What changed
The adopted text removes a paragraph on regulatory arbitrage and profit shifting, and rewrites another to attribute fragmentation to the financial crisis and sector-specific taxes. #4#5 It also drops specific VAT reform options, adding instead a requirement to safeguard consumers and ensure fair contributions. #9 Other changes are formal or wording: corrected typos, removed footnote numbers, and rephrased sentences without altering substance. #1#2#3#6
3 changes of substance, plus 5 formaland2 wording-only. Each change below carries a one-line ✦ note from the same model. Written from the two texts only — read the highlighted passages before relying on it.
The changes to the text itself, in document order. Cover page, citations (“having regard to …”), standard resolution paragraphs and punctuation-only edits are left out — they are in “Show every difference”.
Change #4 Substance
Rewrites the paragraph to attribute fragmentation to the financial crisis and sector-specific taxes, rather than the VAT exemption, and adds a reference to the SIU.
1. Notes that the EU-wide VAT exemption for financial services has resulted in a VAT policy gap; highlights that infollowing the absence of VAT revenues fromgreat financial services,crisis, Member States have introduced 91 sector-specific taxes to tax the financial sector and mitigate these revenue losses,, resulting in a highly fragmented tax landscape; notes that this fragmented tax landscape generates additional operational and administrative costs and increases structural barriers to the cross-border expansion of financial services providers, thus weakening the EU’s financial sector and its investment capacity and undermining the objectives of the SIU and the Banking Union;
Change #5 Substance
Deletes a paragraph on regulatory arbitrage and profit shifting from fragmented tax rules.
2. Highlights that fragmented tax rules across Member States and the high mobility of the financial sector’s tax base create significant opportunities for regulatory arbitrage and capital and profit shifting, hinder cross-border activities of financial institutions and reduce the efficiency and resilience of the EU’s banking and capital markets;
Change #9 Substance
Drops the specific policy options for VAT reform and adds a requirement to safeguard consumers and ensure fair contributions.
27.26. Calls on the Commission to review the impacts of the current VAT regime on the financial sector and to publicly share this analysis; calls on the Commission to consider policy options to address identified distortive impacts, like more effective VAT grouping and options for reforming the VAT exemption, with a view to bringing forward a proposal to reform the VAT rules for the financial sector;impacts; emphasises that any such reform should reduce irrecoverable VAT and the fragmented application of rules, improve legal certainty and tax fairness, and strengthen the competitiveness of EU financial markets, while safeguarding financial stability and minimising regulatory arbitrage between Member States; emphasises that any such reform must also safeguard consumers and continue to ensure that the financial sector makes a fair contribution to public revenues;