Article 116 faces scrutiny following European Commission proposal
Miles Dean, Head of International Tax, comments in relation to the European commissions proposed tax initiatives which may negatively impact low-tax member states.
Miles’ comments were published in Accountancy Age, 21 July 2020, and can be found here.
“Tax-based competition could be negatively impacted by the European Commission’s use of Article 116, warn international tax professionals.
Introduced alongside 24 other taxation initiatives being rolled out by the Commission until 2024, the formerly-unused provision would circumvent the need for unanimity on taxation issues. This would directly impact low-tax member states like Ireland, which has already criticised the plan…
He also says that the use of a ‘back-door’ approach to bypass low-tax member states, who would likely vote against the measure, is unfair and distorts competition – a thought shared by Miles Dean, head of international tax at Andersen Tax UK.
Dean argues that these proposed changes are a “power grab” by the Commission to hamper tax competition and succinctly remove the advantages held by low-tax member states.
“As a practitioner, as someone who deals in cross-border tax every day of the week, I’m not sure what [the Commission is] looking for,” Dean says, speaking of the Commission’s line of proposals. “I think it’s yet another warning shot, and there’ll more red tape, there’ll be more additions to DAC6.”
Given that DAC6 already handles cross-border tax arrangements, which Dean says mirrors existing legislation within the UK, these propositions may not be a general-purpose agreement.
Dean continues that the Commission’s goal to harmonise taxes will alter the overall sovereignty of impacted member states, where attempts to create a level playing field could negatively impact those states’ economies.”