Explanatory Memorandum to COM(2018)443 - 'Fiscalis' programme for cooperation in the field of taxation - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2018)443 - 'Fiscalis' programme for cooperation in the field of taxation. |
|---|---|
| source | COM(2018)443  |
| date | 08-06-2018 |
1. CONTEXT OF THE PROPOSAL
On 2 May 2018, the Commission adopted a package on the next Multi-Annual Financial Framework for the period 2021-2027 1 . The Commission proposed a new, modern long-term budget, tightly geared to the political priorities of the Union at 27. The proposed budget combines new instruments with modernised programmes to deliver efficiently on the Union’s priorities. Building on those foundations, the Commission is proposing a new Fiscalis programme under the Single Market, Innovation and Digital budget heading. This programme will contribute to improve the operation of tax policy, including administrative cooperation, and support tax authorities as described in the Communication accompanying the Multi-Annual Financial Framework proposal 2 ,
This proposal provides for a date of application as of 1 January 2021 and is presented for a Union of 27 Member States, in line with the notification by the United Kingdom of its intention to withdraw from the European Union and Euratom based on Article 50 of the Treaty on European Union received by the European Council on 29 March 2017.
• Reasons and objectives
The Union and the national tax authorities still suffer from insufficient capacity and insufficient cooperation – both within the EU and with third countries – to carry out effectively and efficiently their missions. They need to provide quick and joint responses to emerging problems such as tax fraud, tax evasion and tax avoidance, digitalisation and new business models, while at the same time preventing unnecessary administrative burden for citizens and businesses in cross-border transactions. These trends raise continuously new challenges for the functioning and performance of national tax authorities. They call for better and innovative ways to carry out their core task i.e. collecting taxes which directly feed the national and indirectly the Union budget. The Commission therefore proposes a Fiscalis programme comprising means and a budget that will support tax policy and tax authorities through administrative and information technology (IT) capacity building activities and operational cooperation.
• Consistency with existing policy provisions
This proposal is in line with the Commission agenda to ensure a fair and efficient tax system in the Union with a view, inter alia, to protect Member States' tax authorities' ability to collect taxes. Many of the initiatives adopted in that framework aim at increasing tax transparency and enhancing administrative cooperation, inter alia, through exchange of relevant tax information. The proposed Fiscalis programme will provide the budgetary and other means to support and implement these regulatory interventions 3 . Important features of this administrative cooperation are the relevant European electronic systems, which concretely enable Member States' tax authorities to exchange information.
• Consistency with other Union policies
This proposal is consistent with other proposed EU action programmes that pursue similar objectives in related fields of competence and especially:
–The Customs programme 4 , that supports cooperation in the field of customs;
–The EU anti-fraud programme 5 that combats fraud for the protection of Union financial interests in accordance with Article 325 TFEU;
–The Single Market Programme 6 , which supports EU actions for achieving a better functioning of the single market;
–The Reform Support Programme 7 that helps specific EU countries to build more effective institutions, stronger governance frameworks and efficient public authorities.
Finally, there are possibly further synergies to exploit in the IT area with various Union initiatives, such as the Digital Europe Programme 8 , all programmes that run (significant) electronic systems, the reuse of the building blocks 9 of the Connecting Europe Facility (CEF), the European Interoperability Framework 10 , the Rolling Plan for ICT standardisation 11 , the action plan on FinTech 12 , the Horizon Europe 13 or the work of the EU Blockchain Observatory and Forum 14 and other initiatives about fraud and cybersecurity risks,
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
An important part of the Fiscalis programme concerns the support of the exchange of information between Member States in the framework of administrative cooperation in the taxation area in the European Union. The relevant Union legislation on administrative cooperation provides for the use by the Member States of the European electronic systems. The present proposal specifies that the Commission and the Member States will ensure that the European electronic systems referred to in Chapter IV are adequately developed and operated. In this context, it provides that they will regularly coordinate their respective interventions and agree on all aspects necessary to ensure the operability, interconnectivity and continuous improvement of the European electronic systems. Provision is also made on the tasks and responsibilities that they have to take on for the coordination of the establishment and functioning of the common and national components of the European electronic systems, with a view to ensure their operability, interconnectivity and continuous improvement. These IT capacity building aspects together with other administrative capacity aspects of the programme will contribute to the improved functioning of the internal market and thus justify that the programme is based on Article 114 TFEU.
The proposed Fiscalis programme provides mechanisms, means as well as the necessary funding aiming to support tax policy and to improve cooperation between tax authorities. The proposed measure comprises inter alia meetings and similar ad-hoc events, project-based structured collaboration and human competency and capacity building actions, in which Member States and their officials may participate on a voluntary basis. The overall aim of those actions is to enhance administrative cooperation and improve the administrative capacity of Member States in the area of taxation which justifies the use of Article 197 TFEU.
• Subsidiarity (for non-exclusive competence)
The EU tax objectives of fighting against tax fraud, tax evasion and tax avoidance, improving tax fairness and transparency as well as supporting the functioning of the single market and competitiveness cannot be achieved by the Member States alone. Common rules, coordination and cooperation between Member States' tax authorities are needed to deliver on these objectives and face all related challenges.
Such a high degree of cooperation and coordination can only be achieved with a centralised approach, ideally at Union level. Fiscalis activities are more cost-effective than if each participating country were to set up individual cooperation frameworks on a bilateral or multilateral basis and develop national IT solutions for transnational problems. The Fiscalis activities and mechanisms of cooperation moreover allow deepening significantly the trust amongst national tax authorities that is necessary for a smooth cooperation and co-functioning of EU tax systems in the single market.
Against this background, the Fiscalis programme will concentrate the EU intervention on setting up efficient mechanisms (and the indispensable IT tools) for administrative cooperation, aiming at providing more effective means to national tax authorities in their fight against tax fraud, tax evasion and tax avoidance, while indirectly facilitating taxpayer’s tax compliance.
• Proportionality
The vast majority of the proposed budget will be spent on IT capacity building activities. The chosen approach is based on an IT architecture model where European electronic systems are made up of a combination of common and national components. This model has been favoured above a fully centralised IT architecture model as the former leaves part of the budgetary responsibility with Member States which will develop the national IT components at national level taking into account also national preferences, requirements and constraints. Enhancing the interoperability and interconnectivity for the sake of the internal market is therefore achieved in a proportionate manner.
• Choice of the instrument
EU intervention by means of a funding programme is appropriate. A successor to the Fiscalis 2020 programme is proposed by the Commission as a regulation.
3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Retrospective evaluations/fitness checks of existing legislation
This proposal takes into account the recommendations of the final evaluation of Fiscalis 2013 as well as the preliminary results of the ongoing mid-term evaluation of Fiscalis 2020. They indicate that the programme is providing strong EU added value, building trust and fostering strong cooperation between Member States and also with other participating countries (candidate countries and potential candidates). The programme also eases the implementation of EU legislation, while allowing efficiency gains (through pooling of resources) especially in the area of electronic systems (where EU intervention is resulting in economies of scale and reduced development costs) and training modules (where EU intervention is reported as saving time and money for some authorities). Participants have also reported a high and growing interest in joint actions (particularly working visits, seminars and workshops) as an effective tool that contributes to cooperation and to improve the exchange of information between tax authorities. As regards Fiscalis 2020, the introduction of Expert Teams is seen as a powerful vehicle to drive a deeper cooperation (on a regional or thematic basis) given its specific funding arrangements and operational setup. Some participants pointed out the possibility of increasing the current distribution of funds in favour of this administrative capacity building activity.
• Stakeholder consultations
The Commission commissioned an external study to support the ex-ante evaluation which included dedicated consultation activities to gather more broadly the view from all stakeholders. Considering the particular scope of the programme (tax authorities are the only direct beneficiaries), these consultations concentrated on tax authorities by means of discussions in a project group, country visits/case studies and dedicated surveys. Interviews with business associations, non-profit organisations and academics as well as with Fiscalis 2020 participants, consultants and international organisations (e.g. Organisation for Economic Co-operation and Development) complemented these activities.
The external study and the related consultation activities confirmed the challenging times ahead of tax authorities and the need for an ambitious programme around two key dimensions: on the one hand, continuity and reinforcement of (IT and human) capacity building and cooperation actions for a proper application of EU and national tax provisions and, on the other hand, more enhanced operational cooperation and better tackling innovation.
An open public consultation on "EU funds in the area of investment, research & innovation, SMEs and single market" was carried out. It gathered the views of citizens on, among others, policy challenges and needs for EU intervention as regards taxation.
• External expertise
The Commission commissioned an external study to support the ex-ante evaluation by providing quantitative and qualitative information. The objective of this assignment was to identify the key drivers setting the taxation scene in a post 2020 context as well as the problems to be faced by Member States' tax authorities which could be addressed under a future EU financing intervention, taking into account the nature of the identified drivers and their consequences.
The study helped the Commission to: - identify objectives for an EU-level intervention based on the identified drivers and problems; - identify possible EU policy options to achieve the those objectives, deploy a future EU financing intervention in response to the drivers and problems identified and assess the identified options' expected economic, social and environmental impacts; - compare the options according to the set criteria (such as efficiency, effectiveness, relevance, coherence) and rank them.
• Impact assessment
Given the continuity in terms of content, structure and size of the budget of the proposed Fiscalis programme in comparison with the previous Fiscalis 2020 programme, an impact assessment was deemed unnecessary. An ex-ante evaluation has been considered as more adequate to fulfil the Better Regulation requirements in a proportionate manner.
• Simplification
The on-going programme is already streamlined with a strong focus on outputs and results. It implements all simplifications identified in past evaluations. The main additional simplification identified would consist in an extended use of lump sums / unit costs and the possibility to adopt multi-annual work programmes to avoid the annual administrative burden of comitology.
• Fundamental rights
The proposal has no impact on fundamental rights.
4. BUDGETARY IMPLICATIONS
The timing of the review of EU funding programmes is linked to the proposal for a new Multiannual Financial Framework, as proposed on 2 May 2018 15 . In accordance with this proposal, this Regulation on the Fiscalis programme contains a budgetary framework of EUR 270 million (in current prices) for the period 2021-2027.
The Fiscalis programme will be implemented in direct management mode and in a priority-based manner. Work programmes are established – together with the stakeholders – stipulating the priorities for a specific period.
The programme will have an impact on the Union and Member States revenue. Although not quantifiable, it will facilitate and streamline the work done by tax authorities for the collection of direct and indirect taxes. By increasing the quality of work through cooperation and IT and human capacity building, tax authorities will be more efficient for protecting the financial and economic interests of the Union and of its Member States.
5. OTHER ELEMENTS
• Implementation plans and monitoring, evaluation and reporting arrangements
The impact of the proposed Fiscalis programme will be assessed through interim and final evaluations as well as by monitoring on an ongoing basis a set of high-level key performance indicators. These evaluations will be carried out in line with paragraphs 22 and 23 of the Interinstitutional Agreement of 13 April 2016 16 , where the three institutions confirmed that evaluations of existing legislation and policy should provide the basis for impact assessments of options for further action; The evaluations will assess the Instrument’s effects on the ground based on indicators and targets and on a detailed analysis of the degree to which the instrument can be deemed relevant, effective, and efficient, provides enough EU added value and is coherent with other EU policies. They will include lessons learnt to identify any lacks/problems or any potential to further improve the actions or their results and to help maximise their impact. They will also include identification and quantification of regulatory costs, benefits and savings.
The evaluation reporting system will ensure that data for programme evaluation are collected efficiently, effectively, in a timely manner and at the appropriate level of granularity; such data and information will be communicated to the Commission, in a way that complies with other legal provisions; for instance, when necessary, personal data should be made anonymous. To that end, proportionate reporting requirements will be imposed on recipients of Union funds.
The results and outputs of the programme will be regularly subject to assessment through a comprehensive monitoring system, based on defined indicators in view of accountability for value for money.
Data for measuring performance will be drawn from various data collection tools. The main tools envisaged at present are action follow-up forms, event assessment forms and regular polls of tax officials.
Since the programme plays a supporting role, helping participating country authorities to share information and boost their capacity, the monitoring system focuses on following the progress of the programme’ activities in terms of indicators at outputs levels. Whenever possible, it also follows indicators in areas related to the programme’s high-level objectives.
The Commission will, on a yearly basis, issue a programme progress report containing a summary of performance towards the programme objectives and the related output and result indicators.
• Detailed explanation of the specific provisions of the proposal
Contents
- Chapter I - General Provisions
- Chapter II - Eligibility
- Chapter III - Grants
- Chapter IV - Specific provisions for IT capacity building actions
- Chapter V - Programming, monitoring, evaluation and control
- Chapter VI - Exercise of the delegation and committee procedure
- Chapter VII - Transitional and final provisions
The scope of the programme has been adjusted to allow providing support in a more comprehensive manner to tax policy and tax authorities in view of emerging needs. While the ongoing Fiscalis 2020 programme has as an overall objective to improve the proper functioning of the taxation systems in the internal market, the proposed programme will provide support to tax policy and national tax authorities and thus better mirror support needs deriving inter alia from other policy initiatives at EU and national level. As such, the programme intends to contribute to preventing and fighting tax fraud, tax evasion and tax avoidance; preventing and reducing unnecessary administrative burden for citizens and businesses in cross-border transactions; achieving the full potential of the single market and foster EU competitiveness; and promote and support a joint Union approach in international fora. Therefore, even if presented slightly differently and in a simplified manner – without operational objectives –, the objectives of the programme remains equivalent in principle.
Like the ongoing Fiscalis 2020 programme, the new programme will be open for participation to Member States, acceding countries, candidate countries and potential candidates. In line with overall Union policy, countries of the European Neighbourhood Policy and third countries in accordance with the conditions laid down in specific agreements between the Union and those countries will also have the possibility to take part in the programme under certain conditions.
The types of actions considered eligible for programme funding are in essence similar to the ones under the current programme. Their typology has however been simplified and reduced in order to provide for more flexibility. The indicative list in Annex 1 provides an overview of concrete actions which could be funded under the programme.
Based on the lessons learnt with the current Expert Teams tool under the Fiscalis 2020 programme, the proposal provides specific focus on project-based structure cooperation aimed at boosting enhanced operational cooperation and allowing for deep and integrated forms of cooperation between participating countries.
A novelty compared to the current programme is the provision concerning actions which are necessary for adapting or extending the European electronic systems for cooperation with third countries not associated to the Programme and international organisations. This provides an easier and more straightforward mechanism than the one included in the Fiscalis 2020 programme, which does not allow financing any modification to the European electronic systems for use without an international agreement concluded with the relevant third country according with Article 218 of the TFUE. To guarantee for an optimal response time for putting in place such interconnectivity with third countries, the proposal allows for funding of the necessary adaptations or extensions and for adopting administrative arrangements comprising the relevant conditions, including possibly a financial contribution due by the third country or international organisation in question. This would be possible only if the action is of interest to the Union.
Considering the importance of globalisation, the Programme will continue to provide the possibility of involving representatives of governmental authorities, including from third countries, as well as representatives of international organisations, economic operators or civil society as external experts, where beneficial for the actions implementing the objective of the Programme.
The implementation of the programme will occur through the most commonly used spending mechanisms of Union budget, namely public procurement and grants. As regards grants, the proposal stipulates that no call for proposal will apply where the eligible entities are tax authorities.
As in the past, the Programme should fund actions up to 100% given their strong EU added value. Where actions require the awarding of grants, the applicable co-financing rate will be set out in the work programmes.
The provisions under this chapter aim at providing an improved framework and governance for the IT capacity building actions carried out under the programme. Building on the experience of previous Fiscalis programmes and in view of the increasing number of European electronic systems, some novelties are proposed. An improved definition of common components and national components reflecting better the reality of IT projects and their features has been integrated. The tasks incumbent on the Commission on the one hand, and the Member States on the other hand, have been listed. Finally, a Multi-Annual Strategic Plan for Taxation to be drawn up by the Commission, in partnership with the Member States, will allow for a better planning of budgetary and human resources both at national and EU level. Accompanying reporting duties have been introduced to allow for a better monitoring of IT capacity building actions.
In view of the mid to long-term nature of the objectives pursued and building on experience gained over time, work programmes should cover several years. This is a novelty compared to the current Fiscalis 2020 programme which foresees annual work programmes. While not impacting the implementation of the Programme, multiannual work programmes will reduce the administrative burden for both the Commission and Member States.
A Fiscalis Programme committee (examination procedure) will assist the Commission.
A list of core indicators has been added in Annex 2 to improve the monitoring of the programme and its performance from the outset. The Commission will be empowered to adopt delegated acts to develop the provisions for a monitoring and evaluation framework including through amendments to annex 2 to review and/or complement the list of indicators where necessary.
Interim and final evaluations will be carried out in a timely manner to feed into the decision-making process.
The Commission is empowered to adopt delegated powers as regards the review of the performance monitoring framework and related indicators.
A Fiscalis Programme committee (examination procedure) will assist the Commission.
Coherent, effective and proportionate targeted information to multiple audiences will be ensured, including the medial and public.