Ref. Ares(2016)6884497 - 09/12/2016
EUROPEAN COMMISSION
DIRECTORATE-GENERAL
TAXATION AND CUSTOMS UNION
Direct taxation, Tax Coordination, Economic Analysis and Evaluation
Company Taxation Initiatives
Brussels, 9 December 2016
taxud.d.1(2016)
Meeting Report Code of Conduct Group
24 November 2016
I. EXECUTIVE SUMMARY
1. Notification of Rollback and Standstill for year ending 31 December 2016 -
COM informed the group about the agreed changes to the Group's notification
procedures, starting in January 2017.
2. Standstill
(A) Aruba - COM informed the group about the existence of a Patent box in
Aruba, and NL will now comply with the procedure for the assessment of this
patent box under the modified nexus approach and agreed Code criteria.
(B) Croatia - COM and Croatia will now proceed on a bilateral basis to an
agreed description of the new Croatian measure (Act on Investment Promotion).
3. Rollback: patent boxes - Member States agreed with the COM rollback table
and suggested way forward, with Italy to be added to the group of pre-existing
patent boxes. The group will return to the outstanding rollback issues, as well as
standstill of new patent boxes, in the January meeting.
4. Inbound profit transfers - there was a very brief discussion on this paper. It
was agreed that the monitoring for Member States is no longer necessary, as
ATAD covers the requirement of the guidance. For Dependent and Associated
Territories it was agreed that the monitoring will be postponed until after the
outcome of the external strategy.
5. Council conclusions on criteria and process leading to the establishment of the
EU list of non-cooperative jurisdictions for tax purposes - a list of jurisdictions
to be prioritised for screening was agreed by the Group. Work on the modalities
(including the clarifications of certain criteria) will continue in the subgroup.
6. Report to the Council (ECOFIN) after several drafting sessions the report to
ECOFIN was agreed.
7. AOB - None
Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel.
+32 22991111
II. REPORT
1. Notification of Rollback and Standstill for year ending 31 December 2016:
COM reminded the group about the agreed changes to the Group's notification
procedures, starting in January 2017.
Member States are to notify the Group of any measures that related to either rollback
or standstill before the first meeting of 2017 so that they can be dealt with earlier
than in previous years. These changes were agreed by the Group in January 2016.
2. Standstill
(a) Aruba
COM gave an update to the Group about the Aruba IPC regime that has created a
patent box.
COM informed the Group it has asked NL to comply with the formal notification
process and complete the OECD format questionnaire in order to prepare an agreed
description of the regime, also reminding that NL will have to demonstrate that this
patent box is modified nexus compliant.
COM also indicated additional aspects of the regime need further consideration and
proposed to return to this issue in a later meeting after internal analysis.
(b) Croatia
COM updated the Group about Croatia Act on Investment Promotion and the
possibility that it could create a risk of administrative discretion. COM asked the
Group whether it should continue the procedure and prepare an agreed description.
HR indicated its willingness to continue constructive dialogue with COM and
explained having adopted, in April 2016, a regulation relating to the Act on
Investment Promotion that was not provided to COM. HR indicated that, if the law
does provide for tax reduction, it is not the reduction of a tax liability but rather takes
the form of a state aid. As of September 2016, HR indicated that there has been no
request for such aid and no aid was granted to date.
COM recalled that its understanding of the regime is that a reduction of tax liability is
granted and that it therefore falls within the scope of the Code of Conduct. COM
asked the Group whether it should prepare an agreed description.
It was agreed to prepare an agreed description on a bilateral basis with HR.
3. Rollback: patent boxes
The Commission presented briefly the state of play and the way forward regarding
patent boxes in the Member States. It explained the two steps approach: verification
of the rollback (of the IP regimes existing on 11 December 2014) and subsequently,
the assessment as per the CoC criteria of the existing IP regimes under the standstill
procedure.
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Regarding the Rollback
The Commission explained the table annexed to the room document, presenting the
state of play of the implementation of the rollback obligation, under its 2 main parts:
the closing of the regimes (cut-off date and abolition date) and the safeguards
(enhanced cooperation and measures to prevent acquisition of certain IP assets from
related parties).
As regards the closing of regimes (columns 1 and 2 in the Annex) - with the
exception of France (which does not consider they should amend their IP regime),
MS show broadly positive developments.
Commission concluded that the Rollback picture is fairly positive.
At the very end of the discussion on this item, it was agreed that IT would be added
to the rollback table as an "old" IP regime, and the Commission will start
immediately with all the assessments under the standstill procedure for the next
meeting
.
4. Inbound profit transfers:
The Commission services presented the room document. Delegations were asked if
they agreed that it would not be useful to continue the monitoring of the 2010
guidance on inbound profit transfers as far as the Member States are concerned. In
view of the adoption of the ATAD which includes CFC rules, this would satisfy the
discussed criteria of the monitoring.
After the Group agreed with the Commission proposal, the Chair asked delegations
to provide him and the Council Secretariat with information on how Member States
had implemented the 2010 guidance.
Delegations were also asked whether they agreed that monitoring of Dependent and
Associated territories could be postponed pending the results of the screening
exercise under the External Strategy as some of those territories might be covered by
that exercise.
After some discussion delegations agreed to this way of action.
5. Council conclusions on criteria and process leading to the establishment of the
EU list of non-cooperative jurisdictions for tax purposes:
On 24 November 2016 the Code Group discussed the issue of jurisdictions to screen
for the purpose of the EU Listing process, on the basis of a proposal made by the SK
Pres. After a redrafting session the Code Group agreed on a text where it is stated
that the screening process will be conducted towards the following jurisdictions:
1. All jurisdictions in Table I of the scoreboard;
2. All jurisdictions in table II;
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3. Jurisdictions in table III to V which are financial centre according to the 2008
IMF List: Marshall Islands, Nauru, Niue, Palau, Malaysia/Labuan and Vanuatu.
In order to reach the compromise it has been necessary to clarify in the text that the
letters to be sent to jurisdictions by January 2017 should, among other things, take
account of the situation of jurisdictions with regard to the screening criteria.
With regard to the modalities (room doc # 2), there was a general agreement on the
core part. However, for practical reasons, it decided to postpone the discussion on
the consistency with OECD/GF work to the next meeting of the Code Subgroup
(30/11).
.
Both open issues will be discussed in detail at the next Subgroup meeting scheduled
for 30 November.
6. Report to the Council (ECOFIN) after several drafting sessions the report to
ECOFIN was agreed.
After several drafting sessions the report to ECOFIN was agreed by the Group with
the associated council conclusions.
7. Any other Business
None
ENDS.
Reported by
Circulation:
Circ. Taxud D1
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