 September 2021 on the implementation of the EU requirements for exchange of tax information: progress, lessons learnt and obstacles to overcome. Notes that Eurofisc 2.0 could greatly contribute to the effective use by tax administrations of the tax information exchanged and the quality of information exchanged.

(1) As per the EPRS’ EAVA, the scenario of extended cooperation — exchange of information + OSS will trigger a European Added Value of around EUR 39 billion.