Annexes to COM(2022)717 - Final evaluation of the Fiscalis 2020 programme - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2022)717 - Final evaluation of the Fiscalis 2020 programme. |
|---|---|
| document | COM(2022)717  |
| date | December 14, 2022 |
Fiscalis 2020 has created tangible outputs as a result of interconnected systems and consistent information exchange and helped officials in tax administrations to acquire skills and exchange experiences through a wide range of joint actions and training. It is likely that many of the programme’s actions and outputs would likely fade and be discontinued in the medium-term at least compared to the current scale and scope. The current networks between tax administrations built over the years would fade. As a result, the implementation of EU law would be less harmonious with more room for economic agents to exploit the lack of coordination across borders as ‘loopholes’ to avoid taxes or to commit fraud. Indeed, tax fraud challenges cannot be tackled if Member States do not look beyond the borders of their administrative territories or cooperate intensively with counterparts.
With increasing digitalisation, globalisation and movement of workers, the implementation of EU tax law and the fight against fraud, avoidance and aggressive tax planning will be increasingly important and as a result the programme’s added value is also likely to continue increasing.
5. Relevance of the Programme
Globalisation and digitalisation combined create new opportunities and challenges to tax systems’ ability to collect tax revenue. They generate new ways of working (hybrid and remote work) and conducting business (without physical presence) which are not fully in sync with the way tax systems are still designed and tax authorities conduct their activities. They can also create potential for tax avoidance or evasion if tax administrations and systems do not keep up with change.
To face such challenges, a range of tax-related legislative changes were already adopted during the 2014-2020 period and Fiscalis 2020 actions closely supported the implementation of these initiatives. For instance, the 2015 VAT place of supply rule changes were accompanied by the introduction of the so-called MOSS system to facilitate cross-border trade in digital services. The Directives on Administrative Cooperation were introduced to facilitate the automatic exchange of information between tax administrations and to ensure the fair payment of taxes for taxpayers (individual or entities) who generate income in cross-border activities. Preparatory work was done to introduce IT support to the implementation of the e-commerce directive, which became operational on 1 July 2021.
The trend is there to stay, and authorities and economic operators will need to keep up with the increasingly digitalised, globalised world. This emphasises the need to reinforce tax administration cooperation and national authorities’ administrative capacities and hence the relevance of the programme to support Member States in the digitalisation and modernisation of procedures. Given its past success, future Fiscalis programmes are found to remain relevant to facilitate Member States’ exchange of information, cooperation and coordination via IT systems, joint actions and training and as such contribute to the effective and efficient functioning of the internal market in this context.
When looking at relevance, the evaluation looked at the needs of national tax administrations and economic operators. The final evaluation showed that the programme continues to be both relevant and necessary. Indeed, Fiscalis 2020 was deemed highly relevant to addresses tax administrations’ major challenges and meet their needs. The IT infrastructure and systems were reported to be highly relevant for tax officials’ daily work, as they are the main communication platforms through which Member States can exchange relevant data to fight tax fraud and evasion and implement EU law. This in turn fosters mutual assistance and coordination. Training and joint actions are also considered relevant to enhance administrative capacity such as knowledge building and networking. Through the exchange of information, good practices and guidelines, Fiscalis supports policymaking and the more equal and predictable application of EU law and the fight against tax fraud, evasion and aggressive tax planning. A level playing field and fair competition is key for economic operators to perform their activities. Moreover, excessive administrative burden and tax compliance costs can prevent some businesses from carrying out economic activities, particularly across borders. Fiscalis IT systems were deemed especially relevant for economic operators, simplifying compliance by making information easily available or for example alleviating the administrative burden on companies providing telecommunications, broadcasting and electronic services by avoiding filing VAT returns in each country where services are supplied (and increasing tax compliance).
Some tax authorities suggested that Fiscalis could support the creation of a database on Member States’ legislative developments in the tax field, covering emerging developments affecting taxation such as virtual currencies for instance. Fiscalis coordinators in candidate countries pointed out their limited capacity to benefit fully from Fiscalis-funded actions due to its EU-oriented nature. This adds to the fact that these countries do not have access to all IT systems, which affects their ability to take part in related training components.
6. Conclusions and lessons learnt
The evaluation showed that the programme has been effective in achieving its objectives of enabling secure exchange of information, supporting administrative cooperation and enhancing participating countries administrative capacity. In turn, it also supported the implementation of EU tax legislation to fight tax fraud, tax evasion and aggressive tax planning.
Fiscalis 2020 contributed to enhancing cross-country cooperation and tax authorities’ administrative capacity through the development and maintenance of EU IT infrastructure and systems, joint actions and common training activities. Fiscalis contributed to more harmonised approaches and simplified procedures, lowering administrative burdens and reducing compliance cost for taxpayers.
Through the IT infrastructure and systems it helped develop and maintain, Fiscalis improved the information available and secured information exchanges. By replacing manual checks and making use of advanced data-analytics and by allowing easier cross-country checks, it enabled a better identification of potential fraud cases, in a more efficient way. It may also have had a deterrence effect, increasing compliance and preventing tax fraud, evasion and aggressive tax planning. While difficult to establish causality, the evaluation study showed that several of the key indicators on tax fraud, tax evasion and aggressive tax planning show signs of improvement during the duration of the programme.
Evidence assessed by the external evaluator indicated that joint actions and training fostered tax authorities’ cooperation and provided space to exchange ideas among counterparts if a specific need was identified. They created networks for participating tax authorities (including informal networks beyond the programme events), enabling further coordination and knowledge sharing, fostering mutual learning and leading in some instances to cross-country cooperation in implementing tax reforms. Information sharing and knowledge transfer enabled by the programme has contributed to a better and more common understanding of legislation and therefore its more coherent implementation. In other words, the Fiscalis programme provides a framework within which to develop cooperation activities (joint actions) with participating authorities in many instances strongly responsible for organising the various aspects of a joint action.
From an efficiency perspective, and despite the difficulties in monetising benefits and establishing causality, the resources invested into Fiscalis 2020 and its components were deemed worthwhile considering the achieved results. In other words, the evaluation concluded that the programme had provided value for the EU and national tax authorities at a reasonable cost. Fiscalis 2020 was aligned and coherent to the Commission overall political objectives, especially to the Europe 2020 strategy. It flexibly adapted to changing priorities and new legislation, fulfilling its role as a funding programme that supports the implementation of EU law on taxation.
The evaluation considered that Fiscalis will likely continue to be a relevant tool at EU level to achieve the goals of supporting the implementation of EU tax legislation and the fight against tax fraud, tax evasion and aggressive tax planning in a world that is changing due to ageing, digitalisation and globalisation, amongst others, and therefore posing challenges to tax systems and administrations. Indeed, Fiscalis remains a relevant instrument to fund the development, implementation and operation of IT infrastructure and systems in the field of taxation, exploring economies of scale. They are resource intensive and it would be difficult for all countries to have the same scope and scale provided by the EU programme. Fiscalis also has been shown to be useful to allow for coordination and mutual learning across countries. IT systems, joint actions and training activities each play a role, in a complementary way, in the achievement of Fiscalis objectives. Fiscalis components are mutually reinforcing. The evaluation showed wide consensus among key stakeholders that the Fiscalis 2020 was necessary, relevant and corresponded to key actors’ needs. The design of the programme has therefore been deemed to be fit-for-purpose and should be maintained.
Nevertheless, the evaluation also pointed to some areas where improvements could be made. The findings indicate that the IT systems assessed in the study are generating benefits which outweigh the costs, in terms of simplification, potential fraud detection and compliance with taxation law. However, the evidence on costs and benefits is weak, and it could be worthwhile for the Commission and Member States to explore ways of better measuring the costs and benefits of the investments made. More comprehensive data on costs (investments in IT systems) and benefits (tax revenue collected, simplification) could feed into further prioritisation and decision making. It should be noted as well that most of the costs borne by the Fiscalis programme in the field of IT consist mainly in interconnecting 27 heterogeneous national IT systems via exchanges of messages instead of developing central solutions based on data sharing. This architectural decision follows the agreed legal basis of the corresponding Taxation European Information Systems. However, it can lead to higher costs at EU level while limiting the capability of data processing with a possible impact on the cost / benefits ratio.
Moreover, the evaluation reports that non-EU countries felt that they should be able to participate in a wider set of activities as they are very relevant and appropriate, thus making their financial investments even more worthwhile. Note that the Commission services have already made moves to address this in the new Fiscalis 2021-2027, by ensuring that invitations are sent to non-EU participating countries, unless otherwise justified.
In addition, while Fiscalis 2020 was deemed coherent and consistent with EU priorities and appropriately complementing other funding programmes such as Customs 2020 and the Structural Reform Support Programme (now Technical Support Instrument), there is scope to improve synergies with Hercule III. The coordination within the Commission was deemed good but the evaluation emphasised the importance to continue to explore ways to better coordinate with other services in view of a fast-changing world.
The evaluation also showed that work continues in terms of implementing the recommendations from the mid-term evaluation and for the future. Following the mid-term evaluation, the Commission set up an internal action plan with 13 action areas to address the 13 recommendations, which included 48 sub-actions. In March 2022, the vast majority (75%+) of the actions have been completed and several are ongoing. In particular, ‘Monitoring and reporting’ and ‘Communication’ are the two main areas where work is still ongoing. The Commission acknowledges and endeavours to address them under the implementation of the Fiscalis programme 2021-2027 or under the next Multiannual Financial Framework. The Commission also endeavours to continuously improve and adjust the Programme to new realities as relevant beyond the recommendations included in this evaluation and notably in view of the future mid-term evaluation.
(1) OJ L 347, 20.12.2013, p. 25
(2) The Fiscalis 2020 programme was built on predecessor programmes. The first programme was called Matthaeus-Tax, started in October 1993 and ran until end-December 1995. Rebranded Fiscalis, there have now been four Fiscalis programmes, including the one evaluated here: the first Fiscalis programme (1998-2002); the second Fiscalis programme (2003-2007); the third Fiscalis programme (2008-2013) and the fourth Fiscalis programme (2014-2020) or Fiscalis 2020 evaluated here. Regulation (EU) 2021/847 of the European Parliament and of the Council of 20 May 2021 establishing the ‘Fiscalis’ programme for cooperation in the field of taxation from 2021 to 2027 and repeals Regulation (EU) No 1286/2013.
(3) Fiscalis 2020 mid-term evaluation SWD (europa.eu)
(4) A number of the 2020 Fiscalis programme activities continue in 2021 as most grant agreements have been prolonged to 2021.
(5) The United Kingdom withdrew from the EU and became a third country as of 1 February 2020. It was therefore considered a participating EU country for most of the programme duration. In total, 35 countries fell within the Fiscalis 2020 framework: the 27 EU Member States plus the UK while it was an EU Member State and 7 candidate and potential candidate countries.
(6) For example, 14,000 messages in 2020 vs. 12,800 messages in 2017 for DAC1 related systems; 29,700 messages in 2020 vs. only 4,600 in 2017 for DAC2 systems; 992,292 messages in 2020 vs. 689,839 messages in 2017 for the MOSS system.
(7) Note that the funding relates to the collaborative aspect of the joint actions i.e. funding allows for the action to take place if in the remit of the programme, but in many instances the national authorities are largely or fully responsible for organising the action. The Commission may act as the initiator of or participate in for example Fiscalis Project Groups, Workshops and Seminars while with MLCs, there is no Commission participation in line with the provisions in the relevant legal basis of the MLC.
(8) Communication from the Commission to the European Parliament and the Council an Action Plan for fair and simple Taxation Supporting the Recovery Strategy: https://ec.europa.eu/taxation_customs/sites/default/files/2020_tax_package_tax_action_plan_en.pdf
(9) DG TAXUD eLearning data