Explanatory Memorandum to COM(2023)736 - Conclusion of the amendment of the Agreement with Norway on administrative cooperation, combating fraud and recovery of claims in the field of VAT - Main contents
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| dossier | COM(2023)736 - Conclusion of the amendment of the Agreement with Norway on administrative cooperation, combating fraud and recovery of ... |
|---|---|
| source | COM(2023)736  |
| date | 24-11-2023 |
•Reasons for and objectives of the proposal
The present proposal concerns the conclusion of an amendment of the Agreement between the European Union and the Kingdom of Norway (“Norway”) on administrative cooperation, fight against fraud and recovery of claims in the area of value added tax 1 (“the Agreement”).
The Agreement entered into force in September 2018. The Agreement allows the EU Member States and Norway to cooperate in a similar way Member States do under Council Regulation (EU) No 904/2010 2 and Council Directive 2010/24/EU 3 to fight against VAT fraud, and assist each other to recover claims in the field of VAT.
However, in the meantime several amendments to Council Regulation (EU) 904/2010 were made and new tools for administrative cooperation were introduced, namely by the amending Council Regulation (EU) 2018/1541 4 . The new tools include:
- enhancement of the Eurofisc network through reinforced governance, the so-called follow-up actions (joint processing and analysis of data) and administrative enquiries carried out jointly (joint audits);
- working with other law enforcement EU bodies (Europol, OLAF);
- sharing key information on imports and on vehicles.
The possibility to use other means to exchange information than the standard forms was also introduced.
Article 41 i of the Agreement lays down the formalities if a Party to the Agreement would like to revise it. Thus, this Party shall lay a proposal before the Joint Committee, which shall make recommendations, in particular for the commencement of negotiations according to the rules for international negotiations of the Parties.
During the second meeting on 25 November 2021 of the EU-Norway Joint Committee, established under Article 41 i of the Agreement, the Kingdom of Norway officially submitted a request to supplement and amend the Agreement in order to:
• take into account the newly introduced administrative cooperation tools (the use of other means to exchange information than the standard forms, the administrative enquiries carried out jointly and the follow-up actions in the framework of Eurofisc).
• update the reference to the repealed Directive 95/46/EC by Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data 5 and in particular, introducing a reference to the provisions of the European Economic Area (EEA) agreement 6 equivalent to Regulation (EU) 2016/679.
Norway has so far participated actively in most of the Eurofisc working fields. During the course of 2020 and 2021, Norway alerted the Member States to possible fraud and potential VAT loss amounting to EUR 5 billion in the carbon credit area.
The amendment of the Agreement by including the above-mentioned new tools would allow for better cooperation and enhance the fight against fraud, thus bringing added value for both parties to the Agreement (Norway and Member States).
A Council decision authorising the opening of negotiations with the Kingdom of Norway to amend the Agreement between the European Union and the Kingdom of Norway on administrative cooperation, combating fraud and recovery of claims in the field of value added tax was adopted on 17 June 2022 7 .
The recommendation by the Joint Committee to commence negotiations, in line with Article 41 i of the Agreement (exchange of letters), was adopted by written procedure in October 2022.
A round of negotiations was held on 18 November 2022 and agreement was reached on 27 June 2023.
The Council has consistently been informed about the progress in the Working Party on Tax Questions and in the High-Level Working Party.
The Commission considers that the objectives set out by the Council in its negotiating directives were attained and that the negotiated text is acceptable to the Union.
The signing, on behalf of the Union, of the amendment of the Agreement between the European Union and the Kingdom of Norway on administrative cooperation, combating fraud and recovery of claims in the field of value added tax took place on XXX.
•Consistency with existing policy provisions in the policy area
The amendment of the Agreement was negotiated in line with the comprehensive negotiating directives adopted by the Council on 17 June 2022.
Enhancing VAT administrative cooperation with third countries is one of the actions announced with the 2020 European Commission Communication for a Fair and Simple Taxation supporting the recovery 8 .
Furthermore, it should be noted that the amendment would cover cooperation tools already in force and applied by the Member States based on Regulation (EU) No 904/2010.
Therefore, this initiative is in line with the present Commission policy in the field of VAT and would harmonise Member States’ cooperation with Norway with the EU acquis.
•Legal basis
The present proposal to the Council is submitted pursuant to Article 218(6) of the Treaty on the functioning of the European Union (TFEU).
Article 3 i TFEU provides that, in addition to the areas of exclusive Union competence listed in Article 3 i TFEU, the Union shall 'also have exclusive competence for the conclusion of an international agreement when its conclusion is provided for in a legislative act of the Union or is necessary to enable the Union to exercise its internal competence, or in so far as its conclusion may affect common rules or alter their scope'.
Under the Court of Justice consistent case law, an agreement may affect common rules or alter their scope when it covers areas where there are harmonising measures. 9
The subject matter of the revision of the Agreement, i.e. to cover the new administrative cooperation tools introduced by Council Regulation (EU) 2018/1541, falls within the Union`s exclusive competence. The update of the references to Directive 95/46/EC by Regulation (EU) 2016/679 might be done in the framework of the Joint Committee pursuant to Article 41(2)(k) of the Agreement. However, that update can also be included in the reopening of the negotiations on the text of the Agreement.
In accordance with the Treaties, the Commission makes a proposal for the conclusion of an agreement of the Union.
•Proportionality
The cooperation instruments to be included in the amendment of the Agreement will respect the principle of proportionality and will not go beyond what is necessary to meet the objective of providing a common framework for administrative cooperation between the European Union and the Kingdom of Norway in the field of VAT. This amendment of the Agreement will enable the Member States’ authorities responsible for the application of VAT legislation to cooperate with the Norwegian tax authorities in the same way they cooperate between themselves in the EU and based on the EU acquis.
•Impact assessment
According to tool 7 of the Better Regulation 10 , an impact assessment is not needed when the impact cannot be clearly identified ex-ante, the impacts are small or the Commission has little or no choice in the matter.
The amendment aims to align as much as possible with the EU legislation in the area of VAT administrative cooperation and data protection to the already in force EU-Norway agreement on VAT cooperation. In practice, the outcome of the envisaged proposal will not be any new legal act, but an amendment of the EU-Norway agreement.
•Fundamental rights
The envisaged Agreement will respect the key values of the European Union as established in Article 2 of the Treaty on the Functioning of the European Union and the Charter of Fundamental Rights of the European Union.