PricewaterhouseCoopers International Limited

____________________________________________________________________________ PricewaterhouseCoopers International Limited 1 Embankment Place London WC2N 6RH T: +44 (0)20 7583 5000 / F: +44 (0)20 7822 4652 PricewaterhouseCoopers International Limited is registered in England number 3590073. Registered Office: 1 Embankment Place, London WC2N 6RH.

International Limited is registered in England number 3590073. Registered Office: 1 Embankment Place, London WC2N 6RH. Uploaded at: https://ec.europa.eu/eusurvey/runner/dac_evaluation?surveylanguage=en 4 March 2019 European Commission: Public consultation on the functioning of the administrative cooperation in the field of direct taxation Introduction and scope of our response PricewaterhouseCoopers International Limited on behalf of its network of member firms (PwC) welcomes the opportunity to respond to the European Commission (“the Commission”) with respect to its consultation to assist the evaluation of the key provisions for administrative cooperation in the field of direct taxation (Council Directive 2011/16/EU - “the Directive”). We welcome this consultation and the Commission’s broader review of the operation of this important plank of the European Union’s tax framework.

…and the Commission’s broader review of the operation of this important plank of the European Union’s tax framework. While we agree that the areas that the consultation focuses on are well chosen, we believe that our views are better represented through a freeform response to these areas, as opposed to responses to multiple choice questions. In addition, we expect that the stakeholders best placed to comment on the Exchange of Information itself will be tax administrations, while we are well placed to comment on sections C (Legal Entities) and D (Consultants / Advisers). We therefore particularly welcome the opportunity to provide all our comments under section F of the consultation, through this concise paper, and accordingly have not completed the optional questions in sections B through E.

…through this concise paper, and accordingly have not completed the optional questions in sections B through E. General comments on scope Directives in scope It is not clear what is meant with the “key provision for administrative cooperation”, but would welcome clarity on this point. The Directive is a body of law that has grown up by way of Ref. Ares(2019)6268021 - 10/10/2019 2 of 4 amendment to the original directive of 2011.

…law that has grown up by way of Ref. Ares(2019)6268021 - 10/10/2019 2 of 4 amendment to the original directive of 2011. As it has been amended five times, we refer to the Directive at each point in time as follows: ● DAC1: 2011/16/EU (application from January 2013 and January 2015 for non-AEOI and AEOI respectively) ● DAC2: 2104/107/EU (application from January 2016) ● DAC3: 2015/2376/EU (application from January 2017) ● DAC4: 2016/881/EU (application from June 2018) ● DAC5: 2016/2258/EU (application from January 2018) ● DAC6: 2018/822/EU (application from July 2020; including disclosure of arrangements from June 2018) The implementation period for DAC6 thus still has time to run (and at the time of writing has only been legislated in one Member State). DAC5 has been applicable as from 1 January 2018.

…at the time of writing has only been legislated in one Member State). DAC5 has been applicable as from 1 January 2018. However, the consolidated text of January 2018 seems to be of DAC1 to DAC4, rather than inclusive of DAC5. In addition, the consultation is also said to be part of the evaluation on administrative cooperation in the field of direct taxation, where a report under Article 8b of the Directive is foreseen for January 2019. Looking at the evaluation roadmap (attached of 22 February 2018) it states: The focus of the evaluation will be data on activities up until the end of 2017, reported to the Commission by mid-2018. While automatic exchanges under DAC1 have continued for some years already, and DAC2 and DAC3 exchanges have recently started, exchanges under DAC 4 and DAC 5 are still under way and data from these will therefore not be included in this evaluation.

…under DAC 4 and DAC 5 are still under way and data from these will therefore not be included in this evaluation. We have thus taken the position that while DAC6 is not covered by this review, DAC4 and DAC5 amendments are, to the extent that they have already impacted on stakeholders (which in practice will be limited for stakeholders other than tax administrations, despite the inclusion of Country by Country Reporting questions in Section C of the consultation). Consultation format and questions Some of the questions posed appear to extend beyond the remit of assessing the functioning of the Directive; testing whether it achieves objectives that it was not designed to. For example, the second question in Section A seeks to assess whether the Directive is successful in curbing tax competition between Member States, rather than promoting administrative cooperation between them.

…in curbing tax competition between Member States, rather than promoting administrative cooperation between them. As no decision has been agreed by Member States regarding harmonisation of tax bases and systems, we question the appropriateness of such questions in this review. Such a question may be more appropriate when a review of the Common Consolidated Corporate Tax Base is undertaken, should such an objective become attractive to Member States. The survey does not include questions on how the operation of the Directive could be improved to offer benefits to taxpayers, for example how EoI could be used to avoid or resolve double taxation disputes. We would welcome further review in this area.

…how EoI could be used to avoid or resolve double taxation disputes. We would welcome further review in this area. 3 of 4 Operation of the Directive Rights of taxpayers We have the following observations regarding potential areas where the Directive could be improved to give greater respect to the rights of taxpayers without hampering (and in some cases improving) the fulfilment of the Directive’s operation: ● Under the Directive, there is no requirement for taxpayers to be notified when an exchange of their information has taken place (nor the right to review the accuracy of the information exchanged). In light of developments such as the implementation of the European Union’s General Data Protection Regulation, it may be appropriate to review whether taxpayers should and could be given such rights.

Data Protection Regulation, it may be appropriate to review whether taxpayers should and could be given such rights. ● Under the Directive, there is no automatic right of taxpayers to review correspondence between tax administrations and limit the information exchanged to what is most relevant. In light of the ruling from the European Court of Justice in 2017 regarding the Berlioz case (C-682/15), we believe that the Directive could be improved (and future disputes lessened) by ensuring an opportunity for taxpayers to review such correspondence in advance to allow assessment of the “foreseeable relevance” condition. Transparency and certainty Tax certainty is a key concern for businesses, and the extensive changes to the tax system in the EU, OECD Inclusive Framework countries and beyond in response to the OECD BEPS recommendations places us in an environment of significant change.

…countries and beyond in response to the OECD BEPS recommendations places us in an environment of significant change. The work of the OECD, EU, and individual countries regarding the taxation of the digitalisation of the economy furthers the uncertainty that businesses currently face. We are hopeful that this will be resolved by a broad and deep consensus among countries about the future of the international tax system. We welcome transparency initiatives destined to treat economic actors consistently and coherently, irrespective as to whether or not they operate within a Member State, and full transparency with tax administrations.

…as to whether or not they operate within a Member State, and full transparency with tax administrations. With increased information (particularly standardised information for which context may be lacking) there are increased opportunities for disputes to arise - a further challenge to tax certainty However, the Directive could also be a catalyst in the path towards cooperative compliance where taxpayers and tax authorities can target the employment of valuable resources and management time and avoid litigation by constructive upfront exchange of views between experienced tax professionals who are empowered to serve that purpose. We would welcome additional initiatives at an EU level to resolve (and prevent) disputes, and believe that the exchanges of information under DAC may provide a useful springboard for such approaches to be developed.

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_____________________________________________________________________________ PricewaterhouseCoopers International Limited 1 Embankment Place London WC2N 6RH T: +44 (0)20 7583 5000 / F: +44 (0)20 7822 4652 PricewaterhouseCoopers International Limited is registered in England number 3590073. Registered Office: 1 Embankment Place, London WC2N 6RH. 3 April 2023 Attn Mr Patrice Pillet Head of Unit DG TAXUD - Unit C1 European Commission 1049 Bruxelles Belgium Subject: European Commission VAT in the Digital Age - public consultation PwC International Ltd on behalf of its network of member firms (PwC) welcomes the opportunity to respond to the public consultation ‘VAT in the Digital Age’.

…network of member firms (PwC) welcomes the opportunity to respond to the public consultation ‘VAT in the Digital Age’. Introduction The European Commission’s (Commission) VAT in the Digital Age (ViDA) initiative covers a number of issues that we believe are significant in the context of modernising and improving the smooth functioning of the EU VAT system, particularly with regard to the reduction of administrative burdens for businesses trading cross-border. We have set out in this letter and the accompanying appendices a comprehensive response to the proposals tabled by the Commission. For ease of reference, we have also summarised our key comments and recommendations immediately below. This submission follows on from PwC’s original submission (dated 22 May 2022) as part of the public consultation.

This submission follows on from PwC’s original submission (dated 22 May 2022) as part of the public consultation. As a network, we have gathered feedback in relation to ViDA and this feedback is reflected in this letter. Overall, we: • Support the uniform application of the proposed rules and a system that is designed to ensure greater efficiency in the VAT system; • Contend that any VAT compliance should be easier and not harder (both in terms of costs and reducing the number of VAT registrations) after the implementation of the ViDA proposals; Ref. Ares(2023)2405327 - 03/04/2023 2 of 24 • Caution that any proposal should be supported by an appropriate impact assessment before implementation ie.

…of 24 • Caution that any proposal should be supported by an appropriate impact assessment before implementation ie. the new rules need to be effective, and businesses need a realistic timeframe to implement in order to reduce administrative burdens and compliance costs; and • Observe that the ViDA proposals have been presented as one overall package. However, we consider that the topics are important enough in themselves to be able to be handled separately. This approach will allow momentum to be generated and no one single measure will need to wait for a resolution of other measures. Summary

…allow momentum to be generated and no one single measure will need to wait for a resolution of other measures. Summary 1. Digital reporting requirements (DRRs) PwC welcomes the proposed change to the VAT legislation to make electronic invoicing the rule rather than the exception. Such provision will be a significant driver for accelerated automation in the exchange of business and financial data in the EU and beyond. In addition, the initiative taken by the Commission to introduce a harmonised framework for digital reporting of intra-EU transactions, with the possibility of extending such a system also to cover domestic transactions, is timely and pivotal for a smooth functioning of the VAT-system. This will allow Member States to, if desired, implement measures that fit with their economic and social objectives whilst avoiding further fragmentation and diversity of these types of…

…burden for businesses. Further detailed comments on the proposed requirements are provided in Appendix 1. 2. VAT treatment of the platform economy Whilst we welcome the Commission’s intention to reform the VAT treatment of the platform economy, create neutrality between online and offline operating models and prevent the risk or fraudulent activity, it is important that reforms to rules in this area are carefully formulated to ensure simplicity, reduce complexity and to not stifle innovation in this area. The Commission might consider the following approach: • Clarify and harmonise the application of existing rules to the platform economy. • Continue to explore the range of potential roles for platforms in addressing relevant VAT issues and review the implementation of deemed supplier regimes from those already in operation (e.g. Canada and India).

…and review the implementation of deemed supplier regimes from those already in operation (e.g. Canada and India). 3 of 24 • As far as possible, follow international best practice (e.g. see the 2021 OECD’s report ‘The Impact of the Growth of the Sharing and Gig Economy on VAT/GST Policy and Administration’) and globally consistent solutions for any reform of VAT rules and information reporting rules. • Revisit and consolidate data obligations to limit reporting and record keeping requirements to what is strictly necessary to calculate the final VAT or tax liability, and implement more efficient and effective means of sharing information internally at a tax authority level.

…liability, and implement more efficient and effective means of sharing information internally at a tax authority level. • Allow platforms and largescale VAT-registered accommodation providers the ability (under an opt-out rule) for the underlying supplier to account for the VAT if this is easier and more efficient from a systems point of view. This is the position in the recently passed law in New Zealand (with a start date 1 April 2024). Additional comments on the proposals with respect to these aims and concerns are provided in Appendix 2. 3. Single VAT registration in the EU and Import One Stop Shop (IOSS) Changes and improvements of the EU VAT Directive to ease the compliance burden and make the VAT system more transparent and accessible are welcome and necessary.

…to ease the compliance burden and make the VAT system more transparent and accessible are welcome and necessary. Overall, the changes within the third pillar (single VAT registration (SVR), extension of the special schemes OSS and IOSS ) are from our perspective seen as positive. Additional comments are provided in Appendix 3. Concluding comment and PwC contacts For any clarification on this response, please do not hesitate to contact me or one of the persons listed below. We look forward to discussing any questions you may have and we welcome the opportunity to contribute further to the discussion. Yours sincerely Stef van Weeghel, Global Tax Policy Leader [email protected] T: +31 (0) 887 926 763 4 of 24 PwC IL is registered under number 60402754518-05 in the EU Transparency Register.

+31 (0) 887 926 763 4 of 24 PwC IL is registered under number 60402754518-05 in the EU Transparency Register. Additional Contacts: Edwin Visser [email protected] Will Morris [email protected] Eugen Trombitas [email protected] Daniel Anghel [email protected] Sandra Zolch [email protected] Christoph Zenner [email protected] Sara Lörenskog [email protected] Ellen Cortvriend [email protected] Adina Vizoli [email protected] Phil Greenfield [email protected] Nicole Stumm [email protected] Claire De Lepeleire [email protected] Bart van Osch [email protected] 5 of 24 Appendix 1 - DRRs Introduction Our detailed comments to the proposed texts • E-invoicing will be the general rule for the issuance of invoices: Articles 217, 218 and 232 Definition of an electronic invoice According to the proposed text, the definition of…

…invoicing in public procurement, which regulates electronic invoicing in business-to-government (B2G) transactions. There is no doubt that the use of structured, standardised data is a precondition for interoperability and automation – and, with that, a key condition for tax administrations to receive high-quality data via digital reporting. The effort needed to shift to a 100% structured invoice process (in an EU market that still is very much concentrated around paper and PDF invoicing), should however not be underestimated, and requires a carefully thought out approach that takes into account all possible business use cases. It should be carefully considered whether the developed standard for B2G transactions will or can be all-encompassing, to also serve for all different types of B2B transactions.

…for B2G transactions will or can be all-encompassing, to also serve for all different types of B2B transactions. Where relevant, it should be further adapted to be able to support such B2B scenarios as much as possible. Furthermore, the Commission should consider the continued need to include data (for specific business use cases) that cannot be easily standardised or automated. Interoperability requirements In order to truly meet the requirements around interoperability of the future model, it would be beneficial for the Commission to, alongside the alignment around the European Standard for E- invoicing (EN16931), also define the foundations of an eDelivery or exchange model that details the process of exchanging invoices between taxpayers.

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__________________________________________________________ PricewaterhouseCoopers International Limited 1 Embankment Place London WC2N 6RH T: +44 (0)20 7583 5000 / F: +44 (0)20 7822 4652 PricewaterhouseCoopers International Limited is registered in England number 3590073. Registered Office: 1 Embankment Place, London WC2N 6RH. 1 Attn Mr. Gerassimos Thomas Director General DG TAXUD European Commission 1049 Bruxelles Belgium 11 September 2024 Dear Mr. Thomas, Subject: PwC response to the European Commission’s request for evaluation of the Anti-tax Avoidance Directive (ATAD) PwC International Ltd (PwC), on behalf of the PwC network, welcomes the opportunity to respond to the request for feedback on the ATAD by way of this letter.

…of the PwC network, welcomes the opportunity to respond to the request for feedback on the ATAD by way of this letter. The ATAD has been an important and transformative Directive, ensuring that all EU Member States effectively implement key actions proposed under the OECD’s Base Erosion and Profit Shifting (‘BEPS’) package. Since 2017, the Member States have been implementing the various measures such that all five measures are now fully implemented.1 We note that this current evaluation of ATAD follows on from the interim review delivered in August 2020 which provided a “state of play” of transposition for the most part and did not consider reverse hybrid mismatch arrangements at that time.

…of play” of transposition for the most part and did not consider reverse hybrid mismatch arrangements at that time. Now is an opportune time to more comprehensively review the ATAD rules as sufficient time has passed since their introduction to assess how the rules are applying in practice and whether 1 PwC has analysed the local implementation of ATAD in this document. Ref. Ares(2024)6448574 - 11/09/2024 2 they are achieving their original objectives. Additionally, considering the European Commission's stated ambition to reduce the burdens on business associated with reporting and compliance by 25%2, it is crucial to review the rules in tandem with subsequent and future corporate tax changes, some of which overlap with the objectives and the operation of ATAD.

…with subsequent and future corporate tax changes, some of which overlap with the objectives and the operation of ATAD. Consideration of subsequent and future legislation • Three recent reports have concluded that fragmentation of tax rules hampers the internal market and competitive position of the EU3. It is critical to achieving the broader objectives of competitiveness and sustainable prosperity that the EU Commission ensures the corporate tax offering is fit for purpose and not unduly restrictive from the perspective of potential investors. • Since ATAD was agreed, three updates have been made to the Directive on Administrative Co-operation (DAC6, DAC7 and DAC8), the Foreign Subsidies Regulation (‘FSR’), the Pillar Two Directive, the Corporate Sustainability Reporting Directive (‘CSRD’), and public country-by-country reporting (‘pCBCR’).

…the Corporate Sustainability Reporting Directive (‘CSRD’), and public country-by-country reporting (‘pCBCR’). • Further extensions to the DAC are expected, agreement on the FASTER proposal (which is now awaiting an updated opinion from the European Parliament), and possible agreement on the transfer pricing, HoT and BEFIT proposals (however, agreement on these measures does not seem imminent). At an OECD level, the outcomes of the negotiations on Pillar One Amount A and Amount B, the Subject to Tax Rule, and other changes are awaited. We are also conscious of direct and indirect domestic tax changes, such as Digital Services Taxes in the EU Member States (currently subject to a standstill and rollback agreement subject to the outcome of the Pillar One negotiations) and increasingly complex customs requirements.

…agreement subject to the outcome of the Pillar One negotiations) and increasingly complex customs requirements. • For the most part, these new or proposed changes have been reactions to tax avoidance concerns. Before additional measures are introduced, however, especially given the ambition of the Commission noted above to reduce the burdens of compliance rather than increasing them, we would welcome more monitoring and transparency concerning 2 “Reducing burdens and rationalising reporting requirements”, 17 October 2023, link available here, and “Long-term competitiveness of the EU: looking beyond 2030”, 16 March 2023, link available here. 3 “Much more than a market [...] Empowering the Single Market to deliver a sustainable future and prosperity for all EU Citizens”, report of Enrico Letta, published April 2024, available via this link.

…future and prosperity for all EU Citizens”, report of Enrico Letta, published April 2024, available via this link. DG TAXUD “Annual Report on Taxation 2024”, available via this link. “Removal of taxation-based obstacles and distortions in the Single Market in order to encourage cross border investment”, Jost Heckemeyer, 2022, available via this link. 3 the effectiveness, also quantitatively, of the implemented Directive measures based on a thorough review of the operation of ATAD at Member State level. Simplifying corporate tax in the EU • The various new Directives and Regulatory measures mentioned have resulted in an environment in which Member States have been transposing EU Directives into domestic legislation, or supporting the directly applicable EU Regulations, for almost a decade.

EU Directives into domestic legislation, or supporting the directly applicable EU Regulations, for almost a decade. • Businesses are voicing concerns that the business tax systems have become unduly burdensome and complex. As the global business tax system responds to BEPS, certainty of regime and simplicity of rule operation have become increasingly attractive to investors. We suggest that the EU considers simplifying the overall business tax environment for entities operating in the EU to ensure Member States can compete for global and domestic investment into the future. • We welcome the European Commission’s objective to work towards simplification and “decluttering” of the rules.

• We welcome the European Commission’s objective to work towards simplification and “decluttering” of the rules. There are certain overlaps in the policy objectives and expected outcomes of measures contained in some Directives, for example, the Controlled Foreign Company rule (‘CFC rule’) is mirrored largely in the collection of Pillar Two top-up taxes under the Income Inclusion Rule (IIR). Applying both sets of rules simultaneously is burdensome on taxpayers, particularly considering the outcomes under the CFC rule are replicated largely under the IIR. • Another example of where the Pillar Two GloBE rules and the ATAD overlap is via the interest limitation rules introduced via Article 4 of the ATAD, and the intra-group financing arrangements provisions in Article 16(8) of Pillar Two.

…via Article 4 of the ATAD, and the intra-group financing arrangements provisions in Article 16(8) of Pillar Two. While the mechanics of both rules are different, the outcome under both rules is that interest expense deductions may be restricted. The complexity from having these two rules becomes clear when you consider that the taxpayer first operates the interest limitation rule under ATAD, then layers on the intra-group financing arrangement adjustment when determining their jurisdictional GloBE top-up tax. It is also highly likely that the taxpayer needs to consider any domestic restrictions on interest deductibility in addition to these two tests. • We would welcome an analysis concerning if, and to what extent, we need all of the ATAD measures, now that Pillar Two is close to being fully implemented by the EU Member States.

…we need all of the ATAD measures, now that Pillar Two is close to being fully implemented by the EU Member States. 4 Further alignment should be considered • While most of the ATAD measures have been implemented in a broadly similar fashion (GAAR and anti-hybrid rules), other measures included policy choices, exclusions, and options for the Member States to adopt or disregard. There is a policy benefit to allowing a level of flexibility for tax administrations and taxpayers to reflect the specificities of each Member State’s individual tax system. However, a consequence is that these benefits come with an added compliance cost for businesses to manage the 27 different sets of rules and systems within the Single Market. There are merits to exploring to what extent more could be done to further align the ATAD outcome and to avoid fragmentation of the internal market.

…to what extent more could be done to further align the ATAD outcome and to avoid fragmentation of the internal market. If you would like to discuss any points that we have raised in this letter, please do not hesitate to contact me or any of the individuals set out below. Yours sincerely, William Morris Global Tax Policy Leader [email protected] T: +1 202 213 2372 PwC IL is registered under number 60402754518-05 in the EU Transparency Register 5 PwC Contacts Name Email Address Edwin Visser (Tax Policy) [email protected] Phil Greenfield (Tax Policy) [email protected] Chloe Fox (Tax Policy) [email protected]

originalus šaltinis (PDF) ↗

_____________________________________________________________________________ PricewaterhouseCoopers International Limited 1 Embankment Place London WC2N 6RH T: +44 (0)20 7583 5000 / F: +44 (0)20 7822 4652 PricewaterhouseCoopers International Limited is registered in England number 3590073. Registered Office: 1 Embankment Place, London WC2N 6RH. Attn Mr Benjamin Angel DG TAXUD European Commission 1049 Bruxelles Belgium 2 June 2021 Dear Mr Angel European Commission: DAC - crypto-assets/e-money and enhancing compliance PwC International Ltd (PwC) welcomes the opportunity to share its views on the consultation document on strengthening rules on administrative cooperation and expanding the exchange of information for crypto-assets/e-money and on enhancing compliance.

…cooperation and expanding the exchange of information for crypto-assets/e-money and on enhancing compliance. As discussed with various governments and international organisations or supranationals, in the crypto-asset/e-money space, we have come across a number of the challenges in determining the appropriate tax treatment of crypto-assets and ensuring tax compliance in various jurisdictions. The various challenges and tax compliance issues are highlighted in our Annual Global Crypto Tax Report 2020 (2020 Report). The 2020 Report evaluated and reviewed the digital assets tax guidance globally and identified tax guidance gaps or where guidance may need to be refined and added.

…assets tax guidance globally and identified tax guidance gaps or where guidance may need to be refined and added. With a slightly different scope and adding a specific section on tax reporting, it complemented the OECD’s Taxing Virtual Currencies: An Overview of Tax Treatments and Emerging Tax Policy Issues which was published a couple of weeks later. The premise of the DAC8 consultation is that reporting is necessary for fair and appropriate taxation where information asymmetries exist with regard to the taxation of relevant variables. This must be balanced with the principle that reporting must never become an end in itself, and should only be legally obligatory where information Ref. Ares(2021)3695112 - 04/06/2021 2 of 7 asymmetries actually exist and must be eliminated in favour of fair and appropriate taxation.

- 04/06/2021 2 of 7 asymmetries actually exist and must be eliminated in favour of fair and appropriate taxation. Accordingly, any information reporting regime should be evaluated based on (1) the clarity of the information requested (is the data requested sufficiently differentiated to permit its direct use); (2) the necessity of its collection (requesting the least data required to fulfil the goal of the regime, and not soliciting additional information); and (3) its direct utility to the enforcement of the tax laws by the relevant tax authority. We consider that our most constructive contribution to the consultation is in the form of the following narrative, setting out our views and experience on the two areas on which feedback is sought. Crypto-assets and e-money A.

…setting out our views and experience on the two areas on which feedback is sought. Crypto-assets and e-money A. Perceived issues and approach • In our 2020 report, we note that the guidance that has been issued to date is often focused on how to apply existing tax laws or policies to transactions, situations and structures that are unique to digital assets — rather than passing new legislation. As a result, there are currently significant differences between jurisdictions on how crypto-assets and e-money are categorised for tax purposes and on the guidance available to market participants seeking to comply with their tax obligations. This can cause issues if, for example, certain tax treatments or concessions are only available to transactions in a defined asset class, but where digital assets do not meet that specific definition.

…only available to transactions in a defined asset class, but where digital assets do not meet that specific definition. Common tax base rules across the EU on digital assets or at least a recommendation to publish guidance could reduce this problem. • Much of the available legislation and guidance also lags a number of years behind the industry. For example, most of it focuses almost exclusively on payment tokens, such as Bitcoin. It deals with capital gains and VAT issues around the spending and exchange of such tokens, as well as the taxation of proof of work mining income. The result is that businesses that are pushing the boundaries of this technology to explore new business models — especially when it is cross- border — are often faced with significant tax uncertainty.

…explore new business models — especially when it is cross- border — are often faced with significant tax uncertainty. Consequently, they will have to go back to first principles to predict how policy makers and tax authorities are likely to react in three to four years’ time. This can be very challenging, especially for a start-up. The use of sustainable principles for taxing digital assets could mitigate the effect. 3 of 7 B. Goals for tax policy and information reporting • There is a real need for clarity on the legal framework itself, in order to assess the risks of non-compliance. The need for information reporting should be allied to overall tax policy in order to address the areas in which there are deficiencies.

…reporting should be allied to overall tax policy in order to address the areas in which there are deficiencies. • Having a reporting regime may also help tax morale in the context of improving voluntary compliance with the perception that all those involved in taxable transactions are being identified. • Further, the necessity of the information requested must be specifically assessed in the context of a distributed ledger, as well as the size of the transaction. o With assets on public distributed ledger technology (DLTs or blockchains), the transactions carried out are accessible to everyone, including tax authorities. There is no or limited information asymmetry between taxpayers, intermediaries and tax authorities in this respect. The data is completely transparent.

…asymmetry between taxpayers, intermediaries and tax authorities in this respect. The data is completely transparent. The only information regarding which there is an asymmetry in cases of public DLTs is the (tax) identity behind the corresponding wallet ID. There are therefore good reasons, not least the proportionality of public interventions and obligations to cooperate, to limit the reporting of tax obligations in cases of public DLTs to the communication of the wallet IDs belonging to them. o Further, a carve-out for those assets that pose limited tax risks (e.g., stablecoins) or that are only issued and transferred in a very limited setting (see further below) seems quite prudent.

…or that are only issued and transferred in a very limited setting (see further below) seems quite prudent. • Consistency of reporting regimes is also critical to limiting the burden of reporting, and ensuring any new reporting has a direct utility to addressing a gap in reporting without duplication with other regimes. o The OECD’s Working Party 10 (WP10) is currently defining the key design features of a new reporting framework for virtual assets, either pursuant to the CRS regime or under a comparable standalone third party reporting regime. o The day to day operations of most are highly automated and display the characteristics of digitally automated services.

The day to day operations of most are highly automated and display the characteristics of digitally automated services. They could therefore be impacted by digital service taxes or other digital levies or by the OECD proposals under Pillar One & Two (sometimes collectively referred to as BEPS 2.0) or the UN’s Article 12B treaty recommendations, many of would shift taxing rights away from the location where such services are delivered, to the location of the customer. 4 of 7 C. Clarity - Scope of crypto assets to be addressed: • The definitions of assets which are to be subject to reporting will need to be clear and, ideally, to cope with further development of the market in the near future (new coins, new business models, new technology, etc.).

…cope with further development of the market in the near future (new coins, new business models, new technology, etc.). Given the potential risks envisaged for which reporting is a potential aide there might, for example, be a case for limitation to financial assets or convertibles, ie assets that have a readily ascertainable market value by virtue of there being a sufficiently liquid market for them. D. Necessity of Collection - Use cases and exemptions • New use cases (such as many of the new Decentralised Finance – or ‘DeFi’ – applications) are constantly being introduced. With the pace of innovation, it may be more effective to establish various other criteria for determining the intermediaries that are required to be reporters and for the nature of the activities in relation to which they would have to report, as well as the specific assets/transactions as noted above.

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originalus šaltinis (PDF) ↗