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Look back 2019 and Tax Calendar 2020 – Financial Services Industry

In a rapidly changing environment, tax and legal issues are never far away. In this e-flash we provide you with a retrospection on the most important tax developments of 2019 for the Financial Services industry (regarding operational taxes) as well as some attention points and opportunities. We also take the opportunity to look forward to the New Year 2020 and are pleased to refer to our Tax Calendar for 2020.

EU Mandatory Disclosure Requirements – state of play

As previously reported, mandatory disclosure requirements (MDR) for intermediaries and relevant taxpayers entered into force in the European Union on June 25, 2018, to be applied as of July 1, 2020. Most, but not all, Member States met the December 31, 2019 deadline to transpose the new rules into domestic law.

This seventh Special Edition Euro Tax Flash summarizes the most recent status of the implementation of the new rules into Member States’ domestic legislation, as at January 8, 2019.

Earnings stripping rules: Royal Decree clarifying legal framework published

As anticipated in our earlier flash, a Royal Decree has been published in the Belgian Official Gazette of 27 December 2019.

The purpose of the Royal Decree is to execute the so-called “earning stripping rules“, i.e. an interest deduction limitation regime which was already enacted by the legislator at the end of 2017.

However, some issues still remain unresolved. The new (incomplete) rules enter into force as from assessment year 2020 (for taxable periods starting on 1 January 2019 at the earliest).

Unfair trade practices in a B2B environment

Earlier this year, on 21 March 2019 a new Act was adopted bringing a revolution of new rules towards the business community, in particular with regard to contract terms and dispute resolution. The Code Economic Law now contains new rules regarding (i) unfair contract terms, (ii) unfair market practices between companies and (iii) abuse of economic dependence.

VAT quick fixes 2020 part 4: valid VAT identification number to apply the exemption for intra-community supplies

On 4 December 2018, the Council of the European Union adopted the so-called “VAT quick fixes”. The “VAT quick fixes” aim at simplifying international trade and are to be implemented by the EU Member States by 1 January 2020.

New tax rules on the Digital Economy will also impact the Brick-and-Mortar Economy

The digitalization of the economy exposed shortcomings of today’s tax rules. In an environment where businesses can remotely interact with their consumers and create value without physical presence in the market, the current tax rules are perceived to be no longer effective. The two main shortcomings identified are the question of fair allocation of taxing rights among jurisdictions and the remaining risks of profit shifting.

The tax challenges arising from the digitalization of the economy are one of the main areas of focus of the OECD/G20 Base Erosion and Profit Shifting (BEPS) project for several years. In May 2019 the OECD/G20 Inclusive Framework on BEPS adopted a Programme of Work to develop a consensus solution to these tax challenges based on two pillars. In the autumn 2019, the proposals for the two pillars were released for public consultation and are planned to be agreed upon by mid-2020 already.  The European Commission welcomed the proposals and expressed its support for the international work on the two pillar approach.

Immigration : looking back and forward

With Christmas Carrols in the air, it’s time to reflect on some hot immigrations topics which kept us busy in 2019, also preparing for what 2020 will bring.

VAT quick fixes 2020 part 3: Uniform rules to simplify chain transactions

On 4 December 2018, the Council of the European Union adopted the so-called “VAT quick fixes”. The “VAT quick fixes” aim at simplifying international trade and are to be implemented by the EU Member States by 1 January 2020.

Earnings stripping rules: draft law clarifying legal framework withdrawn

The recently introduced draft legislation to finalize the implementation of the earnings stripping rules in Belgium (see also our earlier newsflash) has been withdrawn. It is hence unlikely that the Federal Parliament will adopt legislative changes to the base law before year-end.

Consequently, the earnings stripping rules will basically apply as of FY 2019 without the add-ons provided for by the draft legislation.

German Finance Minister issues amended Financial Transaction Tax proposal

On December 9, 2019, the German Finance Minister, Olaf Scholz, issued a revised proposal for a Council Directive regarding the introduction of a common financial transaction tax (FTT) to the participating Member States in the so-called enhanced cooperation procedure (Germany, Austria, Belgium, France, Greece, Italy, Portugal, Slovakia, Slovenia and Spain). The revised proposal includes an optional exemption for pension schemes and a new system for mutualization of the FTT revenues.