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Taxation and Customs 2023

2023 Annual Report on monitoring the application of EU law - Infringement cases by policy area

Infringement cases open at year-end 2019 - 2023

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By clicking on the multi-level chart, you can consult, for 2023, the number of infringement cases open at the year-end per policy sector and per type of infringement.

Compliance promotion activities in 2023

Guidelines on how to implement EU law

In 2023, in the area of indirect taxation, the Commission published the following guidelines:

In 2023, in the area of customs, the Commission published the following guidance documents:

Meetings with Member States

VAT

In the area of VAT, the VAT Committee - an advisory instance composed of representatives of Member States and of the Commission - agreed in 2023:

  • Guidelines on the interaction of the new special EU VAT rules for small and medium-sized enterprises with the rules on intra-Community acquisitions and fixed establishments. From 1 January 2025, Member States will have to implement the special rules as modernised by the SMEs Directive (Directive 2020/285/EU).
  • Guidelines on the VAT treatment of services by e-wallets providers, by marketplaces in relation to the collection of funds and by Buy-Now-Pay-Later providers making payments to merchants, as well as on crypto-assets and transactions performed on and with crypto-assets.
  • Following the implementation of the Vouchers Directive (Directive 2016/1065/EU), Guidelines on the nature and use of vouchers.
  • Guidelines following-up on the Court of Justice judgment on VAT treatment of fuel cards.
  • To promote the correct implementation of the SMEs Directive (Directive 2020/285/EU), the Commission also organised in 2023 a meeting of the Group on the Future of VAT to present the first draft of the related Explanatory Notes and to give Member States the opportunity to comment on and suggest topics to be covered therein.
  • In 2023, the EMCS Computerisation Working Party held a physical meeting and many online sessions to discuss the deployment on 13 February 2024 of Phase 4.1 of the Excise Movement and Control System (EMCS). This development aims at aligning excise and customs procedures to facilitate the movement of excise goods. The Commission also held an important number of bilateral meetings with Member States to discuss their deployment status and potential issues.
  • The Recovery Expert Group held meetings in 2023 to discuss the correct implementation of EU law in the field of tax recovery assistance, including issues related to the transfer of VAT refunds and of erroneously paid VAT.
  • Under 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, a third meeting of the Joint Committee was held to:
    • take stock of the administrative cooperation and recovery assistance in 2021 and 2022;
    • present the state of play on the amendment of the Agreement which will provide Member States with new cooperation tools with Norway, similar to the ones introduced by an amendment to the Regulation on VAT administrative cooperation (Regulation 2018/1541/EU); and
    • present new initiatives, such as the changes to the Regulation on VAT administrative cooperation (Regulation 904/2010/EU) and VAT in the digital age.
  • Under the Protocol on administrative cooperation and combating fraud in the field of value added tax and on mutual assistance for the recovery of claims relating to taxes and duties to the Trade and Cooperation Agreement between the European Union and the European Atomic Energy Community, of the one part, and the United Kingdom of Great Britain and Northern Ireland, of the other part (VAT Protocol), a third meeting of the Trade Specialised Committee was held to:
    • take stock of the administrative cooperation and recovery assistance in the first two quarters of 2023; and
    • adopt the decisions for the full implementation of the VAT Protocol.

Direct taxation

In the area of direct taxation, the Commission regularly and often extensively engages with Member States to prepare the national transposition process of EU legislation. This active support continues even after the transposition deadline in order to ensure a common approach and interpretation of legal provisions, to the benefit of affected citizens and businesses and to support legal coherence across the single market.

In 2023, specifically, the Commission extensively engaged with Member States following the adoption of the Directive on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union - the Pillar Two Directive (Directive 2022/2523/EU) - in preparatory work to ensure the timely and correct implementation of the Directive by 31 December 2023. The Commission organised a series of meetings with Member States, in particular:

  • nine meetings of the expert group Working Party IV – Direct Taxes, all dedicated to interpretation and/or transposition of the Pillar Two Directive, in which the Commission clarified a number of Member States’ questions;
  • six coordination meetings where selected topics were discussed with Member States in view of possible common positions to be taken in the ongoing discussions on Pillar Two at the OECD level;
  • the outcome of this work led to the drafting and publication of Frequently Asked Questions.

Furthermore, following the adoption of the Directive on administrative cooperation in the field of taxation for income generated by sellers on digital platforms (DAC7), the Commission engaged with Member States in preparatory work to ensure the timely and correct transposition of the Directive by 31 December 2023. The Commission organised several meetings in the field of direct taxation on the issue of administrative cooperation in 2023, that included the following:

  • one meeting of the Working group on administrative cooperation in direct taxation and three in the Subgroup on Automatic Exchange of Information. In these meetings, the Commission discussed and agreed with Member States on an updated and improved bilateral feedback template for the purpose of Directive on administrative cooperation in the field of taxation.
  • in a dedicated subgroup to the Working group on administrative cooperation in direct taxation, the Commission discussed with Member States how to implement the new requirements concerning the content of exchanges under the Directive regarding mandatory automatic exchange of information in the field of taxation (DAC3). The subgroup drafted a template for the content and format of DAC3 information to be used by all Member States when informing other Member States of tax rulings and advance pricing agreements decided in accordance with national provisions but with cross-border relevance. The dedicated subgroup met once and presented the outcome at a meeting of the permanent Subgroup on Automatic Exchange of Information.
  • in the EU Advanced International Administrative Cooperation Community group, governed by FISCALIS, an EU cooperation programme that enables participating countries, their tax administrations, and their officials to work together in the fight against tax fraud, tax evasion and aggressive tax planning. Member States and the Commission agreed to a draft guidance for joint audits that are regulated in the sixth amendment to the Directive on administrative cooperation in the field of direct taxation (DAC7);
  • over the course of these and other bilateral meetings, the Commission replied to Member States’ many questions on the interpretation of provisions on the mandatory automatic exchange of information in the field of taxation regarding platform operators and prepared feedback in the form of Frequently Asked Questions that has been shared with Member States. This work also involved consultation of the OECD in many instances.

Lastly, to support the Member States in better enforcing the decisions and regime of EU sanctions against Russia and Belarus, the Commission established a Tax Enforcement Subgroup in the framework of the Freeze and Seize Taskforce. The Tax Enforcement Subgroup was intended to support a better coordination of the enforcement of Russian and Belarusian individuals and companies within the EU while also trying to overcome practical problems and hurdles faced. Its goal was to help Member states with the implementation of tax enforcement measures against sanctioned Russians and Belarusians individuals, companies, and their associate. This includes discussions and exchanges on issues such as tax audits, the exchange of information, screening of tax refunds and other measures, in order to uncover cases of tax fraud, evasion and avoidance. Four meetings were held in 2023; the work of the subgroup is expected to continue.

Customs

In the area of customs, the Commission organised a working group on the assessment of sanctions and infringements in Member States under the Union Customs Code. The working group was initiated in 2022 and finalised in 2023 with regular meetings and exchange of information between the Member States and the Commission on the system of penalties adopted by the Member States on the application of Article 42 of the Union Customs Code. The work of this group resulted in the creation of a database referencing all penalties adopted by the Member States and the drafting of a comprehensive report. The report was published beginning of 2023, accompanied by four Staff Working Documents (Part 1 - General comparative table, Part 2 – Country sheets – Austria - Belgium - Bulgaria - Croatia – Czech Republic - Cyprus - Denmark - Germany - Greece – Estonia, Part 3 – Country sheets - Finland - France - Hungary - Ireland - Italy - Latvia - Lithuania - Luxembourg - Malta – The Netherlands, Part 4 – Country sheets - Poland - Portugal - Romania - Slovakia - Slovenia – Spain – Sweden) of around 1 500 pages, a blue print of the situation of the systems of penalties in Member States.

The Commission chairs the customs expert group which meets on a very regular basis in different constellations depending on the topic. These expert groups in different fields of customs provide for mutual understanding between the Commission and Member States for the purpose of the implementation of existing Union legislation.

Package meetings

Package meetings are meetings between the Commission and a Member State to discuss implementation issues and infringement cases in a given policy area. They can be held before the Commission has detected a breach of EU law or concern existing EU Pilot or infringement cases of the Member State. Package meetings can be an efficient tool to deal with challenges a Member State may face in a policy area, across different acts of EU legislation. The Commission held the following package meetings with Member States in the policy area of taxation:

  • On indirect taxation, the Commission organised package meetings with Germany and Italy to discuss pending investigations, as well as bilateral meetings on targeted implementation issues with Ireland, France, and the Netherlands.
  • On direct taxation, the Commission organised package meetings with Belgium, Spain, France and Italy to discuss pending investigations and infringements. It also held numerous bilateral meetings with all Member States, in particular regarding implementation issues of the Directive on administrative cooperation in the field of taxation for join audits between Member States and Pillar Two Directive on the minimum rate of effective taxation.

Follow-up given to petitions

In 2023, the Commission handled 15 petitions related to alleged breaches of EU law in the area of taxation and customs. Most petitions concerned the area of indirect taxation.

The Commission assessed and decided not to pursue investigations concerning the following petitions alleging a breach of EU law:

  • The Commission did not pursue a petition on the refund by Romania of car taxes charged in breach of EU law (Petition 0013/2023), as it has not identified any incompatibility with EU law.
  • The Commission did not pursue a petition aimed at widening the scope of the VAT exemption on the transportation of exported goods (Petition 0276/2022). The petitioner disagreed with the Commission’s and the VAT Committee’s interpretation of the preliminary ruling of the Court of Justice in the case Cartrans Spedition, C-495/17.

The Commission has pursued investigations on issues raised in the following petitions:

  • In relation to the application by Germany of the VAT exemption of hospital and medical care (Petition 0540/2019), the Commission followed-up with the national authorities on the implementation of the Court of Justice preliminary ruling in the case I (Exonération de TVA des prestations hospitalières), C-228/20.
  • Concerning the use in Italy of vehicles registered abroad, which is the subject of three joined petitions (Petition 1122/2018, Petition 1159/2018 and Petition 0907/2019), the Commission followed-up on the Court of Justice preliminary ruling Prefettura di Massa Carrara, C-274/20. Italy has amended its legislation in line with EU law.
  • The Commission pursued a petition on the allegedly wrong application by Denmark of rules on use of electrical vehicles registered in another Member State (Petition 0467/2023), as the issue is linked to a Commission’s ongoing investigation.
  • The Commission closed an infringement procedure linked to a petition on the reduced registration tax applied by Italy only to Italians living abroad who buy their first housing in Italy (Petition 0690/2019). Further to the national legislation being brought in line with EU law, the Commission withdrew the case before the Court of Justice.

In the field of direct taxation, the Commission followed up on a number of petitions:

  • Petition 0566/2013 and related petitions with the same subject matter (Petitions 0393/2013, 0478/2013, 0204/2021) concern Spanish legislation which obliges the reporting by Spanish resident taxpayers of assets and rights held abroad (‘Modelo 720’). The Court of Justice of the European Union (CJEU) ruled in case C-788/19, Commission vs Spain that Spain violated the free movement of capital (Articles 63 TFEU and 40 EEA) when imposing a disproportionate penalty regime for cases in which Spanish resident taxpayers failed to properly fulfil the information obligations set by Spain. Spain abolished the special penalty regime in the meantime and thereby solved the grievances brought forward by the petitioner. Consequently, the Commission closed the related infringement procedure.
  • The issue of Petition 0315/2018 concerns a heavier taxation for non-resident taxpayers in Portugal on capital gains derived from the transfer of real estate. This same issue was the subject of an infringement procedure handled by the Commission and was also addressed in a preliminary ruling by the Court of Justice of the European Union (CJEU) (Case C-388/19, MK v Tax Authority). The CJEU held that the relevant Portuguese tax legislation violated the free movement of capital (Article 63 TFEU). Portugal has in the meantime adopted a new law and has eliminated the violation. The Commission has thus closed the related infringement procedure.
  • The Commission followed-up on Petition 0982/2021 concerning a possible breach of the free movement of services (Article 56 TFEU) stemming from the difference in Belgian tax authorities’ access to information on financial products used by the Belgian residents (domestic financial and investment products) in comparison to similar products offered by service providers of other Member States. The tax authorities have automatic access to information concerning services provided by financial institutions from other Member States, while information on similar domestic products retained in the National Bank can only be accessed based on a specific, motivated request. The Commission started discussions with Belgium but also with other Member States to identify the national legal regimes in place for access to domestic financial products to decide on the most adequate course of action in the future.
  • The Commission handled Petition 0279/2023 containing a suggestion for the European Union to negotiate a framework treaty with the United States to increase the tax-free threshold of the US inheritance tax. It is for Member States to conclude such treaties. The Commission does not see any possibility of following-up on the suggestion of a multilateral agreement between the European Union and the United States on estate and inheritance tax.

Court of Justice rulings against Member States

  • Commission v The Netherlands (Capital retraite après transfert), C-360/22;
  • Commission v The Netherlands (Transfert de valeur de droits à pension), C-459/22;
  • Commission v United Kingdom (Marquage fiscal du gazole), C-692/20.

Important preliminary rulings

  • Cezam, C-418/22;
  • MOMTRADE RUSE, C-620/21;
  • OGL-Food Trade Lebensmittelvertrieb v Direktor na Teritorialna direktsia ‘Mitnitsa Plovdiv’ pri Agentsia ‘Mitnitsi’, C-770/21;
  • BA (Successions - Politique sociale de logement dans l’Union), C-670/21;
  • Stappert Deutschland, C-210/22;
  • X and Inspecteur van de Belastingdienst Douane, C-107/22;
  • Endesa Generación, C-833/21;
  • SA Manitou BF (Liberté d'établissement), C-407/22;
  • GE Infrastructure Hungary Holding (Rapprochement des législations), C-318/22;
  • Gmina O., C-612/21;
  • Gmina L., C-616/21;
  • Dyrektor Krajowej lnformacji Skarbowej, C-282/22;
  • Autoridade Tributária e Aduaneira (Plus-values sur cessions de parts), C-472/22;
  • Autoridade Tributária e Aduaneira (Imposition des revenus d’intérêts provenant d’obligations et de titres de créance), C-312/22;
  • CDIL, C-96/22;
  • Deco Proteste – Editores, C-505/22;
  • Administrația Județeană a Finanțelor Publice Brașov (Transfert du droit au remboursement), C-508/22;
  • Veronsaajien oikeudenvalvontayksikkö (Taxe sur les véhicules), C-676/21.

Outlook for 2024

In 2024, the Commission will continue important enforcement work in the area of taxation and customs.

In the area of customs, the Commission plans to:

  • regularly update the various guidance documents on the Union Customs Code, in cooperation with Member States, to help Member States implement it;
  • focus on issues with a significant financial impact for the Union Budget, or when it is considered that the EU exclusive competence in the customs field must be defended regarding the fundamental principles of customs law.

In the area of indirect taxation, the Commission plans to:

  • carry out the assessment of the full and correct transposition by Member States of the Central Electronic System of Payment information (CESOP) Directive (Directive 2020/284/EU);
  • continue monitoring the implementation of the revised common framework for excise products (Council Directive (EU) 2020/262) and the revised rules for excise duties on alcohol (Council Directive (EU) 2020/1151);
  • take enforcement actions, tackling the most serious breaches jeopardising the achievement of indirect tax policy objectives.

In the area of direct taxation, the Commission plans to:

  • assess the compliance of national measures with EU rules on the minimum rate of effective taxation of 15 % for multinational companies active in EU Member States, the Pillar Two Directive (Directive 2022/2523/EU), which take effect as of 1 January 2024;
  • assess the compliance of national measures with EU rules on the mandatory automatic exchange of information in the field of taxation regarding platform operators (Directive 2021/514/EU amending Directive 2011/16/EU on administrative cooperation in the field of taxation, or the DAC7), regarding the strengthened rules for joint audits between Member States, a provision of the Directive that takes effect as of 1 January 2024;
  • continue the assessment of national measures’ conformity with EU rules on exchange of tax information as concerns the Directives on:
    • mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements (Directive 2018/822/EU amending Directive 2011/16/EU on administrative cooperation in the field of taxation – DAC6) where certain issues remain outstanding;
    • mandatory automatic exchange of information in the field of taxation in relation to platform operators (Directive 2021/514/EU amending Directive 2011/16/EU) measures that were introduced as of 1 January 2023;
  • continue the assessment of the conformity of national rules against tax avoidance and practices that directly affect the functioning of the single market (Directive 2016/1164/EU) and regarding hybrid mismatches with non-EU countries (Directive 2017/952/EU) – i.e. measures implementing the Directive on rules against tax avoidance practices where certain cases remain outstanding;
  • focus on infringements in direct taxation with a strong impact on the single market and on competition.