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EU priorities regarding taxation measures in 2022

16 Dec 2021

In a statement that resembled the type of new year wishes that are normally reserved for politicians to make after the start of a new year, the EU Parliament and Commission (through ECOFIN) have already indicated what their priorities will be for 2022. We can expect the French presidency of the Commission to be particularly proactive in pushing these priorities forward in the first half of the year.

The principal priority appears to be to implement the OECD Pillar 2 minimum tax rate by the deadline set for 2023. It is unclear at this point whether the EU might be prepared to proceed regardless of the timing of the implementation process being managed by the OECD and to extend the impact of the rules beyond the borders of the EU. In the meantime, indications are that the EU’s own plans as regards digital services tax will remain on hold.

Other priorities appear to include:

  • Implementing the proposals (which recently formed the subject matter of a consultation paper) for measures to combat the use of shell entities and which can be expected to be in place in the early part of 2022
  • A more robust approach to zero tax jurisdictions and their inclusion in the list of non-cooperative jurisdictions - it is not clear how this would be affected by the minimum tax proposals or the extent to which this might affect EU member states with certain regimes that allow for zero or low taxation
  • Measures to combat double non-taxation and double or multiple tax benefits - what form these may take is unclear given the DAC6 and ATAD measures already in place
  • Extending DAC6 type measures to the use of crypto-assets

These priorities have as their background the EU Code of Conduct, a concept which first appeared as long ago as 1997 as a soft law tool to address harmful tax practices, in particular those that amount to harmful tax competition. During the Slovenian presidency of the EU Commission in the second half of 2021, proposals were put forward to revise the Code of Conduct so as to cover a number of new elements, including those listed above, as well as more detail on what constitutes a harmful tax measure and greater scope for EU members to conduct peer reviews.

Although the Code of Conduct proposals have met with some opposition from certain member states, this is unlikely to slow down significantly the pace of the various processes and taxpayers and tax authorities are likely to have a busy time dealing with a number of measures in the course of 2022.

The ECOFIN’s press release can be found here

The revised Code of Conduct proposal can be found here

ECOFINs press conference can be found here