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EY Europe SCRL/CVBA De Kleetlaan 2 1831 Diegem 1 Submission via website 7 November 2023 Subject: EY Comments in response to the public consultation on the proposals put forward by the European Commission to reform the EU Customs Union Introduction We appreciate the opportunity to submit these comments on behalf of EY on the proposals put forward by the European Commission on 17 May 2023 to reform the EU Customs Union. The proposal aimed at establishing the Union Customs Code and the European Union Customs Authority1 will in the remainder of this feedback paper referred to as ‘new Union Customs Code’. In this document, we will provide our preliminary observations on the content of the proposals to reform the EU Customs Union.

…document, we will provide our preliminary observations on the content of the proposals to reform the EU Customs Union. Given the nuance that we feel is needed for a careful and thorough consideration of the proposals, we have provided for high-level observations that we think need to be considered in the remainder of the legislative process. General overall observations Alignment other legal areas In the introductory to the proposals to reform the EU Customs Union, the European Commission stresses the importance of consistency of the proposals with existing policy provisions in the policy area and other Union policies.

…importance of consistency of the proposals with existing policy provisions in the policy area and other Union policies. We observe that the provisions in the proposal for a new Union Customs Code do not make any reference to other existing policy provisions in the policy area, and proposals to amend other Union policies (e.g., the Market Surveillance Regulation, Carbon Border Adjustment Mechanism) are not part of the proposals put forward by the European Commission. Cross- references and amendments to other Union policies, however, seem to be essential to ensure full alignment between the new Union Customs Code and other existing policy provisions in the policy area. Moreover, it seems worthwhile to also consider consistency with other policy domains like export controls.

…area. Moreover, it seems worthwhile to also consider consistency with other policy domains like export controls. Entry into force date Based on Article 264, the new Union Customs Code will enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. Despite the existence of Article 265 of the new Union Customs Code, most substantive provisions will be applicable as of the date the new Union Customs Code enters into force. We observe that most substantive provisions, will be applicable on the twentieth day following that of the publication of the new Union Customs Code in the Official Journal of the European 1 Regulation of the European Parliament and of the Council establishing the Union Customs Code and the European Union Customs Authority, and repealing Regulation (EU) No 952/2013, COM(2023) 258 final. Ref.

Code and the European Union Customs Authority, and repealing Regulation (EU) No 952/2013, COM(2023) 258 final. Ref. Ares(2023)7559019 - 07/11/2023 EY Europe SCRL/CVBA De Kleetlaan 2 1831 Diegem 2 Union. It is only then that the European Commission is entitled to exercise the delegated and implementing powers that it has been granted. The European Commission will consequently have very little time to adopt delegated or implementing regulations. Similarly, customs authorities and economic operators will have little if any time to prepare themselves for the change and may increase the chances of disrupted customs operations and non-compliance. We therefore feel that it would make sense to set the date of application later than the entry into force date of the new Union Customs Code.

…it would make sense to set the date of application later than the entry into force date of the new Union Customs Code. Sanctions We welcome the efforts of the European Commission to harmonize sanction provisions, given the currently existing divided landscape between the EU Member States. Forms of sanction In case of a customs infringement listed in Article 252 of the new Union Customs Code, Article 254 provides for minimum non-criminal sanctions. In case of monetary penalties, the percentages must be based on the customs duties avoided and, if the infringement does not affect the amount of the customs debt, on the customs value of the goods.

…avoided and, if the infringement does not affect the amount of the customs debt, on the customs value of the goods. We observe that this may result in an undesirable outcome if for part of the imported goods the infringement affected the amount of the customs debt, and for the other part of the imported goods the infringement has not affected the amount of the customs debt, while the customs value of the imported goods is for both parts the same. This can be illustrated based on an example where two imported goods are both valued at EUR 1,000. As a result of an intentional infringement, EUR 100 of import duties is avoided for the first imported good, where for the second imported good the infringement does not affect the amount of the customs debt since the customs duty rate on this good is zero.

…good the infringement does not affect the amount of the customs debt since the customs duty rate on this good is zero. According to Article 254(a)(i)(1) and (ii)(1) of the new Union Customs Code, the pecuniary charge shall comprise an amount up to a maximum of 200% of the customs debt where the customs infringement has an impact on customs duties and other charges, and up to a maximum of 200% of the amount of the customs value of the goods where the customs infringement has no impact on customs duties and other charges. In the example this would result, in theory, in a penalty of respectively EUR 200 and EUR 2,000, whereas in the latter case no customs duties have been avoided as a result of the infringement. Time limitation for customs debts Article 182, para. 1, of the new Union Customs Code stipulates that a customs debt expires three years after the date on which it incurred.

…of the new Union Customs Code stipulates that a customs debt expires three years after the date on which it incurred. Based on Article 249 of the new Union Customs Code, Member States must apply a statute of limitation between five to ten years when imposing non-criminal sanctions. We observe that the before-mentioned provisions could lead to the situation that the customs debt in case of non-criminal sanctions will have expired after three years, while penalties for Union customs infringements should still be imposed for at least five and a maximum of ten years. This difference seems to create a remarkable situation where fines remain valid for a longer period than the statute of limitations for the infringement. EY Europe SCRL/CVBA De Kleetlaan 2 1831 Diegem 3 Importer Based on Article 5, para.

…limitations for the infringement. EY Europe SCRL/CVBA De Kleetlaan 2 1831 Diegem 3 Importer Based on Article 5, para. 12, of the new Union Customs Code, the importer is defined as: Any person who has the power to determine and has determined that goods from a third country are to be brought into the customs territory of the Union or, except otherwise provided, any person who is considered a deemed importer. Based on this definition legal or economic ownership over the goods seems to be implicitly required. It is also required for the importer to be established in the European Union according to Article 20, para. 2, of the new Union Customs Code.

…the importer to be established in the European Union according to Article 20, para. 2, of the new Union Customs Code. Under the current Union Customs Code, the requirement for the declarant to be established in the EU results in non-EU established persons having to appoint an indirect customs representative in case they want to declare goods for free circulation in the European Union. We observe that under the new Union Customs Code, it is still possible to appoint a customs representative acting in a direct or indirect capacity. Nonetheless, the clear wording of Article 20, para. 2 of the new Union Customs Code does not suggest the importer can be released from the requirement to be established in the European Union and no general derogation from this requirement is included in Article 20, para. 3.

…established in the European Union and no general derogation from this requirement is included in Article 20, para. 3. If this requirement were upheld, this would effectively create a barrier for non-EU established businesses to release their goods for free circulation in the European Union. Authorizing an EU established entity in those cases to act as importer without them becoming the legal or economic owner of the goods, may resolve this issue, although this may result in import-VAT deductibility issues, as the importer will in that case not be the legal or economic owner which may prohibit him from recovering the import- VAT due at the border.

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…1 EY Europe SCRL/CVBA De Kleetlaan 2 1831 Diegem 10 February 2026 Subject: EY Comments on the EU Public Consultation on the possible recast of the Directive on Administrative Cooperation in the Field of Direct Taxation (DAC) We appreciate the opportunity to submit these comments on behalf of Ernst & Young (EY) in response to the European Commission’s (the Commission) public consultation on the possible recast of the Directive on Administrative Cooperation in Tax Matters (DAC). This submission includes our views on simplification alternatives being considered, perspectives on reporting costs and additional potential areas for improve- ment. We welcome this consultation as an opportunity to help shape an effective redesign of the DAC, with the aim of creating a more competitive tax landscape for businesses and investors throughout the European Union (EU). Section 1 outlines our…

…on the experience of the EY network. Section 3 presents our closing thoughts and points for additional reflection. 1. Overarching Comments Introduction Simplification and deregulation have become critical priorities in taxation, as businesses face an increas- ingly complex and cumulative burden of reporting obligations. In this context, a potential recast of the DAC into a single consolidated legal instrument offers a timely opportunity to address overlaps, incon- sistencies and inefficiencies in EU reporting requirements. As acknowledged by the Commission, businesses have repeatedly called for a reduction in administrative burdens.

As acknowledged by the Commission, businesses have repeatedly called for a reduction in administrative burdens. The planned overhaul should therefore go beyond identifying simplification options and provi- sions no longer fit for purpose and should enable a comprehensive review of the reporting framework, including the use of data by tax authorities, and the proportionality of each obligation and the need for EU-level regulation. Ref. Ares(2026)1784456 - 17/02/2026 2 EY Europe SCRL/CVBA De Kleetlaan 2 1831 Diegem In doing so, the legislative assessment should carefully balance simplicity of rules design, the impact on competitiveness, the choice of an appropriate simplification strategy, and a realistic evaluation of com- pliance costs.

…the choice of an appropriate simplification strategy, and a realistic evaluation of com- pliance costs. Simplification by design and regulatory stability We build on EY’s 2024 submission to the EU's DAC evaluation,1 especially regarding DACs 2 to 6, high- lighting the need for simplification and certainty as key policy principles. In particular, we reemphasize that to reduce administrative burdens, three key considerations should be made at each stage of the legislative lifecycle at the EU level: ensure that the policy objectives are compelling and clearly articulated, ensure that the rules are targeted and efficient and carefully evaluate the administrative costs of business against the effectiveness of the rules. Meaningful simplification should begin at the design stage of future reporting and legal frameworks, ra- ther than attempting to correct complexity after it emerges.

…design stage of future reporting and legal frameworks, ra- ther than attempting to correct complexity after it emerges. Limiting the frequency of amendments and ensuring regulatory stability are critical. It is important to be mindful that measures labelled as simplifi- cation can still generate additional complexity if they require system changes or operational adjustments. There are also adjacent costs to retrain and familiarize personnel with the changed processes. Ultimately, stable and predictable rules are essential to reducing real compliance costs. Furthermore, current reporting and compliance obligations significantly impact taxpayers with a low risk profile. Information reported and exchanged will also have little relevance for the tax authorities that will have to process the information.

…and exchanged will also have little relevance for the tax authorities that will have to process the information. Therefore, to deliver meaningful reduction of administrative burdens to achieve the ambitious targets, we recommend the development of objective, risk-based criteria, applica- ble across all businesses, to exclude low-risk situations from the reporting obligations under the DACs, where appropriate, and in particular for Country-by-Country Reporting, relevant MDR and Top-up Tax reporting purposes. 1 Letter of 30 July 2024, at ec.europa.eu. 3 EY Europe SCRL/CVBA De Kleetlaan 2 1831 Diegem EU leadership in simplification and global coordination Where innovative, coherent, and harmonized solutions can be developed and implemented at the EU level, leadership should be exercised through the proactive coordination of simplification efforts across Member States.

…leadership should be exercised through the proactive coordination of simplification efforts across Member States. The existence of a 148-jurisdiction Inclusive Framework does not justify deferring action or waiting for global consensus when simplifying EU instruments that are derived from, or closely aligned with, OECD standards. Building on these internal efforts, the EU can then be a positive voice at the global level. As many DAC reporting obligations are derived from standards and recommendations at OECD level, the EU will be well positioned to leverage the collective influence and technical expertise of its Member States to promote practical, evidence-based simplification of international standards, while con- tinuing to advance effective solutions within its own regulatory framework.

…of international standards, while con- tinuing to advance effective solutions within its own regulatory framework. DAC reporting overlaps and alignment The successive adoption of multiple DAC instruments has inevitably resulted in overlaps in concepts, def- initions, and reporting triggers. While such overlap may give rise to perceptions of redundancy, it is im- portant to recognize that similar concepts can serve different purposes and carry distinct meanings de- pending on the objectives and policy rationale of each DAC framework. Accordingly, efforts should not be directed at eliminating overlaps as such, but at improving coordination across instruments, focusing on alignment of scope and terminology where differences are not strictly necessary, and identifying op- portunities for simplification that are consistent with the underlying policy objectives.

…and identifying op- portunities for simplification that are consistent with the underlying policy objectives. Merging or consol- idation should focus on areas where simplification is consistent with those objectives and on aligning scope and terminology where differences are not strictly necessary. Efficient use of existing Information and proportionality A key element of simplification lies in reassessing how information currently reported under existing EU instruments is being used in practice. Before introducing any new reporting obligations, policymakers should assess whether the information is already available to tax authorities but potentially underused.

…policymakers should assess whether the information is already available to tax authorities but potentially underused. As noted in our earlier submission, emerging technologies also enable a move from broad reporting and automatic exchange of large datasets to targeted, on-demand access, allowing tax authorities to retrieve only the data necessary for a specific permitted purpose. 4 EY Europe SCRL/CVBA De Kleetlaan 2 1831 Diegem Where tax administrations already have access to the information needed for a given purpose, efforts should focus on providing clear rules and guidance interoperability of data, and analytical capacity, rather than adding new reporting layers. All exchanges and use of data, including through new technology, must be subject to clear purpose limi- tations and protected by robust guarantees to safeguard taxpayers’ rights and interests.

…subject to clear purpose limi- tations and protected by robust guarantees to safeguard taxpayers’ rights and interests. Information exchanged under the DAC and other reporting frameworks may include personal or commercially sensi- tive data, and taxpayers often have limited visibility regarding who accesses their information and for what purposes. Ensuring transparency on data use and exchange is critical to reducing the risk of misuse and data breach. An accumulation of reporting requirements does not necessarily strengthen tax enforcement and may, in practice, dilute data quality and reduce the practical usefulness of information.

…tax enforcement and may, in practice, dilute data quality and reduce the practical usefulness of information. Any revision or exten- sion of DAC reporting rules should therefore be preceded by a thorough, evidence-based assessment of their proportionality and added value, examining actual data usage, the compliance burden and compet- itiveness impact on businesses and whether equivalent information is already available through existing reporting frameworks. Rethinking reporting costs Any simplification strategy must be grounded in a realistic understanding of compliance costs. It is often assumed that reporting obligations entail a one-off implementation cost followed by largely automated processes, but this assumption rarely holds in a regulatory environment subject to frequent change, di- vergences in implementation, ongoing interpretation and limited stability.

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…1 EY Europe SCRL/CVBA De Kleetlaan 2 1831 Diegem 11 September 2024 Subject: EY Comments on the EU Public Consultation on the Evaluation of the Anti-tax Avoidance Directive (ATAD) We appreciate the opportunity to submit these comments on behalf of Ernst & Young (EY) in response to the European Commission’s (the Commission) public consultation on the evaluation of the Anti-tax Avoidance Directive (ATAD). This initiative by the Commission is timely and crucial, as it allows for a reflection on the effectiveness and efficiency of ATAD in the context of the broader EU corporate tax framework and its alignment with the Union's policy objectives. Section 1 contains an introduction with our overarching comments regarding the review of ATAD. Building on this foundation, Section 2 addresses particular elements of ATAD drawing on the experience of the EY network. Section 3 presents concluding…

…particular elements of ATAD drawing on the experience of the EY network. Section 3 presents concluding observations. 1. Introduction Overall aim and impact of ATAD ATAD was initially developed to ensure the implementation within the EU of key Actions from the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) Project. ATAD focused on the domestic law changes that were proposed in the BEPS Project to create better coordination between the tax systems of individual jurisdictions. In addition to ATAD, the EU also took significant steps to enhance the access of tax authorities to data and information relevant for risk assessment and administration, promote the worldwide adoption of the BEPS minimum standards through the Code of Conduct process, and to establish public tax transparency requirements.

…the BEPS minimum standards through the Code of Conduct process, and to establish public tax transparency requirements. With that, the adoption of ATAD has been at the heart of the EU's efforts to protect Member States’ tax bases by closing off tax structures that were identified as being artificial and aggressive through cooperation between tax authorities. Moreover, right after the BEPS project, the OECD started to work on the Global Minimum Tax, which also now has been implemented in the EU and other jurisdictions. Need for in-depth evaluation of accumulated measures Due to the combination of measures that have been implemented, the EU created a structure whereby multiple locks have been put in place to lock the same door. It needs to be recognized that this has come with a very significant growth in the administrative costs for businesses. It also means that it is difficult Ref.

…come with a very significant growth in the administrative costs for businesses. It also means that it is difficult Ref. Ares(2024)6451180 - 11/09/2024 2 EY Europe SCRL/CVBA De Kleetlaan 2 1831 Diegem if not impossible to isolate the effects of specific measures and to assess which of the measures is the most effective in addressing practices that are considered undesirable. An analysis of the revenue effects of the BEPS measures during the years before the Global Minimum Tax became effective could be useful to separate the effects of introduction of the BEPS measures from the effect of the minimum tax rules. The BEPS measures have fundamentally changed the international tax landscape in terms of the alignment between economic activities and profit taxation.

…changed the international tax landscape in terms of the alignment between economic activities and profit taxation. Given the fact that there are multiple overlapping measures, it is essential that ATAD be reviewed in the context of the full array of measures that have been put in place and are embedded in the overall EU tax landscape currently. Due to the recent introduction of new EU tax initiatives, including the Mandatory Disclosure Rules of the Directive on Administrative Cooperation, ATAD 1 and 2, Public Country-by-Country Reporting and the Minimum Tax Directive, businesses and investors in the EU have been confronted with an accumulation of new tax measures. In light of the interconnections between all of these measures, an evaluation of ATAD in isolation would be insufficient and very likely misleading.

…between all of these measures, an evaluation of ATAD in isolation would be insufficient and very likely misleading. Moreover, consideration of any future measures must take into account all aspects of the then-existing tax and economic environment into which such measures would be incorporated and balance the value such measures would bring against the administrative costs they would add. The evaluation of ATAD must assess the interactions between all these measures, with the aim that they are coherent, do not overlap unnecessarily, and align with the EU's renewed focus on competitiveness. In this regard, we also refer to the observations and recommendations set out by Mario Draghi's report “The future of European competitiveness”.

…to the observations and recommendations set out by Mario Draghi's report “The future of European competitiveness”. Also, in our recent submissions,1 we set out considerations that should be made at each stage of the legislative cycle – policy design, transposition and application – to safeguard against excessive complexity of the tax rules and avoid hindering business operations, while ensuring that the legislative framework remains responsive to the evolving needs of businesses operating within the EU. We believe that a comprehensive review of ATAD that fully reflects the EU’s current priorities on simplification and lowering of administrative costs for businesses will require more intensive and ongoing consultation with stakeholders. We urge the Commission to provide the opportunity for more detailed input into the review and the development of any recommendations with respect to ATAD.

…opportunity for more detailed input into the review and the development of any recommendations with respect to ATAD. 1 EY Comment Letter on the EU Public Consultation for the Evaluation of the Directive on Administrative Cooperation in the Field of Direct Taxation (DAC), and EY Comment Letter on the EU Public Consultation for the Draft Implementing Regulation and Annexes on the template and electronic formats for ‘country by country’ reports. 3 EY Europe SCRL/CVBA De Kleetlaan 2 1831 Diegem Safeguarding compatibility with primary EU law The comprehensive evaluation of the EU corporate tax rules should also encompass a thorough review of the rules’ adherence to primary EU law considering the evolving case law of the European Court of Justice (ECJ).

…of the rules’ adherence to primary EU law considering the evolving case law of the European Court of Justice (ECJ). The Commission should oversee the alignment of EU tax directives with the Treaty on the Functioning of the European Union, particularly when Member States seek to eliminate preferential treatment to address ECJ-identified discriminatory treatment of cross-border situations versus comparable domestic situations. In efforts to rectify ECJ-identified disparities between cross-border and domestic treatments, legislators sometimes opt to extend tax rules designed for cross-border situations onto comparable domestic situations. However, such measures typically inflate the compliance workload without producing a corresponding tax effect in situations that are strictly domestic.

…inflate the compliance workload without producing a corresponding tax effect in situations that are strictly domestic. It is important to explore alternative solutions to enhance, not undermine, the EU's competitive edge, while ensuring legal clarity and certainty for taxpayers. 2. Comments on selected specific elements of ATAD 2.1 Interest limitation rules Current economic outlook and new EU ambitions require re-evaluation of tax treatment of debt The treatment of debt and related interest payments is a crucial component of any corporate tax system due to its significant effect on taxpayers’ ability to attract and secure essential funding for investment. The ATAD’s interest limitation requires an in-depth evaluation for several reasons.

…essential funding for investment. The ATAD’s interest limitation requires an in-depth evaluation for several reasons. First, the 2015 BEPS Action 4 Report suggested that the initial generic corridor for interest deductibility of 10% to 30% of the taxpayer's earnings before interest, tax, depreciation and amortization (EBITDA) may be subject to revision after a review of the implemented measures.2 This recognizes that the generic corridor requires evaluation and adjustment over time. The review of the interest deductibility rules of ATAD should consider the rapidly evolving macroeconomic outlook, including notably the impact of increased interest rates, which differs significantly from the economic context in which ATAD was adopted.

…impact of increased interest rates, which differs significantly from the economic context in which ATAD was adopted. For example, the ceilings for interest deductibility should be re-evaluated and adjusted during periods of high interest rates to prevent adverse effects on the ability of businesses and investors to maintain their leverage. 2 OECD, Limiting Base Erosion Involving Interest Deductions and Other Financial Payments, Action 4 - 2015 Final Report, paragraph 97. 4 EY Europe SCRL/CVBA De Kleetlaan 2 1831 Diegem In this regard, it is useful to recognize that the initial corridor was determined by a macroeconomic analysis. The purpose of this analysis was to align the interest deductibility limitation with the level of external interest payments that businesses make in the global economy.

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