Recommendations to Fight Tax Avoidance in EU and New Solidarity Tax to Inbound Expatriates in Spain – The Latest News

European Union

European Parliament Committee Adopts Recommendations to Fight Tax Avoidance, Calls for Minimum Taxation of Capital Gains and Assessment of Tax Regimes for Attraction of Private Wealth

The ECON Committee of the European Parliament passed a report on March 21st, 2023, consisting of a series of suggestions that stress the need to sustain efforts towards enacting laws that prevent tax evasion and money laundering, ensure proper implementation and enforcement of existing measures, and introduce crucial new reforms.

Niels Fuglsang, the author of the report, has identified the taxation of capital gains and the implementation of measures to discourage detrimental tax practices as the key takeaways. He believes that these measures are crucial for attracting foreign income, wealth, and assets, and for achieving greater tax equity. Fuglsang regards the report as a significant milestone as it is the first time that such a definitive call has been made to the Commission and Member States to take action in these domains.

The report highlights the issue of taxing capital gains and urges the Commission to evaluate the feasibility of imposing a minimum tax on capital gains within the EU.

The report also recognizes the potentially negative impact of tax systems designed to attract digital nomads and foreign income and wealth, and recommends that these systems be evaluated for their potential harm.

The report includes several additional proposals, such as:

• Protect journalists and whistleblowers;
• Regulate intermediaries more effectively;
• Enhance reporting and sharing of information, especially in relation to beneficial ownership;
• Address practices that can negatively impact tax collection, such as the use of cryptoassets, golden passports, or specific real estate transactions;
• Explore the possibility of implementing a variation of the United Kingdom’s system for investigating unexplained wealth;
• Reform the Code of Conduct on Business Taxation.

The report’s recommendations are based on the insights gleaned from the Pandora Papers and other comparable data breaches, and are a result of a number of studies and hearings that were commissioned and organized by the Subcommittee on Tax Matters of the European Parliament (FISC Subcommittee).

The report was approved by 46 votes in favor and 7 abstentions and will be made available in a consolidated form in the coming days. The plenary session of the European Parliament is slated to vote on the report on May 8, 2023, although this date is subject to change.

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Spain

Tax Authorities Confirm Applicability of New Solidarity Tax to Inbound Expatriates

The General Directorate of Taxes has released a decision to clarify that individuals who fall under the Special Regime for Inbound Expatriates (commonly referred to as the “Beckham Law”) are subject to taxation under the solidarity wealth tax for high-net-worth individuals solely for their assets located in Spain that are enforceable under Spanish law.

On December 28, 2022, Law 38/2022 was enacted, introducing the solidarity wealth tax for high-net-worth individuals.

Although not yet published, Ruling V0424-23 was issued on February 24, 2023. Any updates regarding the ruling will be reported as they become available.

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