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Ref. Ares(2013)2571677 - 04/07/2013
EUROPEAN COMMISSION 
DIRECTORATE-GENERAL  
TAXATION AND CUSTOMS UNION 
 
 
Brussels, 04/07/2013 
TAXUD D2/
/ /taxud.d.2(2013)2721763 
COMBINED DIRECTORATE C/DIRECTORATE D REPORT ON DISCUSSIONS  
AT THE HIGH LEVEL WORKING PARTY IN THE COUNCIL ON 6 JUNE 2013  
ON THE JUNE ECOFIN PREPARATION 
Subjects: 
1.  Communication on the future of VAT – State of play 
2.  Revised Savings Tax Directive Proposal 
3.  Revision of the Administrative Cooperation Directive 
4.  Draft June ECOFIN report to the European Council 
5.  Eurofisc 
6.  Work on Base Erosion and Profit Shifting. 
7.  Anti-Fraud Agreement with Liechtenstein and associated negotiating 
mandate with four other non-EU countries  
8.  Tax in non-tax dossiers 
 
1) Communication on the future of VAT – State of play 
COM presented the room document and put emphasis on recent achievements as regards 
the mini One-Stop-Shop (MOSS), the ‘VAT anti-fraud Package’ and the definitive 
regime. 
 
 
 

DE indicated that their final position would depend on the proposals tabled by COM and 
urged COM to take into account the Ecofin Conclusions. They required that any 
explanatory notes be discussed by Member States before their release. 
 
Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 229-91111 
 
 

FR set out their priorities: a review of the VAT rates structure with a proposal in 2013, a 
proposal on the VAT exemptions and the smooth implementation of the MOSS. They 
asked for details as to the timetable.  
AT agreed with DE as regards the explanatory notes and added that they should require 
unanimity. 
IT asked for details on the timetable in particular as regards the reduced rates, the 
exemptions and anti-fraud measures with particular emphasis on the split payment and 
agreed with AT and DE as regards the explanatory notes. 
EL asked for the creation of a sub-group on the split payment. 
COM explained that the explanatory notes are not binding. Nevertheless, COM tries to 
reflect the consensus among stakeholders. As to reduced rates and exemptions, Member 
States should not expect major changes. The split payment requires firstly that businesses 
make more widely use of electronic tools such as electronic invoicing.  
 
2) Revised Savings Tax Directive Proposal 
The Presidency recalled the adoption at the 14 May ECOFIN meeting of the Negotiating 
Mandate with Switzerland and the four other non-EU countries on the amended EUSD 
and the call made by the European Council in point 10 (b) of its conclusions of 22 May 
for the adoption of the revised Directive before the end of this year. The Presidency also 
asked Croatia to speed up the signature and ratification of its agreements with dependent 
and associated territories. 
COM informed about the letters sent to the five non-EU countries concerning the 
commencement of negotiations and the initiative of Commissioner Šemeta to have 
meetings at political level with each of the five countries starting from next week. This 
initiative is aimed at stressing the level of ambition which the EU should have in the 
negotiations. 
 
3) Amendment of the Administrative Cooperation Directive 
COM explained that its legislative proposal could be adopted either on 11 or 12 June. It 
entails a quick reaction to the invitation of the European Council and is aimed at 
accelerating ideas which were already present in Article 8 of the 2011 Directive. It would 
support AEOI between Member States regarding the items of income included in 
Member States' FATCA agreements with the US and not covered or to be covered by the 
Savings Directive. It would ensure coherence in the approach of MS to AEOI; it would 
be a matter of concern if the MFN implications of FATCA gave rise to diverging 
bilateral agreements.  In essence the proposal is intended to take account of:  
•  The work at the OECD on a standard for automatic exchange of information; 
•  The Savings Directive; 
•  The framework for cooperation provided by the Administrative Cooperation 
Directive and the obligations of MS under its Most Favoured Nation clause; 


•  The G-5 initiative. 
 
 
 
 
 
 
 
 
 
 
DE thanked the Commission for its work but supported the 
 comments about the need 
for a single approach. In its view, as FATCA already exists, there is a need for a common 
standard.  
LU raised four points: 
•  Need for coherence between what happens within and outside the EU; 
•  Need to be aware that FATCA involves exceptions for some products and 
institutions, and thresholds; consistency would also entail looking at these issues, 
in order to keep the administrative burden proportionate; 
•  As we are "in a period of transition", there is a need for a period of stability with 
no further changes to Directives, in the interest of smooth functioning of the 
markets; 
•  Need for a level playing field with competitors outside the EU, as otherwise 
capital will flow outside and no additional tax revenue will be collected. 
FR observed that the EUSD has been operating for some years and its amendments have 
been blocked until now, so there has been stability. The broad application of FATCA and 
the MFN clause already address the level playing field question. Given the benefit which 
EU Member States derive from free movement within the EU, it is legitimate to ask them 
to accept more obligations than non-EU countries which don't have that benefit. 
COM concluded by pointing out that Member States have agreed that global EOI is 
important and that the Commission's intention is merely to ensure that any global 
commitments into which Member States enter take account of their obligations and their 
interests.  For example, there are EU rules on data protection and Member States should 
not have to agree to an asymmetrical reporting system that does not meet their needs in 
terms of information.  
 
4) Draft Report from June ECOFIN to the European Council 
The Presidency started by distributing a revised version of the relevant Room document, 
where an attempt was made to take account of the comments and drafting suggestions 
presented by a number of MS (
 LU, AT, DE, FR, IT, CY, PL) on the eve of the 
meeting. 


AT asked for a deletion of the explicit reference to its country as the only one which 
hasn't switched to automatic exchange of information. 
Apart from noting some inconsistencies in the last paragraph devoted to savings taxation, 
LU insisted on making extensive reference to the European Council conclusion of 22 
May and on including again the reference in the first paragraph of the same chapter to the 
link between the Directive and the agreements with third countries which provide for 
withholding taxes, while IT expressed a preference for deleting the reference to the 
existing agreements. 
COM asked for additions to paragraphs 20 and 22, to reflect fully and accurately the 
content of the ECOFIN Council conclusions. In particular, the Council conclusions did 
not say that action at national or EU level did not suffice; it talked rather about a need for 
a combination of actions at national, EU and global levels. Reference should also be 
made to the Council's call for a key role of the EU in the definition of the global standard 
for automatic exchange of information. Furthermore, this should not be limited to the 
simple extension of FATCA; FATCA should provide a basis, not be "used" as such. 
There should also be a reference to the Commission's upcoming proposal for an 
amendment to the DAC, as that was mentioned in the European Council conclusions. 
Reference was also needed to the fact that the Commission will take forward work on 
aggressive tax planning and profit shifting, as noted also by the European Council.  
As regards the concerns raised by
 
 COM indicated that given the tight 
deadline (4 weeks), there would be a need for a streamlined procedure within the 
Commission and that the appropriate procedure remained to be examined.   
DE was also of the view that actions to combat tax evasion should be taken within the 
EU as well as outside. Concerning paragraph 22, FATCA is a reality that we have to 
accept so the wording here is fine with DE and we should be cautious about changing it. 
In the afternoon, the Presidency circulated a further revised version of the Room 
document (see enclosure). 
 
 
 
 
 
   
The Presidency will circulate on 7 June a REV3 version to be sent to Coreper. 
5. Eurofisc 
A presentation (copy available) was made by the incoming (Dutch) chairperson of 
Eurofisc which focused on the background to the creation of the network, the 
achievements to date and the areas where there was room for improvement in the 
functioning of the network in the future. The latter included developing a system for 
measuring the results of Eurofisc as well as a strategy to respond to new developments. 
Mention was also made to the idea of extending the remit of the network to cover direct 
taxation as was referred to in the 2012 Commission Action Plan on Tax Evasion and 
Fraud. 


COM  echoed these sentiments and pointed to additional elements that might, in this 
context, focus attention on the prevention of VAT fraud in the light the current debate on 
QRM and RC etc. (imminent publication of updated VAT Gap Study, possibility of 
COM seeking a mandate to negotiate EU-wide bilateral agreements on VAT cooperation 
with certain third countries, plan by IE to hold a Fiscalis seminar on sharing best 
practices in VAT fraud prevention in the first half of 2014). 
 
 
 
 
 
 
6. BEPS 
COM remarked that the Room document #5 Rev1 included under Tax Policy 
Coordination iii that ‘the June meeting of the OECD’s Committee on Fiscal Affairs 
(CFA) could receive a written report on recent activities and developments at EU level in 
relation to issues that concern both EU and the OECD including Beps
..’ and furthermore 
it was also proposed that the CFA would continue to be invited to provide the HLWP 
with updates of its activities’
. Such a reporting is not seen as a real activity for Tax Policy 
Coordination in the EU vis-à-vis BEPS.  
DE and FR did welcome the text proposed by the Presidency.
 
 
 
 
7. Anti-Fraud Agreement with Liechtenstein and associated negotiating mandate with 
four other non-EU count
ries 
 
 
 
 
 
  
 
 
 
 
8. Tax in non-tax dossiers 
This was the third meeting of the HLWP during the Irish Presidency during which the 
subject of tax issues in non-tax files was on the agenda. The issue was first discussed at 
the meeting of 29 January 2013. At the meeting on 13 March there was insufficient time 
to discuss the issue. Before the meeting on 6 June, the Council Secretariat had sent out 


two room documents on the subject: i) a Presidency document concerning the proposed 
approach to be taken by the HLWP; and ii) a document prepared by the General 
Secretariat of the Council containing four examples of non-tax dossiers that contain tax 
elements. 
The Presidency explained that it had put this subject on the agenda because a large 
number of Member States are concerned about the growing incidence of tax elements in 
non-tax dossiers, which they believe undermines unanimity for tax provisions and could 
lead to undesirable and inconsistent changes in Member States' tax law. It wants to set up 
an early warning system to address this problem.  
All MS delegations that took the floor were very positive to the initiative of the 
Presidency to launch discussions on this subject. They all agreed that this was an 
important topic and supported the Presidency's proposal for an alert mechanism.  
 
 
 
 
FR on the other hand opposed the Council Conclusions proposed at the HLWP meeting 
of 13 March as disproportionate  
PT suggested that all documents received by the Council Secretariat that had an element 
relating to taxation should be given a FISC number in order to keep track of those 
proposals. Furthermore tax in non-tax files should be a fixed point on the agendas of all 
meetings of taxation working groups in Council. 
FI, MT, CZ, SK, NL, EE & PL also expressed the hope that there would be further 
discussions on this issue.  
BE referred to tax issues in a dossier concerning penal sanctions for fraud (Proposal for a 
Directive of the European Parliament and the Council on the fight against fraud to the 
Union's financial interests by means of criminal law ,COM(2012)363). 
LU stressed that the most problematic issue is when the EP inserts tax provisions in non-
tax proposals during the trilogue.  
The Council Legal Service stressed that it verifies the legality of any proposals that are 
submitted to the Council. However, there is a difference between legality and 
opportunity. A non-tax proposal may legally include a tax provision despite having a 
different legal basis to that normally used for tax issues, but it may be preferable for 
Member States that their tax experts have the opportunity to decide on any tax issues. 
COM  noted that the issue is politically sensitive and said that the Commission 
recognises the concerns of the Member States. However, it is for the Council and the 
Member States to organise themselves in relation to this. The Commission is very 
vigilant in assessing the legal bases that it uses. But we also need to be constructive and 
realistic; it may not be such a “sensitive” problem if a proposal on statistics contains a 
reference to tax and it is an advantage for tax administrations that under the anti-money 
laundering Directive a tax crime is considered a predicate offence. The Commission has 
a right of initiative and there is jurisprudence covering the issue of when taxation issues 
can be covered by other legal bases. Proposals made are legally checked within the 
Commission and the Council, and it is then for the Council to react. COM opposed the 


Presidency proposal for an alert mechanism to be applied by the COM. The 
Commission's Secretariat General cannot go through all proposals and inform the 
Council as soon as there is a tax element as that approach would be impossible to manage 
if it were to apply to all policy areas. However, COM is open to other ideas such as 
making this point a regular one on agendas.  
The Presidency clarified that it had elected to limit itself to producing a paper on the 
operational aspects because it had decided that it would be difficult at this stage to reach 
consensus on Council Conclusions and that to aim for that would have risked blocking all 
progress. The Presidency stated that it was in favour of continuing the discussions under 
the following presidencies in order to move the process along. 
 
 
 
 
 
Cc: 
Mr Moutarlier; (CAB) 
Messrs Zourek, Bergmann, Kermode,