ROBERTA METSOLA ELECTED NEW PRESIDENT OF THE EUROPEAN PARLIAMENT

Following an agreement between the three main political groups, Roberta Metsola (EPP, Malta) was elected on Tuesday 18 January President of the European Parliament in the first round with 458 votes out of 690. Ms Metsola, who has been an MEP since 2013, became first vice-president in November 2020. She will lead the Parliament until a new Parliament is constituted following the 2024 European Elections. This week, MEPs also elected 14 vice-presidents of the EP and five quaestors as well as they updated the number of members in the EP’s 20 committees and 3 sub-committees.

SOME EU FINANCE MINISTERS HAVE CONCERNS ABOUT PILLAR II IMPLEMENTING DIRECTIVE

EU Finance Ministers discussed for the first time on Tuesday 18 January the proposal for a Directive implementing the minimum 15% effective tax rate (so-called Pillar II) within the EU. The French Presidency of the EU Council said it intends to devote the early months of the semester in the tax field mainly to this issue. The debate nevertheless showed some emerging concerns. Poland, Hungary and Estonia expressed their will to have legal safeguards linking the implementation of Pillar II to the implementation of Pillar I (reallocation of taxing rights) of the OECD tax reform, which still needs to be finalized through a Multilateral Convention. The three countries, as well as Sweden, also expressed concerns about the 2023 application timeline, that might not be achievable for everyone, they said. For its part, Malta expressed “serious concerns” without giving any more details. The discussion will continue at the next Ecofin Council on 15 March, where France hopes an agreement can already be reached.

DEBRA PROPOSAL TO BE PRESENTED IN 2022

EU Commissioner for Taxation, Paolo Gentiloni, confirmed on Monday 17 January that the European Commission will present its proposal for establishing a debt-equity bias reduction allowance (DEBRA) in the course of 2022. Mr Gentiloni was replying to a written question from MEP João Pimenta Lopes (The Left, Portugal). He said the aim of the initiative is to address the bias coming from the fact that interest paid on debt is tax deductible, while the remuneration paid out as a return on equity is not. It is envisaged to accompany the rules with a strong anti-abuse framework, he added. The Commission is currently finalizing its impact assessment, so the key design choices of the measure are still outstanding, he explained. According to a provisional agenda, the proposal could be presented on 11 May 2022.

EUROPEAN COMMISSION LAUNCHES ITS WORK ON THE MODERNIZATION OF VAT

The European Commission opened on Friday 21 January a public consultation on its plan to modernise VAT reporting obligations and facilitate e-invoicing, update the VAT rules for the platform economy and move to having a single VAT registration in the EU. The Commission already announced this initiative in its 2022 Work Programme and should present it during the third quarter of the year. The Commission will particularly look at the introduction of partial (limited to cross-border transactions) or fully harmonised (covering domestic and cross-border transactions) digital reporting requirements, including e-invoicing. A further option could be to introduce data storage obligations that will require taxpayers to record transactional data using a pre-determined format and provide information only upon request, it explains. The public consultation is running until 15 April.

AMLA IS HIGH ON THE AGENDA OF THE FRENCH PRESIDENCY OF THE EU COUNCIL

The proposal to create a new EU authority dedicated to the fight against money laundering will be a big priority of the French Presidency of the EU Council during the next months, assured Olivier Dussopt, French Minister Delegate for Public Accounts, during a conference organized in Paris on Friday 21 January. France wants “ambitious” and “proportionated” compromises, he said. The independence of AMLA’s executive board as well as the nature – rather than just the amount – of the actions that AMLA will control will be two fundamental points for France, he explained. In the European Parliament, the work is just getting started, MEP Luis Garicano (Renew Europe, Spain) – one of the main negotiators of the EP on this file – said. His first priority will be to broaden the scope of the entities which will fall under the direct supervision of AMLA. Mr Garicano also identified as other possible “improvements” the need to have more resources, to focus more on the non-financial sector and to have a central FIUs function.

EUROPEAN COMMISSION SEEKS MEMBER STATES’ FEEDBACK ON THE TRANSPOSITION OF THE PROPORTIONALITY TEST DIRECTIVE

The European Commission intends to invite Member States’ experts to share experience and views regarding the transposition of the 2018 Directive on a Proportionality Test before adoption of new regulation of professions during the meeting of the Working Party on Competitiveness and Growth of the Council on 3 February 2022. According to the Commission, the proportionality test, that the Directive put in place, shall ensure that all requirements concerning regulated professions are necessary and balanced. In a preparatory note, it emphasizes again that the effective transposition of the Directive at national level is crucial in order to realize its full potential in terms of prevention. The Commission also wants to receive information on what Member States have done or intend to do to ensure that national proportionality assessment procedures effectively work in practice and form an integral part of the decision-making process.