2016 Annual Activity Report - European Commission · implement in a coherent and harmonised way...

2016

Annual Activity Report

DG TAXATION

AND

CUSTOMS UNION

Ref. Ares(2017)1727123 - 31/03/2017

taxud_aar_2016_final of 61

Table of Contents

THE DG IN BRIEF 3

EXECUTIVE SUMMARY 6

A) KEY RESULTS AND PROGRESS TOWARDS THE ACHIEVEMENT OF GENERAL AND SPECIFIC OBJECTIVES OF THE DG ............................. 6 B) KEY PERFORMANCE INDICATORS (KPIS) ......................................................................................................................... 8 C) KEY CONCLUSIONS ON FINANCIAL MANAGEMENT AND INTERNAL CONTROL (EXECUTIVE SUMMARY OF SECTION 2.1) ................... 14 D) INFORMATION TO THE COMMISSIONER(S) .................................................................................................................... 15

1. KEY RESULTS AND PROGRESS TOWARDS THE ACHIEVEMENT OF GENERAL AND SPECIFIC OBJECTIVES OF THE DG 16

2. ORGANISATIONAL MANAGEMENT AND INTERNAL CONTROL 32

2.1 FINANCIAL MANAGEMENT AND INTERNAL CONTROL ................................................................................................ 32 2.1.1 CONTROL RESULTS ........................................................................................................................................... 33 2.1.2 AUDIT OBSERVATIONS AND RECOMMENDATIONS.................................................................................................... 48 2.1.3 ASSESSMENT OF THE EFFECTIVENESS OF THE INTERNAL CONTROL SYSTEMS .................................................................. 54 2.1.4 CONCLUSIONS AS REGARDS ASSURANCE ................................................................................................................ 55 2.1.5 DECLARATION OF ASSURANCE ............................................................................................................................ 57

DECLARATION OF ASSURANCE 58

2.2 OTHER ORGANISATIONAL MANAGEMENT DIMENSIONS ............................................................................................ 59 2.2.1 HUMAN RESOURCE MANAGEMENT ...................................................................................................................... 60 2.2.2 BETTER REGULATION (ONLY FOR DGS MANAGING REGULATORY ACQUIS) .................................................................... 60 2.2.3 INFORMATION MANAGEMENT ASPECTS ................................................................................................................ 60 2.2.4 EXTERNAL COMMUNICATION ACTIVITIES ............................................................................................................... 60


THE DG IN BRIEF

The Directorate General Taxation and Customs Union's (TAXUD) mission is twofold: to

develop and implement tax policy across the EU and to develop and manage the Customs

Union.

EU Taxation Policy

The EU has a complementary role when it comes to taxation, a competence at the core

of national sovereignty. The power to introduce or remove taxes, of increasing and

reducing them but also of making sure they are actually collected and paid to the state

budget is in the hands of Member States. There is added value in having EU-wide

intervention when it comes to further improve the internal market, make taxes fairer

or helping Member States in tackling cross-border tax fraud, tax evasion and

avoidance. Often an EU-wide approach is the only way to avoid a series of individual

national approaches which rather than closing loopholes open up new ones because of

their uncoordinated nature.

National governments are broadly free to design their tax laws according to their national

preferences, provided they respect certain fundamental principles, such as non-

discrimination and respect for free movement in the internal market. EU tax policy aims

at establishing and respectively improving the common legal framework in the areas

of direct and indirect taxes. This common framework

should minimize the risk of tax-induced relocation of

economic activities while providing the tools for

administrative cooperation supporting revenue

collection for the EU and Member States' budgets and

fighting tax fraud. EU tax policy is a key element to

strengthen the internal market in which the co-existence

of 28 national tax systems may result in double taxation,

but also double non-taxation and distortions of competition.

The European Commission presents proposals for tax

legislation where it considers EU-wide action is needed for

the internal market to work better. It can also make

recommendations and issue policy guidance in specific

areas. Any European Union tax legislation and subsequent

changes thereto must be unanimously agreed by all EU

countries before entering into force.

Infringement policy aims to enforce a proper application of European tax legislation in

all Member States as well as to remove illegal distortions with negative impact on EU

citizens and business and to support efforts to eliminate tax obstacles to the proper

functioning of the internal market.

The Fiscalis 2020 funding programme has a key role by enhancing cooperation

between participating countries, their tax authorities and their officials to improve the

functioning of the taxation systems in the internal market.

In the framework of the European Semester, TAXUD has responsibility for the

economic analysis of national tax policies and preparing the country-specific

recommendations in the field of tax policy and supporting reforms to improve the

fairness and efficiency of national tax systems.

http://bookshop.europa.eu/en/taxation-pbNA0115038/?CatalogCategoryID=sciep2OwkgkAAAE.xjhtLxJz


EU Customs Policy

The Customs Union, a basic pillar of the European

Union, supports and protects the single market. The

Treaty on the Functioning of the EU (TFEU) provides

that the Customs Union is an exclusive competence

of the European Union built on the principles of free

movement of goods within the Union and a

common external tariff towards third countries. The treaty also emphasises the

importance of the promotion of trade in this context.

The common legislative framework adopted at the EU level is implemented by the 28

national customs administrations. As a result, close partnership with Member States

is crucial for the effective, efficient and uniform performance of the Customs Union. The

2016 Communication "EU Customs Union Governance" should give this partnership a new

boost.

The Union Customs Code, applicable from 1 May 2016 is key for a well-functioning and

performing Customs Union with full digitalisation of all customs procedures. The

Commission ensures through the Customs 2020 ("C2020") funding programme that

the customs administrations are interconnected and the Customs Union is equipped with

modern automated electronic systems.

The Commission is actively supporting Member States in implementing the

Customs Union by, for instance, managing on a day by day basis most of the EU

import quotas and keeping up to date all tariff-related information. The Commission

also supports Member States through guidance and assistance with interpretation of

legislation to implement customs rules. Together with Member States and trade

stakeholders, the Commission also develops examples and

models of best practice.

For the EU as a whole, external demand is a major source of

growth; in the next decade 90% of demand is expected to

come from outside Europe. In a period of slow economic

recovery and rebuilding of government finances, there is

increasing pressure to manage international trade

transactions efficiently, including for customs authorities

which are responsible for securing international supply

chains besides their traditional task of collecting revenues. As

such, customs authorities help legitimate EU business to be

competitive on the world markets. The OECD has estimated

that a comprehensive trade facilitation reform could cut trade

costs by up to 10% for OECD countries. On a global level, reducing trade costs by even

1% would increase worldwide income by € 30 billion. This represents a massive potential

to tap into and means that the efficiency of customs is pivotal.

Because of their presence at the EU external border, customs are also called upon to

implement in a coherent and harmonised way more than 60 pieces of non-customs

EU legislation relating, for example, to dual use, fire arms, intellectual property, public

health, consumer protection, transport, the environment and agriculture. Amongst other

things, work on the EU Single Window environment is aimed at helping Member States to

achieve this objective.

With the current focus on security and migration, Customs also has a key role in

supporting action at borders to ensure coherent policy action in relation to the

movement of people.

http://bookshop.europa.eu/en/customs-pbNA0114987/?CatalogCategoryID=sciep2OwkgkAAAE.xjhtLxJz

http://europa.eu/!tp87kY


The Commission represents EU customs policy at international level to promote good

EU practice, facilitate legitimate trade and secure the international supply chain. It

achieves this in particular by negotiating and implementing agreements and

arrangements with trading partners and by participating actively in international

standard-setting in multilateral fora and by implementing these standards in the

EU.

Cooperation with external partners

DG TAXUD works closely with several institutional stakeholders, especially other services

of the European Commission, the ECOFIN Council and increasingly the European

Parliament.

We engage regularly with international organisations like the World Customs

Organisation (WCO), the Organisation for Economic Co-operation and Development

(OECD) and the International Monetary Fund (IMF), and external partners such as the

European External Action Service (EEAS), Europol, Eurojust and the European network of

judicial authorities.

We interact regularly with businesses and civil society representatives through various

expert groups such as the VAT Expert Group, the VAT Forum, the Joint Transfer Pricing

Forum, the Platform for Good Tax Governance and the Trade Contact Group.

DG TAXUD reports to Pierre Moscovici, Commissioner for Economic and Financial Affairs,

Taxation and Customs and to Valdis Dombrovskis, Vice President for the Euro and Social

Dialogue.


EXECUTIVE SUMMARY

The Annual Activity Report is a management report of the Director-General of DG

Taxation and Customs Union to the College of Commissioners. Annual Activity Reports

are the main instrument of management accountability within the Commission and

constitutes the basis on which the College takes political responsibility for the decisions it

takes as well as for the coordinating, executive and management functions it exercises,

as laid down in the Treaties1.

a) Key results and progress towards the achievement of general and specific objectives of the DG

EU customs and tax policy plays a crucial role in delivering on the Commission

objective related to creating a deeper and fairer internal market.

In January 2016, the Commission presented the Anti-Tax Avoidance Package

(ATAP) calling on Member States to take a stronger and more coordinated stance

against companies that seek to avoid paying their fair share of tax. By June

2016, the member states reached agreement on the anti-tax avoidance directive,

which contains five anti-abuse measures which all Member States have to apply.

On 25 October, the Commission adopted the corporate tax reform package to

create a more modern and fairer business tax system, re-launching the Common

Consolidated Corporate Tax Base (CCCTB), which provides a single set of rules

for companies to calculate their taxable revenues in the EU, replacing the current

medley of different national systems.

On 7 April 2016 the Commission adopted a VAT Action Plan that sets out

actions to adapt the Value Added Tax (VAT) system to the digital economy and

the needs of SMEs and to tackle the VAT gap. It provides clear orientations

towards a robust single European VAT area in relation to the definitive VAT

system for cross-border supplies and proposes options for a modernised policy

on EU rules governing VAT rates. On 1 December, the Commission proposed

legislative proposals to improve the VAT environment for e-commerce

businesses in the EU. These proposals will allow consumers and companies, in

particular start-ups and SMEs, to buy and sell goods and services more easily

online. Unlocking e-commerce in Europe and the creation of a Digital Single

Market are among the top priorities of the Juncker Commission.

The European Commission adopted on 21 December its Communication setting

out a strategic vision for the governance of the Customs Union, stressing that

the customs administrations of Member States should work towards acting as

one single entity. The Union Customs Code (UCC) came into force on 1 May

2016 foreseeing digitalisation of all customs procedures by the end of 2020. The

Commission is coordinating the implementation of the UCC with Member States

1 Article 17(1) of the Treaty on European Union.


through the UCC Work Programme and the detailed IT project planning the Multi-

Annual Strategic Plan (MASP).

DG TAXUD transposed successfully the 2017 version of the worldwide

Harmonised System (HS) in the 2017 European Combined Nomenclature

(CN). Work continued in managing tariff classification issues and during the

year 58 legislative implementing measures were adopted by the Commission to

ensure uniform treatment across the EU.

The Fiscalis and Customs 2016 Annual Work Programmes, adopted in

January 2016, were the basis for all the activities (Joint actions, Training and

European information Systems) undertaken during this year.

TAXUD focused in 2016 on promoting customs efficiency and cooperation

between customs and other authorities. On 21 December, the Commission

adopted a package of measures to strengthen the EU's capacity to fight the

financing of terrorism and organised crime. One of its pillars is the proposal for a

new cash controls regulation that tightens cash controls on people entering or

leaving the EU with €10,000 or more in cash. On 19 July the Commission issued

the progress report on the implementation of the EU Strategy and Action Plan for

Customs Risk Management.

In 2016, on behalf of the EU and together with the customs administrations of

the Member States, the Commission ensured the implementation of the

customs-related provisions of some 50 customs or free trade agreements.


b) Key Performance Indicators (KPIs)

KPI 1: Tax Action Plans Implementation Indicator

This indicator monitors the policy work carried out by the DG, measuring if and when DG

TAXUD delivers on key actions laid down in the action plans. The indicator provides a

percentage of the actions implemented over time. In 2016 5 actions were closed (green

bars) (15%), while 15 actions were newly started (bars starting in 2016) (50%).

KPI 2: Modernisation and simplification of the Union Customs

Legislation indicator

This indicator monitors the implementation of the IT related tasks assigned to the

Commission and Member States by the UCC work programme aiming for modernisation

and simplification of the Customs Union. The graph demonstrates for the different IT

systems which project phases have been completed on 1 January 2017 since the

adoption of the first version of the UCC Work Programme in 2014.

KPI 3:

Availability of Taxation

and Customs IT

Systems indicator

This indicator visualises the measured availability of European customs and tax Information Systems and of the underlying Common

Communication Network (CCN/CSI) compared to their targeted availability (dotted pillars).

92.00%

93.00%

94.00%

95.00%

96.00%

97.00%

98.00%

99.00%

100.00%

AAR2016

99.97%

95.00%

98.37%

97%

99.23%

99.00%

99.54%

97%

99.98%

99.9%

99.85%

99.50%

Taxation IT systems (VIES on theweb) - measuredTaxation IT systems (VIES on theweb) - targetCentralised IT customsapplications - measuredCentralised IT customsapplications -targetNCTS, ECS, and ICS - measured

NCTS, ECS, and ICS - target

EMCS -measured

EMCS - target

CCN/CSI system - measured

CCN/CSI system - target

KPI 4

Collaboration

Robustness

Indicator

Fiscalis 2020

* No data are available for the awareness rate 2015 as measured bi-annually

** Lasting networking effect and networking opportunity measured as from 2014, baseline 2013 being 0.

*** Actual results 2016 are the data available in February 2017

.


Customs 2020

* No data are available for the awareness rate 2015 as measured bi-annually

** Lasting networking effect and networking opportunity measured as from 2014, baseline 2013 being 0.

*** Actual results 2016 are the data available in February 2017

KPI 5

Internal

control

standards

implemented

Target: >90% each year

80%

85%

90%

95%

100%

20132014

20152016

88%

94% 94%

94%

% requirements fully implemented


c) Key conclusions on Financial management and Internal control (executive summary of section 2.1)

In accordance with the governance statement of the European Commission, (the staff of)

DG Taxation and Customs Union conducts its operations in compliance with the

applicable laws and regulations, working in an open and transparent manner and meeting

the expected high level of professional and ethical standards.

The Commission has adopted a set of internal control standards, based on international

good practice, aimed to ensure the achievement of policy and operational objectives. The

financial regulation requires that the organisational structure and the internal control

systems used for the implementation of the budget are set up in accordance with these

standards. DG Taxation and Customs Union has assessed the internal control systems

during the reporting year and has concluded that the internal control standards are

implemented and function as intended. Please refer to AAR section 2.1.3 for further

details.

In addition, DG Taxation and Customs Union has systematically examined the available

control results and indicators, including those aimed to supervise entities to which it has

entrusted budget implementation tasks, as well as the observations and

recommendations issued by internal auditors and the European Court of Auditors. These

elements have been assessed to determine their impact on the management's assurance

as regards the achievement of control objectives. Please refer to Section 2.1 for further

details.

In conclusion, management has reasonable assurance that, overall, suitable controls are

in place and working as intended; risks are being appropriately monitored and mitigated;

and necessary improvements and reinforcements are being implemented. The Director

General, in his capacity as Authorising Officer by Delegation has signed the Declaration of

Assurance.


d) Information to the Commissioner(s)

In the context of the regular meetings during the year between the DG and the

Commissioner on management matters, also the main elements of this report and

assurance declaration have been brought to the attention of Commissioner Moscovici,

responsible for Economic and Financial Affairs, Taxation and Customs Union.


1. KEY RESULTS AND PROGRESS TOWARDS

THE ACHIEVEMENT OF GENERAL AND

SPECIFIC OBJECTIVES OF THE DG

GENERAL OBJECTIVE 1

A fairer and deeper Internal Market

EU tax policy plays a crucial role in delivering on the Commission objective

related to creating a deeper and fairer internal market. The added value of EU

action is clear: direct taxes should be paid where economic activity takes place

while indirect taxes should be paid where consumption takes place – wherever

that may be within Europe and globally. When businesses operate cross-border

in the internal market, we need tax provisions that on the one hand are simpler

to comply with and on the other hand harder to exploit or avoid than the current

patchwork of 28 different tax rules.

Similarly, EU Customs policy is key to delivering a fairer and deeper internal

market, the Customs Union being an essential part of it. Customs is responsible

for collecting customs duties on goods imported into the Union but also has many

other roles. It is carrying out controls on behalf of other authorities for the

protection of citizens. It has a facilitator role for Union companies manufacturing

and exporting products and as such indirectly contribute to the creation of

growth and jobs within the EU.

Through its initiatives as well recurrent activities, TAXUD has a pivotal role

securing the internal market to be fair and robust.

SPECIFIC OBJECTIVE 1.1

Fight against tax fraud and aggressive tax planning

The Commission presented the Anti-Tax

Avoidance Package (ATAP) on 28

January 2016, kicking off a year where

the Commission made good progress in

its agenda for fair and effective corporate

taxation. The ATAP called on Member

States to take a stronger and more

coordinated stance against companies

that seek to avoid paying their fair share of

tax. In the package, the Commission

proposed legally-binding anti-abuse

measures to block the most common

methods used by companies to avoid

paying tax. It recommended how Member

States should prevent tax treaty abuse and

included a proposal for Member States to share tax-related information on


multinationals operating in the EU. Since

aggressive tax planning has an obvious

international dimension, the final

element of the Package was an external

strategy to promote tax good governance

internationally, including a new EU process

for listing non-cooperative third countries.

By June 2016, the member states

reached agreement on the anti-tax

avoidance directive, which contains five

anti-abuse measures which all Member

States have to apply. These include

measures to limit interest deductions and to prevent profits from being artificially

relocated to low-tax countries without being taxed. A general anti-abuse rule will

prevent artificial tax arrangements while another measure will stop companies

from transferring passive income to subsidiaries in low-tax countries. The

Commission followed up on this proposal in October, with further measures to

tackle hybrid mismatches in relation to third countries.

Panama and other leaks highlighted how certain intermediaries, such as tax

advisers, help their clients to shift profits offshore to avoid being taxed. While

some complex transactions and the setting up of off-shore companies may be

entirely justifiable, it is also clear that other activities may be less legitimate and

in some cases illegal. On 5 July 2016, the Commission set out the next priority

areas for action to strengthen the fight against tax evasion, avoidance and

illicit financial activity at EU and international level. Increasing accountability

of advisers and intermediaries was identified as one of the key priorities. The

Commission therefore launched a public consultation in November 2016 on how a

mandatory disclosure scheme for tax advisers could be put in place. Such rules

would oblige intermediaries to give early information on schemes which could be

viewed as aggressive or abusive planning for tax purposes.

To help identify the real owners of companies and legal arrangements used to

hide assets, the Commission proposed to give tax authorities access to Anti

Money Laundering information. This proposal was adopted by Member States

on 6 December 2016. It will allow tax authorities to monitor whether financial

institutions properly apply EU rules requiring them to identify the real owners of

companies and legal arrangements.

The Commission also continued the work to ensure that Member States' patent

boxes do not lead to harmful tax competition or encourage profit shifting.

The Commission monitored whether Member States' patent boxes made a proper

link between the research and development (R&D) incentive and the underlying

economic activity, in line with the approach agreed at the Code of Conduct

Group in 2014. It drew up draft assessments on Member States' patent boxes,

for the Code of Conduct Group to discuss in 2017.

Following the changes on administrative cooperation for

the automatic exchange on tax rulings and on country-by-country reports, the

Commission adopted an implementing regulation on

the practical arrangements and the computerised format that is applicable as from 1 January

2017.

http://europa.eu/rapid/press-release_IP-16-3618_en.htm


The Commission also actively contributed to the work of the European

Parliament committees set up following the media leaks related to tax evasion

and avoidance.

The Commission's VAT Action Plan of April 2016 sets out urgent measures to

tackle the Value Added Tax (VAT) gap and enhance the fight against VAT

fraud. These measures aim in particular to enhance cooperation between the 28

tax administrations, and between them and third countries.

In this context, the Commission presented in 2016 to the Council an initiative for

introducing a common tool analysing the VAT transactions that would reinforce

the capacity of Eurofisc, a mechanism bringing together VAT fraud experts and

enhancing administrative cooperation between Member States in combating

organised VAT fraud. Member States asked the Commission to prepare the

deployment of that tool by 2018. At working level, DG TAXUD facilitated the

exchange of good practices between tax administrations, for example for

measuring the VAT fraud gap while it provided technical assistance to tax

administrations in some Member States and Ukraine.

In 2016, DG TAXUD worked on the first evaluation of the EU framework for tax

recovery assistance between the EU Member States, including a consultation of

the public. The Commission also took the initiative to facilitate the handling of

cross-border requests for precautionary measures, in order to better fight

against fraudulent tax debtors making themselves insolvent.


An EU tax framework that is fit for purpose

A. Value Added Tax (VAT)

DG TAXUD worked to ensure that the EU tax framework remains fit for purpose,

growth-friendly and as simple as possible for businesses that it does not prevent

the internal market from delivering its full value. Starting from the assumption

that the large majority of taxpayers is honest, DG TAXUD aims to make tax rules

easier to comply with and harder to get wrong.

On 7 April 2016 the Commission adopted a VAT

Action Plan that sets out actions to adapt the VAT

system to the digital economy and the needs of

SMEs and to tackle the VAT gap (see 1.1). It also

provides clear orientations towards a robust single

European VAT area in relation to the definitive VAT system for cross-border

supplies and proposes options for a modernised policy on EU rules governing VAT

rates.

The Action Plan sets out a pathway to modernise the current EU VAT rules,

including:

- key principles for a future single European VAT system;

- short term measures to tackle VAT fraud;

http://ec.europa.eu/taxation_customs/taxation/vat/action_plan/index_en.htm



http://europa.eu/!bu38nh


- update of the framework for VAT rates, setting out options to grant

Member States greater flexibility in setting them;

- plans to simplify VAT rules for e-commerce in the context of the Digital

Single Market (DSM) Strategy and for a comprehensive VAT package to

make life easier for SMEs.

On 1 December, the Commission proposed legislative proposals to improve the

Value Added Tax (VAT) environment for e-commerce businesses in the EU.

These proposals will allow consumers and companies, in particular start-ups and

SMEs, to buy and sell goods and services more easily online. Unlocking e-

commerce in Europe and the creation of a Digital

Single Market are among the top priorities of the

Juncker Commission. By introducing an EU-wide

portal for online VAT payments ('One Stop

Shop'), VAT compliance expenses will be

significantly reduced, saving businesses across the

EU EUR 2.3 billion a year. The new rules will also ensure

that VAT is paid in the Member State of the final consumer,

leading to a fairer distribution of tax revenues amongst EU

countries. These proposals would help Member States to

recoup the current estimated EUR 5 billion of lost VAT on

online sales every year. Estimated lost revenues are likely

to reach EUR 7 billion by 2020 if no action is taken.

The ‘One Stop Shop’ is a proven system for efficient and effective tax collection

which has been in place for business to consumer supplies of electronic services

since 2015. In that year, more than EUR 3 billion of VAT was paid through this

system; representing 70% of trade. An independent assessment showed a high

degree of satisfaction with this system which resulted in savings of EUR 500

million for business.

More specifically, the Commission proposed new rules allowing companies

that sell goods online to deal easily with all their EU VAT obligations in one

Member State and to simplify VAT rules for start-ups and micro-businesses

selling online by allowing them to continue to handle VAT on cross-border

sales under EUR 10 000 as a domestic supply.

https://ec.europa.eu/taxation_customs/business/vat/digital-single-market-modernising-vat-cross-border-ecommerce_en


The Commission also proposes to remove the current VAT exemption

applicable to small consignments imported into the EU that are worth less

than EUR 22. With around 150 million parcels being imported free of VAT into

the EU each year, this system creates distortions for EU business and in

addition is open to massive fraud and abuse. The adoption of this proposal,

combined with the provisions of the Union Customs Code, would provide

adequate legal and operational mechanisms for tax and customs

authorities to deal with the evolving e-commerce trade. The removal of

the exemption from the year 2021 is linked with the advance electronic

provision of information to EU Customs. At the same time, the introduction of

the VAT import one stop shop simplification for VAT will simplify the Customs

clearance procedures.

The Commission proposed to amend the VAT Directive to enable Member States

to reduce VAT rates for e-publications such as e-books and online newspapers.

Under current rules, e-publications must be taxed at the standard rate and thus

cannot benefit from the more favourable treatment available for printed

publications. Once approved, this proposal would allow Member States to extend

the favourable VAT treatment for printed publications to digital publications.

B. Corporate tax reform package

On 25 October, the Commission adopted the corporate tax reform package to

create a more modern and fairer business tax system. Today, cross-border

companies in the EU have to follow 28 rulebooks to determine their taxable

profits in each country. This creates red tape, legal uncertainty and high costs for

cross-border companies. Diverse tax obstacles also create serious tax problems

for companies operating in the internal market, one of them being double

taxation.

To address these problems, the Commission re-launched the Common

Consolidated Corporate Tax Base (CCCTB). The re-launched CCCTB keeps a

strong focus on making cross-border business in the EU cheaper, simpler and

more certain. It provides a single set of rules for companies to calculate

their taxable revenues in the EU, replacing the current medley of different

national systems. Companies in cross-border groups will also be able to offset

losses, in a similar way to purely domestic companies. Once the taxable profits of

the group have been calculated, they will be shared out amongst Member States

where the company is active. This will be done according to a formula based on

the labour, assets and sales of the group in each Member State.

The proposed CCCTB contributes to the EU's agenda for growth and jobs

rewarding companies that invest in research and development (R&D) with a

super tax deduction. The CCCTB also foresees an allowance ensuring that equity

receives similar tax treatment to debt, creating a more neutral and investment-

friendly tax environment. The re-launched CCCTB has a stronger potential to

block tax avoidance and contains stronger anti-abuse provisions than its

predecessor.

https://ec.europa.eu/taxation_customs/business/company-tax/corporate-tax-reform-package_en


The package includes a proposal on double taxation dispute resolution

mechanisms to ensure that double taxation disputes are resolved more swiftly

and definitely.

C. Excise Duties

DG TAXUD was involved in the Council discussion on the Commission report

concerning the implementation of the tobacco taxation directive. In its

conclusions the Council requested the Commission to carry out an impact

assessment on the possible revision of this Directive. DG TAXUD published a first

description of the problems and possible policy options under analysis in June

2016 and launched in November 2016 an open public consultation to gather the

views of EU citizens and stakeholders on these possible options.

The Commission published on 28 October a series of recommendations to

improve the current EU framework for excise duty on alcoholic drinks,

amongst others based on the evaluation of the current arrangements for the

structures of excise duties on alcohol. While the current rules work well, they are

over 20 years old and in clear need of updating in the context of the fight

against tax fraud. Following discussion of the Commission's Report, the

ECOFIN council adopted on 6 December 2016 a set of conclusions concerning

alcohol "structures" taxation. For example, more clarity and research is needed

on the existing exemption for denatured alcohol which can be used to produce

dangerous counterfeit alcoholic drinks. The Commission is also keen to reduce

costs for smaller businesses. Reduced rates of excise duty could be made more

consistent to benefit a wider range of small producers of beer, wine and other

alcoholic beverages. In these conclusions the Council has requested the

Commission to carry out an impact assessment on the possible revision of

Directive 1992/83/EEC. Work is also continuing in the area of denatured alcohol,

to further harmonize the many national denaturing formulations still in use. This

year also saw the adoption of a standard operating procedure for the harmonised

"Euro" formulation for completely denatured alcohol, providing a consistent

testing methodology for those Member States who use the "Euro" formulation.

DG TAXUD also finalised the evaluation of the current arrangements for the

holding and moving of excise goods under excise duty suspension.

D. Control of application of EU law

For fulfilling the objectives of the internal market and the respect of application

of the fundamental freedoms, effective and coherent application of EU tax law is

essential. DG TAXUD promotes the removal of tax obstacles for economic

operators and citizens resulting from incorrect application of EU law by the

Member States.

In the area of indirect taxation, priority was given to cases with positive impact

on the functioning of the internal market. Emphasis was also put on horizontal

application of judgements of the Court of Justice of the EU, where in scope of a

preliminary ruling the Court provided a general interpretation of the EU indirect

https://ec.europa.eu/taxation_customs/consultations-get-involved/tax-consultations/public-consultation-excise-duties-applied-manufactured-tobacco_en

https://ec.europa.eu/taxation_customs/sites/taxation/files/com_2016_676_en.pdf

http://bookshop.europa.eu/en/evaluation-of-current-arrangements-for-the-holding-and-moving-of-excise-goods-under-excise-duty-suspension-pbKP0215865/

http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=COM:2015:621:FIN&rid=1

http://www.consilium.europa.eu/en/press/press-releases/2016/03/08-ecofin-conclusions-structure-rates-manufactured-tobacco/

http://bookshop.europa.eu/en/evaluation-of-current-arrangements-for-the-holding-and-moving-of-excise-goods-under-excise-duty-suspension-pbKP0215865/


tax law as well as on cases of car taxation where the freedom of movement was

violated.

In the area of direct taxation DG TAXUD followed-up three EU-law compliance

initiatives launched between 2011 and 2014, designed to benefit EU citizens in

the area of cross-border inheritances, cross-border workers and mobility of

workers persons. In association with DG FISMA, a new study has been launched

on discriminatory taxation of the investment results of pension funds and life

insurance companies, according to the 2015 action plan for the Capital Markets

Union and the 2012 white paper on pensions.

E. Economic analysis activities and European Semester

DG TAXUD contributed to the European Semester process and most

specifically to the preparation of the Country Specific Recommendations for the

2016 European Semester exercise in Spring 2016 and to the launch of the 2017

exercise recently, notably through its contribution to the Annual Growth Survey

(AGS) and country specific reports.

For tax research, DG TAXUD collaborates closely with the EU Joint Research

Centre (JRC) prolonging in 2016 an administrative arrangement for economic

research and modelling in taxation and with the EU's Statistical Office

(EUROSTAT) formalizing the relationship in a Memorandum of Understanding

signed at the end of 2016. This research contributes to the development of policy

proposals in the DG, including the Corporate Tax Reform package.

DG TAXUD also runs databases on taxation such as the Taxes in Europe

Database and carries out ad hoc economic analysis of tax policy. These tools are

used in support of EU tax policies.



Well-functioning and modern Customs Union

A. Customs Union Governance

The European Commission adopted on 21 December its

Communication on the long-term blueprint for the

governance of the Customs Union. In the last decade, the

role of customs authorities in ensuring safety and security in

the EU is increasing rapidly. The Customs Union has to help

to protect the public against terrorist, health, and

environmental threats but without neglecting its role to

foster and develop competitive businesses. In the

Communication, the Commission sets out a strategic vision

for the governance of the Customs Union, based on

increased coordination of policy and operational

aspects of customs work and related policies and

improved cooperation among the EU institutions,

national customs authorities, trade and other authorities and policies

involved at the cross-border movement of goods. This revitalized partnership

should define the shared overall management vision for the Customs Union and

enable a more effective enforcement of EU customs rules. This should ultimately

strengthen the customs administrations' performance and prepare the Customs

Union for the challenges of the 21st century.

While the rules are the same across the EU, customs authorities do not always

apply them in a cohesive, uniform manner. The vision laid

out in the Communication stresses that the independent

customs administrations of Member States should work

towards acting as one single entity. At the same time,

cooperation with other border management and

security authorities such as national border and coast

guards, the European Border and Coast Guard and Europol

must also be encouraged and strengthened. Equally,

customs operations across the EU should have access to

the IT systems needed to handle as many as nine customs

declarations per second.

DG TAXUD advocates evidence based approach in the governance of the

Customs Union and therefore works on a customs union performance

measurement system with key performance indicators to guide the policy

formulation process. Regular reporting on the state of the Customs Union should

reinforce the visibility but also improve coherence of customs policy.




B. Union Customs Code

The Union Customs Code (UCC) came into force on 1

May 2016 foreseeing digitalisation of all customs

procedures by the end of 2020. The UCC consists of a

package of legal measures, including transitional

measures for the application of the UCC in the period

before all IT systems are in place. The Commission,

Member States and trade stakeholders continued to

cooperate closely to facilitate a correct and uniform

implementation of the many new features and provisions.

In this context, the Commission also took the necessary

steps with the relevant non-EU countries to align the

Common TRANSIT Convention with the UCC transition arrangements before 1

May 2016. To prepare for the entry into force, the Commission also adopted

in April 2016 measures to avoid disruption of smooth supply chains and to

maintain the status quo under the former legislation e.g.

maintaining the possibility not to formally declare

containers, airplanes, vessels and facilitate temporary

admission of goods under certain conditions.

Work continued also to further develop concepts for

which the legal framework is provided in the UCC Package,

but which require more specific guidance for concrete

implementation after the relevant IT systems are in place.

This is the case, in particular, for customs

simplifications, where the future availability of all

relevant information in IT Systems will allow a more differentiated control

approach.

The Commission is coordinating the implementation of the UCC with Member

States through the UCC Work Programme and the detailed IT project planning

the Multi-Annual Strategic Plan (MASP). It is ensuring transparency for

economic operators by publishing the UCC Business Process Models, EU Customs

Data Model, and national planning information. On 11 April 2016 the Commission

adopted a new version of the UCC Work Programme which sets out the planning

for the development and deployment of the necessary 17 electronic systems.

The EP and Council agreed with the Commission on the UCC measures including

the proposed way forward for the period needed to introduce fully automated

processes.

Due to the combination of increasing operational obligations and the multitude of

projects to be created by end 2020, the strain on the IT organisation has

reached a level that needs to be mitigated in the near future. The overall

approach and in particular the creation of an optimal delivery model based upon

a better division of labour between the Member States and the Commission

needs to be evaluated and discussed at high level to alleviate pressure on both

human and financial resources. The upcoming renewal of the Multi-Annual

https://ec.europa.eu/taxation_customs/business/union-customs-code/ucc-introduction_en

http://ec.europa.eu/avservices/video/player.cfm?sitelang=en&ref=I120321


Financial framework will also be an important element that will indicate the

boundaries of what can be done. DG TAXUD has already started the reflection on

the sustainability of its present IT delivery model internally and with Member

States.

Throughout 2016, DG TAXUD continued

its close cooperation with Member

States and trade stakeholders jointly

developing examples of best

implementation practice with the

objective of providing guidance on

uniform and correct implementation of

the new rules laid down in the UCC.

DG TAXUD launched several UCC eLearning modules for both customs officers

and economic operators. These modules are spread via Customs administrations

as well as the Commission Europa website where they reach an estimated

500.000 trainees.

C. Common Customs Tariff

DG TAXUD transposed successfully the 2017 version of the worldwide

Harmonised System (HS) which is every 5 years agreed at World Customs

Organisation (WCO) level, in the 2017 European Combined Nomenclature

(CN). DG TAXUD also assisted the lead service of the Commission (DG TRADE)

in the negotiations of the International Agreement on Information Technology II

and had the leading role in its subsequent transposition in the 2017 CN.

To ensure sufficient and uninterrupted supplies of certain goods that are not

available in the Union or available in insufficient quantities and to avoid any

disturbances on the market for certain agricultural and industrial products,

certain autonomous Common Customs Tariff duties have been partially or

totally suspended. The corresponding regulations (1387/2013 and 1388/2013)

were updated each semester with the objective of accommodating the needs of

the EU industry. For some new products, the suspension of duties was introduced

while for some other products the change was more technical: changing the

wording of their description or assigning new Combined Nomenclature or TARIC

codes. Also some products were withdrawn for which a tariff suspension or tariff

quota is no longer in the Union's economic interest.

Work continued in managing tariff classification issues and during the year 58

legislative implementing measures were adopted by the Commission to ensure

uniform treatment across the EU. In addition under the on-going project "Future

policy ensuring uniform tariff classification and Binding Tariff Information (BTI)"

several cost-effective measures are being implemented to assist Member States

with the classification of products. Joint EU-teams were set up to facilitate

bilateral consultations and to assist the Customs Code Committee. A virtual

forum was set up for Member States having doubts about the classification of a


specific product and facilitating exchange of best practices. In the first half of

2016 DG TAXUD successfully co-organised with the Dutch Presidency the 6th

seminar of the European Customs Chemists bringing together 320 participants

form 55 countries. The seminar presented new challenges that customs and

customs laboratories are facing and participants reflected on possible ways to

respond more efficiently through cooperation. Also in 2016 the European

Customs Laboratory Network (CLEN) was recognised as a WCO Regional Customs

Laboratory for the European continent.


The EU programmes supporting EU tax and customs policy

The Fiscalis and Customs 2016 Annual Work Programmes, adopted in January

2016, were the basis for all the activities (Joint actions, Training and European

information Systems) undertaken during this year. The Fiscalis 2020 and the

Customs 2020 programmes offer Member

States a European framework to

cooperate amongst, respectively, national

tax and customs officials or through

European Information systems (EIS). This

set-up is more cost-effective than if each

Member State were to set up individual

cooperation frameworks on a bilateral or

multilateral basis.

In 2016, the first 5 expert teams

under the new programmes became

operational working on IT

collaboration and on the

automatic exchange of

information in the tax area and on

customs laboratories, Binding

Tariff Information and on

improving operational cooperation

of customs at the Eastern and

South-Eastern land border of the EU.

These expert teams involve all

TAXUD directorates and experts from 26 Member States. In total, 2.75 million

euros of EU co-funding have been committed for these expert teams, which will

operate between 12 and 24 months.


GENERAL OBJECTIVE 2

A new Boost for Jobs, Growth and Investment


Ensuring efficient customs fostering EU competitiveness

TAXUD focused in 2016 on promoting customs efficiency and cooperation

between customs and other authorities. EU legislation to protect health,

safety or the environment, or to impose sanctions in the framework of the

Common Foreign and Security Policy (CFSP), affects the international movement

of goods and requires enforcement by customs at the Union's external borders.

Procedures for controls should be standardised in line with the existing customs

laws and processes to ensure uniform and smooth enforcement by Customs

while reducing the administrative burden. In 2016, TAXUD issued a toolbox for

drafting legislation requiring customs enforcement supporting this

standardisation. The toolbox provides guidance for the preparation or review of

legal acts which foresee customs controls. The use of the toolbox will contribute

to better EU regulation.

The work to further develop the Authorised Economic Operator (AEO)

concept included an update of the EU AEO Guidelines. AEO are reliable traders

who voluntarily meet a wide range of criteria and work in close cooperation with

customs authorities to assure supply chain security. In return for their

cooperation AEO are entitled to benefit from customs simplifications, or

facilitations regarding checks for security and safety, or a combination of both.

TAXUD also ensured the effective implementation of the EU Customs Action Plan

to combat Intellectual Property Rights (IPR) infringements. This included the

adoption of a notice on the enforcement by EU customs authorities of IPR for

goods, in particular medicines, in transit through the EU. TAXUD also organised,

together with the EU Intellectual Property Office (EUIPO), a conference on the

interaction between customs, the police and judicial authorities.

The Commission's 2016 report on customs actions to

enforce IPR is issued and is based on data transmitted by

Member States' customs administrations to the

Commission. More than 40 million products suspected of

violating an intellectual property right were detained at the

EU's external borders by customs authorities across the EU,

with a value of nearly €650 million.

Cigarettes remain the top category (27%) of articles

detained, while everyday products such as food and

beverages, toiletries, medicines, toys and household

electrical goods account jointly for 25.8% of the total. Once

again, China was the main originating country for

counterfeit goods (41%), followed by Montenegro, Hong Kong, Malaysia and Benin.

https://ec.europa.eu/taxation_customs/sites/taxation/files/2016_ipr_statistics.pdf

https://ec.europa.eu/taxation_customs/sites/taxation/files/2016_ipr_statistics.pdf


GENERAL OBJECTIVE 3

A secure European Union


Strengthening security and contributing to tackling terrorism and

serious crime

On 21 December, the Commission adopted a package of measures to

strengthen the EU's capacity to fight the financing of terrorism and

organised crime, delivering on the commitments made in the Action Plan

against terrorist financing from February 2016. The proposals being presented by

the Commission complete and reinforce the EU's legal framework in the areas of

money laundering, illicit cash flows and the freezing and confiscation of assets.

One of its pillars is the proposal for a new cash

controls regulation that tightens cash controls on

people entering or leaving the EU with €10,000 or

more in cash. It enables authorities to act on

amounts lower than the present declaration

threshold of €10,000, where there are suspicions of

criminal activity. The regulation extends customs

competences to check cash sent in postal parcels

or freight shipments and to precious commodities

such as gold. A provision in the proposal also makes it possible to consider

certain types of prepaid cards as cash, if sufficient indications of abuse are

present. Lastly, the proposal sets up a new framework for the exchange of data

between competent authorities within and between Member States.

On 19 July the Commission issued the progress report on the implementation

of the EU Strategy and Action Plan for Customs Risk Management.

Progress is most noticeable on actions within the remit of customs, while slower

when requiring cooperation between customs and other authorities, in particular

with law enforcement and security authorities. The main challenge at present is

IT related. While feasible technical solutions have been found, e.g. for ensuring

data availability or exchanging information and automating risk analysis,

implementation requires the upgrading of existing systems or deployment of new

ones. However, insufficient financing to develop the required IT systems is a

major issue hampering progress, most notably in relation to the new Import

Control System.

In 2016 the Commission used for the first time the 'fast-track'-procedure to

schedule substances under the EU drug precursor legislation for

chloroephedrine and chloropseudoephedrine, two substances used for illegally

manufacturing methamphetamine.

http://ec.europa.eu/taxation_customs/individuals/cash-controls/why-this-obligation_en


GENERAL OBJECTIVE 4

EU as a strong global actor


Developing international customs cooperation

A. Free Trade Agreements

In 2016, on behalf of the EU and together with the customs administrations of

the Member States, the Commission ensured the implementation of the

customs-related provisions of some 50 customs or free trade

agreements. These agreements have been concluded either with individual third

countries or regions/groups of countries and cover almost 80 countries on all

continents. Work in the joint committees included the development of guidance,

implementing decisions or introduction of amendments to the rules in the areas

of customs cooperation, security, trade facilitation, rules of origin and border

enforcement of Intellactual Property Rights (IPR).

The Commission in parallel pursued, launched or resumed negotiations of the

customs-related provisions of new free trade agreements with countries

like Japan, the US (T-TIP), Mexico, Philippines, Indonesia, Mercosur and Tunisia.

Negotiations to revise the Pan-Euro-Mediterranean Convention on

preferential rules of origin continued.

B. International Customs Cooperation

The Commission contributed with the customs administrations of the Member

States to support and develop customs cooperation at multilateral level, in

particular in the context of the World Customs Organization (WC0). The

Commission was particularly active to ensure that the second mandate of the EU

as Vice-Chair of the WCO Europe Region was successfully completed.

DG TAXUD contributed to the proposal for opening negotiations with Turkey on

the modernisation of the EU-Turkey Customs Union, which was adopted by the

Commission in December 2016.

On 14 June 2016, the Commission published its report on the Customs

cooperation with the Eastern Neighbouring countries. Customs cooperation

with Russia was influenced by political and trade developments. In March 2016

DG TAXUD and the Federal Customs Service of the Russian Federation agreed on

a new Roadmap for the implementation of the Strategic framework for EU –

Russia customs cooperation with focus on transit, trade facilitation, tariff

classification, risk management and combating fraud. The Commission has

insisted on Russia implementing fully the TIR Convention and abstaining from

unjustified barriers to EU trade. This dialogue is important to avoid disruptions in

trade flows.


For Ukraine, the Republic of Moldova and Georgia, the Commission focused

on the implementation of the Association Agreement/Deep and Comprehensive

Free Trade Agreements (AA/DCFTA) and the Strategic Frameworks for customs

cooperation by supporting customs reforms. Progress was made in

implementation of the AEO programmes, accession to the Common Transit

Procedure and accession to the Regional Convention on pan-Euro-Mediterranean

preferential rules of origin. The Customs dialogue with Belarus was revitalised

with the first joint project group meeting taking place in December 2016. The

implementation of the customs provisions of the Enhanced Partnership and

Cooperation Agreement with Kazakhstan started on 1 May 2016.

The enhancement in 2016 of our customs cooperation with our major trade

partners on issues like IPR border enforcement, risk management and customs

controls deserves particularly being emphasised. The EU established an

enhanced customs cooperation agenda with the US, signed joint administrative

arrangements with China and Hong Kong, China on the third phase of the

Smart and Secured Trade Lanes (SSTL) project. The cooperation with Japan

remained excellent.

C. Generalised System of Preferences

The EU's "Generalised Scheme of Preferences" (GSP) allows developing

countries to pay less or no duties on their exports to the EU. This gives them

vital access to EU markets and contributes to their economic growth. As from 1

January 2014, the EU's reformed GSP set out by Regulation 978/2012 applies.

The reformed Scheme focuses support on developing countries most in need. The

rules of origin supporting this Scheme have been reformed in 2010 also with that

same objective and are now enshrined in the UCC delegated and

implementing acts. As part of the reform, a new procedure for registered

exporters and its related IT system (REX) was developed and is operational

since 1 January 2017 by countries benefiting from the EU's GSP. It simplifies

the certification of origin which takes the form of statements of origin made

out by the registered exporters themselves; under their responsibility, and no

longer by a governmental authority. It also improves the effectiveness of the

management and control of the actual originating status of the products, through

an enhanced administrative cooperation with beneficiary countries in the

verification of statements based on risk analysis. The benefits of the new system

are going beyond the strict context of the GSP countries. Also EU exporters

working under this preferential scheme will use the IT system as well as those

exporting goods originating in the EU under some other preferential

arrangements like CETA with Canada.

D. Preferential trade agreements

TAXUD continued monitoring the implementation of preferential trade

arrangements. Monitoring helps to protect the EU's financial interests and ensure

fair trade between the EU and third countries benefiting from preferential trade

arrangements. By enhancing compliance with the rules on preferential origin,


monitoring also strengthens the Union's credibility when negotiating free trade

Agreements. In this context TAXUD performed in 2016 monitoring visits to the

Philippines and Cape Verde providing their customs authorities with tailor-made

explanations and advice. Monitoring visits were also carried out to Denmark

and Austria, the aim being also identifying best practices regarding

implementation of preferential trade arrangements.


2. ORGANISATIONAL MANAGEMENT AND

INTERNAL CONTROL

This section answers to the question how the achievements described in the previous

section were delivered by the DG. This section is divided in two subsections.

The first subsection reports the control results and all other relevant information that

support management's assurance on the achievement of the financial management and

internal control objectives. It includes any additional information necessary to establish

that the available evidence is reliable, complete and comprehensive; appropriately

covering all activities, programmes and management modes relevant for the DG.

The second subsection deals with the other components of organisational management:

human resources, better regulation principles, information management and external

communication.

2.1 Financial management and internal control

Assurance is an objective examination of evidence for the purpose of providing an

assessment of the effectiveness of risk management, control and governance processes.

This examination is carried out by management, who monitors the functioning of the

internal control systems on a continuous basis, and by internal and external auditors. Its

results are explicitly documented and reported to the Director-General. The reports

produced are:

- the reports by the DG TAXUD Authorising Officers by Sub-Delegation;

- the reports from Authorising Officers in other DGs managing budget appropriations in

cross-delegation;

- the contribution of the Internal Control Coordinator, including the results of internal

control monitoring at the DG level;

- the reports of the ex-post audits;

- the opinion of the internal auditor on the state of control, , and the observations and

recommendations reported by the Internal Audit Service (IAS);

- the observations and the recommendations reported by the European Court of

Auditors (ECA).

- These reports analyse systematically the evidence available and provide a complete

coverage of the budget delegated to the Director-General of DG TAXUD.

This section reports the control results and other relevant elements that support

management's assurance. It is structured into (a) Control results, (b) Audit observations

and recommendations, (c) Effectiveness of the internal control system, and resulting in

(d) Conclusions as regards assurance.


2.1.1 Control results

This section reports and assesses the elements identified by management that support

the assurance on the achievement of the internal control objectives2. The DG's assurance

building and materiality criteria are outlined in the AAR Annex 4. Annex 5 outlines the

main risks together with the control processes aimed to mitigate them and the indicators

used to measure the performance of the control systems.

DG TAXUD is a policy DG with a relatively small budget. An amount of EUR 114.400.000

was committed and EUR 103.599.2043 paid in 2016. The budget is implemented on a

centralised basis.

A. Expenditure

The expenditure managed by DG TAXUD falls into the following categories:

Contracts (IT procurement, intra-muros and miscellaneous)

Overall, the value of signed contracts represents about 83,91% of the total

committed budget in 2016.

The largest part of DG TAXUD's operational budget is dedicated to IT expenses

(EUR 83.100.000 or 72.63%) committed in 2016, through several framework

contracts concluded between the Commission and IT suppliers. These contracts

ensure the on-going work on the trans-European systems, networks and related

databases, as well as the IT training tools, in line with the work programmes of

2 Effectiveness, efficiency and economy of operations; reliability of reporting; safeguarding of assets

and information; prevention, detection, correction and follow-up of fraud and irregularities; and adequate management of the risks relating to the legality and regularity of the underlying transactions, taking into account the multiannual character of programmes as well as the nature of the payments (FR Art 32).

3 See Annex 3, table 2

83.1

12.8

6.2 6.0

0.7 0.4 1.1 1.0 3.2

IT Contracts

Customs/Fiscalis JointActions

Intra-muros Consultancy

Studies, consultancy, communication….

Communication

Translations

Contributions toInternationalOrganisations


the Fiscalis 2020 and Customs 2020 programmes.

Other contracts relate to procurement of different tools or services such as

studies, databases, consultations (EUR 6.000.000 committed in 2016, i.e. 5.25%),

intra-muros technical assistance (EUR 6.200.000 committed in 2016, i.e. 5.42%)

and communication activities (EUR 700.000 committed in 2016, i.e. 0.61%).

Grants and Joint Actions under Customs and Fiscalis 2020 programmes

Overall, the expenditure related to the grants represents about 11,15% of the

total committed budget in 2016.

The grants (EUR 12.490.000 committed in total in 2016) represent the second

major category of the expenditure under the programmes and within TAXUD. They

are managed through 7 multi-beneficiary grant agreements (4 for Customs 2020

programme and 3 for Fiscalis 2020 programme).

The 2 most important grants relate to Joint Actions (EUR 10.440.000, i.e. EUR

5.830.000 for Customs 2020 and EUR 4.610.000 for Fiscalis 2020) and aim at

developing better coordination between the national administrations in the tax and

customs areas. The expenditure in the framework of the Joint Actions consists of

grants awarded to the participating national administrations and reimbursement of

costs incurred by experts. The beneficiaries of these grants are the public

administrations of the 28 Members States and of 6 applicant countries (Albania,

Bosnia and Hercegovina, fYRoM, Montenegro, Serbia and Turkey).

The 5 other grants (EUR 2.050.000 committed in total in 2016) relate to expert

teams under Customs 2020 for CELBET (11 Member States), BTI (13 Member

States) and Labo projects (11 Member States), and under Fiscalis 2020 for IT

collaboration (8 Member States) and for the AEOI-DAC2 project (6 Member

States).

Finally a small part (EUR 310.000 of the committed amount) is devoted to

reimbursement of the travel and subsistence expenses of external experts under

both programmes Customs 2020 (EUR 240.000) and Fiscalis 2020 (EUR 70.000).

Contributions to international organisations

This type of expenses relates to the membership of the EU to the World Customs

Organisation, and represents about 1% of the total committed budget (EUR

1.103.866).

Pilot Projects

On the initiative of the Budgetary Authority, DG TAXUD received and committed

EUR 1.000.000 (0,87% of the total committed budget) for 2 pilot projects: one in

the field of digital fiscal education system and tax payments (EUR 500.000), and

one in the field of capacity building, programmatic development and

communication in the context of the fight against tax avoidance, tax evasion and

tax fraud (EUR 500.000).

Administrative expenditure

The administrative expenditure managed by DG TAXUD (mission's expenses,

meetings of committees and expert groups, training, conferences and other

miscellanea expenditure) represents about 2,8 % of the total committed budget


(EUR 3.200.000).

Throughout 2016, DG TAXUD committed EUR 350.000 (0,31% of the total budget) for

the payment of translations made by the Commission Translation Service (DGT).

B. Sub-Delegations

Besides the above described expenditure, DG TAXUD received the following sub-

delegations during the reporting period:

a cross-sub-delegation from DG NEAR4 for the implementation of the "travel,

accommodation and conference facility (TAC) 2015 for a seminar for the Western

Balkan Countries and Turkey" under the Instrument for Pre-accession Assistance (IPA)

Transition and Institution Building component. This cross-sub-delegation is a carry-

over from 2015. DG TAXUD did not commit any appropriations in 2016, but paid EUR

16.479,31 for the reimbursement of costs claims for travel and subsistence of experts

coming from candidate countries or potentially candidate countries. DG TAXUD’s AOD

issued a report without reservation on the status of the files on 07 February 20175.

a cross-sub-delegation from ESTAT for the use of the Common Communication

Network/Common System Interface (CCN/CSI) by ESTAT's application SIMSTAT. This

cross-sub-delegation is a carry-over from 2015. DG TAXUD did not receive any

commitment appropriations on the cross-sub-delegation budget line, but paid EUR

250.000,00 to cover the 2015 commitment. DG TAXUD’s AOD issued a report without

reservation on the use of these appropriations on 03 February 20176. To be noted

that starting in 2016, the co-delegation process has been set up for the commitment

credits and related payment credits.

As in previous years, DG TAXUD has delegated appropriations to DG EMPL and DG

DEVCO. Being Commission services themselves, their AOD is required to implement the

appropriations subject to same rules, responsibilities and accountability arrangements.

The cross-subdelegation agreement requires the AOD of DG EMPL and DEVCO to report

on the use of these appropriations.

A cross-sub-delegation was given to DG EMPL in the scope of the AGM meeting

project. The agreed contribution of DG TAXUD was EUR 86.000 in 2016. DG EMPL

committed EUR 53.838,40 from the EUR 86.000,00 sub-delegated appropriations

(from the administrative envelope7) and returned the balance to DG TAXUD8. DG

EMPL did not pay any amount from the EUR 53.838,40 sub-delegated payment

appropriations from the same budget line. The DG EMPL AOD issued a report without

reservation on the use of these appropriations on 27 January 20179.

A former cross-sub-delegation was given to DG DEVCO in the scope of the "Good

Governance in the Tax Area" in line with the recommendations of the "Tax and

Development" Communication (on the former Fiscalis 2013 budget line). No

commitments and no payment appropriations were made available to DG DEVCO

4 DG ELARG before 01/01/2015 5 Ref. Ares(2017)664023 – 07/02/2017 6 Ref. Ares(2017)615331 – 03/02/2017

7 BGUE-B2016-14.010201.00.02.20-C1-TAXUD/EMPL 8 DG EMPL could not commit these appropriations before the end of the year 9 Ref. Ares(2017)448146 – 27/01/2017


in 2016. Indeed, all the funds were committed before the end of 2012 and the

operations finished in 2013. The DG DEVCO AOD issued a report without

reservation on 23 February 201710.

As reported above, the AODs did not communicate any events, control results or issues

which could have a material impact on assurance for the committed and paid amounts.

These reports have been submitted to a desk review, which did not result in any

observations.

For the 2016 reporting year, the cross-delegated AODs have themselves reported

reasonable assurance on the delegated budget managed by them on our behalf. They

have signalled no serious control issues. For the amounts that have not been spent by

the cross-delegated AODs, no report has been received.

Considering the relatively small amount entrusted to these other DGs, and bearing in

mind the reports without reservation from the Authorising Officers in those DGs, DG

TAXUD does not make additional controls as regards legality, regularity and error rates.

10 Ref. Ares(2017)988140 - 23/02/2017


Risk-type /

Activities

Grants (e.g.

actual costs

based, or lump

sums, or

entitlements)

Procurement

(e.g. minor or

major values)

Cross-delegations

to other DGs

(other AOXDs)

NEI, e.g. Revenues,

Assets, OBS

((in)tangible or

financial assets &

liabilities)

ICO

indicators

available

at this

level ? (cf.

L&R,

SFM,

AFS, SAI,

TFV)

Independent info

from auditors

(IAS, ECA) on

assurance or on

new/overdue

critical

recommendations

available?

Any

reservation?

Procurement 89.272.701,61 31.971.540,28 N N

Grants 11.564.386,48 14.211.224,43 N N

Other 2.762.115,91€ N N

Totals

(coverage)

11.564.386,48€ 89.272.701,61€ 2.762.115,91€ 'overall'

RER not

meaningf

ul; see

overall

AER &

ARC

Y N

ICO-related

indicators

available at

this level ?

(cf. L&R,

SFM, AFS,

SAI, TFV)

Y

RER : 2,01%

CEC : yes

L&R, SFM,

AFS, AFS, TFV

: OK

Y

RER : 0,5%

CEC : yes

L&R, SFM,

AFS, AFS,

TFV, SAI : OK

Y

L&R, SFM, TFV

: OK

Clean Mngt Decl.

SAI = OK

TFV = yes

['overall'

RER not

meaningf

ul; see

overall

AER &

ARC]

NA N

Links to AAR

Annex 3

Overall total = 103,59 M€; see Table 2 – payments made Table 4 – assets n/a n/a n/a

Acronyms used in the above table : L&R : legal & regulatory, RER : residual error rate, SFM : sound financial management, CEC : cost effectiveness of controls, AFS : anti-fraud strategy, SAI : safeguarding of assets and information, TFV : true and fair view, ARC : average recoveries and corrections, AER : average error rate


C. Coverage of the Internal Control Objectives and their related main

indicators

Control effectiveness as regards legality and regularity

DG Taxation and Customs Union has set up internal control processes aimed to ensure

the adequate management of the risks relating to the legality and regularity of the

underlying transactions, taking into account the multiannual character of programmes as

well as the nature of the payments concerned.

Procurement

For procurements, the control objective is to ensure that the DG has reasonable

assurance that the amount of financial operations authorised during the reporting year

and which would not be in conformity with the applicable contractual or regulatory

provisions, does not exceed 2% of the total expenditure for the reporting year.

DG TAXUD calculates this number on the basis of the reported exceptions and non-

compliance events, defined as control overrides or deviations from policies and

procedures.

During the reporting year, 13 exceptions and 4 non-compliance instances were

recorded as control failure. None of these had an impact on the legality and

regularity of the transactions. All concerned instances relate to formal compliance

issues which do not have a negative impact on the budget.

The correction of the detected erroneous invoicing which involved an amount

unduly invoiced, resulted in 37 credit notes for a total amount of EUR 218.678,63.

Please refer to table 8 in annex 3 for details. All errors and irregularities have

been discovered before the actual payment, which is why no recovery order for

unduly paid amount has been issued in 2016. Considering that all corrections take

place before the actual payment is made (ex-ante), there are no errors left at the

moment of payment. Nonetheless, to calculate the error rate for procurement,

DG TAXUD has taken a most conservative approach and estimates the error rate

for procurement at 0,50% (see also annex 4).

In conclusion, the analysis of the available control results, the assessment of the

weaknesses identified and that of their relative impact on legality regularity has not

unveiled any significant weakness which could have a material impact as regards the

legality and regularity of the financial operations. It is therefore possible to conclude that

the control objective as regards legality and regularity has been achieved.

Grants

The principle of effectiveness set out by the Financial Regulation concerns the attainment

of the specific objectives set and the achievement of the intended results. In terms of

financial management and control, the main objective (among the five ICOs) remains

ensuring that transactions are legal and regular.

DG TAXUD has set up internal control processes aimed to ensure the adequate

management of the risks relating to the legality and regularity of the underlying

transactions, taking into account the multiannual character of programmes as well as the

nature of the payments concerned.


The control objective for the legality and regularity of the underlying transactions is to

ensure that the best estimate of the error rate by management is below 2%.

In order to better comply with payment deadlines, DG TAXUD modified in 2015 its

methodology of verification of the final financial reports from the Member States'

administrations. All payment requests and recovery orders are firstly verified by ex-ante

controls embedded in the financial circuits. Furthermore, basic and high level checks (on

top of the built-in controls within the IT system, ART2) are performed.

In 2016, the ex-ante desk review and controls detected EUR 128.192,20 non-elegible

cost, therefore an error rate of 1,11%.

After this first verification step, the financial reports are provisionally closed and the

settlement (either via a payment or a recovery order) with the beneficiaries is done. Only

then, the detailed desk reviews (ex-post controls), are performed. This ex-post

verification may lead to additional recoveries from the Member States' administrations.

Further to these ex-post desk reviews and controls, DG TAXUD decided, in 2015, to

perform on-the-spot audits in 3 to 5 Member States per year with the intention to cover

the majority of the MS/CC till the end of the current program period.

In 2015, on-the-spot audits in three countries (covering six Member States'

administrations), were performed. The final results were only available in 2016 and can

be summarised as follows :

Value Error rate Estimate of error

Country 1 428.849,86 3,30% 14.156,93

Country 2 653.406,32 2,52% 16.489,11

Country 3 591.390,26 5,15% 30.482,92

Total audited MS 1.673.646,44 3,66% 61.128,96

The above countries were intentionally targeted for on-the-spot audits due to their high

risk profile and based on various operational indicators showing that the follow-up of

programme activities still had some margin for improvement in those countries.

Extrapolating however this average error rate of 3,66% to the entire community and

programmes funds cannot not be done as it is not representative for the entire

programmes.

Instead, an average weighted error rate, was calculated using the results of the on-the-

spot audits on the one hand, and, for the rest of the community, the results of the ex-

ante verifications throughout the year. This calculation (see Annex 4), results in a best

possible estimation for grants in 2016 of 2,01%.

The above control strategy of DG TAXUD takes into account the specificities of the

grants, where the beneficiaries are clearly defined by the programmes. More concretely,

the beneficiaries of the grants are Member States' customs and tax administrations and

Candidate and potential Candidate Countries' customs and tax administrations.

Furthermore, ART2 (the obligatory IT system for managing joint actions) embeds several

controlling measures. Last but not least, it must be noted that there are numerous

individual actions with relatively small amounts involved for each action (reimbursement

of travel and subsistence expenditures).

The assessment by the management is based on the results of key controls performed in

2016, notably ex-ante controls, monitoring of projects, and desk reviews. The desk-

reviews are controls performed before the final payment/recovery. This better reflects


the specificities of the grants and enables distinction with other controls. The desk

reviews mainly focus on the more risky transactions and on the higher value

transactions. Ex-post audits are only performed when indicated by the risk analysis or

resulting from the desk reviews.

As the beneficiaries of the grants are clearly defined by the programmes and all projects

and actions are ex-ante approved by DG TAXUD, the controls related to the selection and

contracting phases ensure the legality and regularity of the grants commitments.

The analysis of the main causes and types of errors that were most commonly detected

during the 2016 ex-ante control confirmed that it was not necessary to call into question

the assurance.

In the context of the protection of the EU budget, at the Commission's corporate level,

the DGs' estimated overall amounts at risk and their estimated future corrections are

consolidated.

For DG Taxation and Customs Union, the estimated overall amount at risk at payment11

for the 2016 payments made is EUR 0,617 M€. This is the AOD's best, conservative

estimation of the amount of relevant expenditure12 during the year (97,457 M€) not in

conformity with the applicable contractual and regulatory provisions at the time the

payment is made.

This expenditure will be subsequently subject to ex-post controls and a sizeable

proportion of the underlying error will be detected and corrected in successive years. The

conservatively estimated future corrections13 for those 2016 payments made (on the

non-procurement part) are 0,005 M€. This is the amount of errors that the DG

conservatively estimates to identify and correct from controls that it will implement in

successive years.

The difference between those two amounts leads to the estimated overall amount at risk

at closure14 of 0,612 M€.

11 In order to calculate the weighted average error rate (AER) for the total relevant expenditure in the

reporting year, the detected, estimated or other equivalent error rates have been used.

12 "relevant expenditure" during the year = payments made, minus new pre-financing paid out, plus previous pre-financing cleared.

13 Even though based on the 7 years historic average of recoveries and financial corrections (ARC), which is the best available indication of the corrective capacity of the ex-post control systems implemented by the DG over the past years, the AOD has adjusted this historic average by neutralising the amount of credit notes. Any coding errors, ex-ante elements, one-off events, (partially) cancelled or waived ROs, other factors from the past years that would no longer be relevant for current programmes (e.g. higher ex-post corrections of previously higher errors in earlier generations of grant programmes) have been adjusted in order to come to the best but conservative estimate (i.e. 0,06%) of the expected corrective capacity average to be applied to the reporting year's relevant expenditure for the current programmes in order to get the related estimated future corrections.

14 For some programmes with no set closure point (e.g. EAGF) and for some multiannual programmes for which corrections are still possible afterwards (e.g. EAFRD and ESIF), all corrections that remain possible are considered for this estimate.


Table X - Estimated overall amount at risk at closure

DG TAXUD

"payments made" (FY; m€)

minus newa prefinancing (in FY; m€)

plus clearedc

prefinancing (in FY; m€)

= "relevant expenditure"d (for the FY; m€)

Average Error Rate (weighted AER; %)

estimated overall amount at risk at payment (FY; €)

Average Recoveries and Corrections (adjusted ARC; %)

estimated future corrections [and deductions] (for FY; €)

estimated overall amount at risk at closuree (€)

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

Programme, Budget Line(s), or other relevant level

as per AAR annex 3, table 2

as per ABAC DWH BO report on prefinancing f

as per ABAC DWH BO report on prefinancing f

= (2) – (3) + (4)

Detected error rates, or equivalentg estimates

= (5) x (6) based on 7Y-avg historic ARC (as per ABAC DWH BO report on corrective capacity)f: (X,X%), but adjustedh to be the best but conservative estimate for the current MFF

= (5) x (8) = (7) – (9)

Procurement 89,27 4,11 0 85,16 0,5% 0,42 0 0 0,42

Grants (joints actions)

11,56 11,29 9,26 9,53 2,01% 0,19 0,06% 0,005mEUR 0,18

Other 2,76 0 0 2,76 0 0 0 0 0

Overall, total 103,59 15,40 9,26 97,45 0,63% 0,61 mEUR and 0,64%

of (5)

= 0,005 mEUR; and

0,01% of (5)

0,61 mEUR and 0,63%

of (5)

a New PF actually paid by out the DG itself during the FY (i.e. excluding any PF received as transfer from another DG) c PF actually having been cleared during the FY (i.e. their 'delta' in FY actuals, not their 'cut-off' based estimated 'consumption')


d For the purpose of equivalence with the ECA's scope of the EC funds with potential exposure to L&R errors (see the ECA's AR methodological Annex 1.1 point

7), also our concept of "relevant exposure" includes the payments made, subtracts the new pre-financing paid out and adds the previous pre-financing actually

cleared during the FY. This is a separate and 'hybrid' concept, intentionally combining elements from the budgetary accounting and from the general ledger

accounting.

e For some programmes with no set closure point (e.g. EAGF) and for some multiannual programmes for which corrections are still possible afterwards (e.g.

EAFRD and ESIF), all corrections that remain possible are considered for this estimate

f differentiated at a level lower than the DG total

g In Shared Management, e.g.: "validated/adjusted error rates", "residual error rates at MS-level, as reported by the MS Audit Authorities and

applied/adjusted/projected by the DG", etc.

h Even though based on the 7 years historic average of recoveries and financial corrections (ARC), which is the best available indication of the corrective capacity

of the ex-post control systems implemented by the DG over the past years, the AOD has adjusted this historic average. Any coding errors, ex-ante elements,

one-off events, (partially) cancelled or waived Recovery Orders, other factors from the past years that would no longer be relevant for current programmes (e.g.

higher ex-post corrections of previously higher errors in earlier generations of grant programmes) have been adjusted in order to come to the best but

conservative estimate of the expected corrective capacity average to be applied to the reporting year's relevant expenditure for the current programmes in order

to get the related estimated future corrections.


D. Cost-effectiveness and efficiency

Based on an assessment of the most relevant key indicators and control results, DG

Taxation and Customs Union has assessed the cost-effectiveness and the efficiency of the

control system and reached a positive conclusion.

The principle of efficiency requires to ensure an optimal ratio between resources

employed and results achieved. The principle of economy requires that the resources

used by the institution in the pursuit of its activities shall be made available in due time,

in appropriate quantity and quality and at the best price. This section, together with the

internal control templates in annex 5, outlines the indicators used to monitor the

efficiency of the control systems, including an overall assessment of the costs and

benefits of controls.

See also internal control templates in Annex 5.

Procurement

DG TAXUD has produced an estimation of the costs of the three main control processes.

A quantitative estimation of the volume of errors prevented and detected is not available

though, since it is not possible to quantify the related benefits, other than by the

amounts recovered or discovered as wrongly invoiced as a result of these controls (see

previous section). By consequence, it is not possible to determine the cost-effectiveness

of controls by comparing costs with benefits and it is therefore necessary to consider only

the efficiency indicators. To do so, DG TAXUD has defined efficiency measures for the

controls associated with the three core processes:

- For procurements, an estimated EUR 255.927,2715 were invested in controlling 2

procurement procedures for contracts which had a total value of EUR

177.763.358,28. Each procurement procedure has an estimated handling cost of EUR

228.85516. Thus, 0,14% of the total contract value was dedicated to control. The

average time to procure17 was 225 days in 2015.

The procurement procedures are to a large extent a regulatory requirement which

cannot be reduced. These controls are undoubtedly a necessity to eliminate the risks

outlined in annex 5.

- Overall, no 2016 procurement procedures needed to be retendered due to leakages.

There were no procedures where no offers were received. All tendering procedures

15 1,85 FTE, representing the efforts of all actors involved in the control of the public procurement procedures

(i.e. the actors in the financial unit, the committee on public procurement, the Authorising Officers by (sub-) Delegation, etc.).

16 1,65 FTE, representing the combined efforts of actors in the operational and financial units in preparing and running a public procurement procedure

17 Elapsed time between the publication of the procurement procedure in the Official Journal and the signature of the award decision.


were accepted by the financial unit and there were no complaints from unsuccessful

tenderers. The Committee on Public Procurement did not reject any procurement

procedure.

For payments, an estimated EUR 496.80018 were invested in preparing and

controlling 1.106 payments worth EUR 100.837.088,09. On average a financial

transaction costs an estimated EUR 449 for processing. Thus about 0,49% of the

total payment amount was dedicated to control. The average time to pay in 2016 was

19,58 days19.

DG TAXUD considers these controls necessary to be in compliance with regulatory

requirements.

- For contracts, an estimated EUR 524.40020 were invested in preparing and

controlling about 220 contracts (or the amendments of the contracts) worth about

EUR 108,7. Thus about 0,48% of the total amount contracted was dedicated to

control. In average preparation and controlling of each contract costs an estimated

EUR 2.384. DG TAXUD considers these controls are necessary to ensure compliance

with regulatory requirements.

- There were no specific ex-post supervisory measures on procurement in 2016.

Overall, during the reporting year the controls carried out by DG TAXUD for the

management of the budget appropriations cost EUR 1.277.127,2721 and are considered

cost effective (in particular as the cost of these controls represents only 1,33% of the

total payments made).

Cost efficiency indicator Result 2016

Procurement - overall cost of control (% over payments made) 1,33%

Procurement - cost of controls of the evaluation and selection

procedure/ value contracted (%)

0,14%

Procurement - related cost of control of payments/ amount paid (%) 0,48

Procurement - related cost of control of the supervisory measures/

value of transactions checked (%)

NA22

Time to pay (days) 19,58 days

Time to procure (days) 225 days

Average cost of a payment EUR 449

Average cost of establishing and managing a contract EUR 2.384

Average cost of a procurement procedure EUR 228.855

18 3,6 FTE, representing the combined efforts of actors in the financial and operational units involved in

invoicing process and in the payments preparation, verification and execution

19 The average time to pay comprises all payments executed by DG TAXUD. 20 3,8 FTE, representing the combined efforts of actors in the financial and operational units involved in

contracts preparation, verification and validation 21 A total of 9,25 FTE 22 There were no specific supervisory measures throughout 2016


Grants

Cost efficiency indicator Result 2016

Grants - overall cost of control (%) [cost of control from contracting

and monitoring the execution up to payment included/ amount paid]

3,3%

Grants - cost of control ex post audits/ value of grants audited 3,42%

Grants – time to pay 22 days

The applied ex-ante controls ensure that the errors detected during the desk reviews are

very limited. As the control strategy primarily aims to ensure compliance with the

regulatory framework, its benefits are not quantifiable.

During the reporting year the controls carried out by DG TAXUD for the management and

control of the grant programme cost about 387.404 €, representing 3,3% of the total

grant payments. The cost of the ex-post on-the-spot audits in 2016 was 57.181,82€

which represents 3,42% of the total value of grants audited.

The total cost of control for grants, i.e. the overall ex-ante controls and the cost of the

ex-post on-the-spot audits was 444.585,46€ representing 3,84% of payments made.

These controls are considered cost effective and essential to ensure compliance with

regulatory requirements.

Overall conclusion on the cost-effectiveness and efficiencies of controls

DG TAXUD quantifies the costs for carrying out the controls described in annex 5 on the

basis of the resources and inputs required for these controls and estimates their benefits,

in so far as possible, in terms of the amount of errors and irregularities prevented,

detected and corrected by these controls (as per Annex 3, table 8). Most benefits

however are non-quantifiable covering non-financial gains like: better value for money,

deterrent effects, efficiency gains, system improvements, protection from reputational

damage and, above all, compliance with regulatory provisions.

In 2016, the controls cost in total EUR 1.277.127,27 for procurement related controls,

and EUR 444.585,46€ for grants related controls, representing 1,66% of all payments

made and are therefore considered cost-effective. These controls are essential to ensure

compliance with regulatory requirements.

DG TAXUD does not intend to use the possibility in art 66.2 to differentiate the frequency

and/or the intensity of the DG's controls. No revisions were considered needed or cost-

effective.


E. Fraud prevention and detection

DG Taxation and Customs Union has developed and implemented its own anti-fraud

strategy in December 2013, elaborated on the basis of the methodology provided by

OLAF. It has been updated in December 2015 with a new action plan for the 2016-2018

period.

DG TAXUD's Anti-fraud strategy focusses on developing a strong anti-fraud culture within

the DG through awareness raising activities on potential fraud risks and ethical behaviour

among TAXUD staff. The strategy furthermore addresses an active cooperation with OLAF

and the integration of fraud aspects into the SPP cycle of the DG.

During 2016, specific anti-fraud related actions were carried out in DG TAXUD:

– Introduction of a new action plan for 2016-2018;

– monitoring the AFS action plan at the end of the year;

– the "red flags", a register of indicators pointing to possible irregularities and fraud,

was developed;

– the intranet website – dedicated to the implementation of the anti-fraud strategy and

instructions for contacts with lobbyists was further improved;

– records of lobbyists' contacts are kept at unit level;

– a test verifying effectiveness of the system used for exchanging encrypted e-mails,

resulting in 81% of positive replies.

The various training sessions, workshops and the communication to staff through

updated information on the intranet resulted in a significant increase of awareness in the

area of anti-fraud and ethics across the DG. So far over 35 training sessions aimed at the

prevention, detection and reparation of fraud were organised, reaching up to 90% of

staff in DG TAXUD.

The AFS is monitored regularly and proved to be a reliable tool to follow up anti-fraud

controls in an effective and efficient manner. The state of implementation of the anti-

fraud strategy is reported to the senior management at least once per year. All planned

actions for 2016 were implemented.

Following the IAS audit report on the performance and coordination of anti-fraud

activities in the traditional own resources (TOR) area, the anti-fraud strategy will have to

be updated in 2017 to address the accepted recommendations related to fraud risk in the

TOR area and fraud proofing of legislation.

Other control objectives: safeguarding of assets and information, reliability of

reporting

DG TAXUD manages a fair number of intangible assets (EUR 26.892.330,74 in 2016 –

see Annex 3, Table 4).

These assets are mainly IT assets and include off-the-shelf software (commercial

software purchased from various suppliers) and internally generated intangible assets

(in-house developed Information Systems).

Following the ex-IAC audit on intangible assets in 2013, DG TAXUD has developed a

rigorous methodology to record and keep track of these intangible assets. A


comprehensive manual, with clear responsibilities between the IT and Financial units has

been elaborated and is followed ever since. Software purchases are recorded in ABAC

Assets and declassifications are thoroughly documented. Yearly, the state of play is

reported to OIB.

For in-house developed Information Systems, the accounting correspondent and IT units

perform a yearly scrutiny of all IT projects according to the procedures laid down in the

internal Accounting Manual of DG TAXUD and update the SAP accounting system

accordingly.

At the moment of writing, there are no known elements or weakness that would deserve

a reservation.

2.1.2 Audit observations and recommendations

This section reports and assesses the observations, opinions and conclusions reported by

auditors in their reports as well as the limited conclusion of the Internal Auditor on the

state of control, which could have a material impact on the achievement of the internal

control objectives, and therefore on assurance, together with any management measures

taken in response to the audit recommendations.

In 2016 DG TAXUD was audited by the Commission Internal Audit Service (IAS) and the

European Court of Auditors (ECA).

All internal audit recommendations are monitored by liaising with the operational units

responsible for the implementation of the recommendations and reporting progress to

IAS on the actions taken.

IAS OPINION/CONCLUSION ON THE STATE OF INTERNAL CONTROL

The IAS concluded23 that the internal control systems audited are overall working

satisfactorily, although one very important finding remains to be addressed. This

finding relates to the roles and responsibilities in the Traditional Own Resources are made

within the scope of the audit on "performance and coordination of anti-fraud activities in

the Traditional Own Resources (TOR) area" (audit performed in 2016).

At the time of writing, DG TAXUD submitted the audit action plan to the IAS but did not

yet receive formal agreement on this action plan. Consequently, the deadline for

implementation of this finding can only be confirmed once the review of the action plan

has been finalised by the IAS.

AUDIT ENGAGEMENTS in 2016

In 2016, the following audits, follow-up audits and implementation of action plans took

place in DG TAXUD:

AUDITS

23 Ares(2017)836716 dated 15/02/2017


1) PERFORMANCE AND COORDINATION OF ANTI-FRAUD ACTIVITIES IN THE

TRADITIONAL OWN RESOURCES (TOR) AREA

The objective of the audit was to assess whether the anti-fraud activities in the area of

TOR are planned, managed and coordinated in an effective manner to ensure the best

protection of the Commission's financial interests.

The scope of this audit engagement covered the Commission’s anti-fraud activities in the

TOR area with a particular focus on customs duties and cigarette smuggling. The audit

focused on the activities of OLAF, DG BUDG and DG TAXUD.

The IAS concluded that despite the high risk of fraud in the TOR area, the focus of the

Commission Anti-fraud Strategy and the individual AFSs for a Directorate General is

primarily on prevention and detection in the expenditure area and less on TOR. This

resulted in 1 very important recommendation (related to roles and responsibilities in the

TOR area) and 2 important recommendations (related to operational cooperation and

reflection of fraud in customs in its AFS and Management Plans).

At the time of writing this report, the action plan has been sent to the IAS for review.

It is foreseen to implement the required actions throughout 2017.

2) FINANCIAL MANAGEMENT & IT PROCUREMENT

The overall objective of this audit was to assess the adequacy of the design and the

effective implementation of DG TAXUD's internal control systems as regards its IT

procurement, contract and financial management processes as well as the effectiveness

and efficiency of the related financial circuits.

The scope included IT procurement procedures, framework contracts, specific contracts

and requests for actions as well as the related financial transactions performed.

There were neither critical nor very important issues, the audit identified a number of

areas for improvement, reflected in 3 important recommendations which relate to the

improvement of procurement and contract management guidance, and revision of the

financial circuits and the control strategy.

The related action plan has been issued and will be implemented throughout 2017.

3) IT OPERATIONS AND USER ACCESS MANAGEMENT

The IAS announced the audit in mid-2016 (expected completion in 2017). The audit work

is in progress.

4) INTERNAL PROCESSES SUPPORTING TRADE POLICY NEGOTIATIONS

The IAS announced this multi DG audit in November 2016 (expected completion in

2017).

The overall objective of the audit is to assess if the internal processes supporting trade

policy negotiations are effective and efficient across the Commission.

The audit will also assess whether the internal control system provides reasonable

assurance regarding various processes supporting trade negotiation activities.

The audit work is in progress.

FOLLOW-UP AUDITS

5) FOLLOW UP OF THE AUDIT ON EXTERNAL COMMUNICATION STRATEGY

The objective of this audit was to give a reasonable assurance that the sector responsible

for Information and Communication and other TAXUD units in charge of external

communication put in place adequate measures to ensure that communication processes


are effectively and efficiently implemented in order to provide reliable, relevant and up-

to-date external communication. The audit resulted in 7 very important (two downgraded

by IAS to important), 6 important (one downgraded by IAS to desirable) and 1 desirable

recommendation.

As a result of the follow up, four recommendations were assessed by the IAS as not fully

implemented. The outstanding actions concern mainly the recognition of the external

communication as the core business by adapting a set of documents such as job

descriptions, annual planning and budget implementation.

The very important recommendation related to Annual planning of external

communication actions in unit responsible for communication and policy units actually

exceeded the expected completion date (31/12/2015, revised to 31/01/2017), compared

to the original target date by 1 year and 1 month.

All four outstanding recommendations were reported as implemented on 31/01/2017.

The IAS will assess the state of implementation of the recommendations not yet fully

implemented in 2017.

6) FOLLOW UP OF THE AUDIT ON CUSTOMS PERFORMANCE MEASUREMENT

SYSTEM

The main objective of the audit was to assess the extent to which DG TAXUD had an

adequate performance measurement framework in place for customs activities both in

terms of its day-to-day operational and administrative activities (internal) and in terms of

the delivery of policy objectives (external). The audit resulted in 2 very important and 1

important recommendations.

Based on the results of the follow-up audit, recommendation no 1 Performance

measurement of committees and groups (rated Very Important) and recommendation no

3 Customs programmes evaluations and monitoring (rated Important) have been

adequately and effectively implemented.

However, for recommendation Performance measurement of DG TAXUD customs

activities (rated Very Important), DG TAXUD was advised to develop its planning,

measurement and monitoring processes so that these become an effective tool to

manage, supervise and improve operational activities at all levels. This outstanding

action concerns the definition of a limited set of key performance indicators and reporting

which is done in the context of the SPP documents. It was implemented and sent to the

auditors for review.

The second follow-up of this last action is foreseen in 2017.

7) FOLLOW UP OF THE AUDIT ON PROCUREMENT AND MANAGEMENT OF

STUDIES

The objective of the audit was to provide a reasonable assurance that the systems in

place for planning, procurement, contractual management and use of external studies

undertaken at the level of the DG are effective and efficient to support the achievement

of the DG's objectives, and implemented in compliance with the relevant rules. The audit

resulted in 2 very important (both downgraded by IAS to important) and 6 important

recommendations (one downgraded by IAS to desirable), which required improved

annual planning and management overview.

The Internal Audit Service has conducted a follow-up audit in February 2016 and

assessed that all the reviewed recommendations have been adequately and effectively

implemented and that the audit could be closed.

SUMMARY OF THE STATE OF RECCOMENDATIONS' IMPLEMENTATION


AUDIT/FOLLOW-UP AUDIT (FU)

RECCOMENDATIONS

ISSUED IMPLEMENTED PENDING

Performance of Anti-Fraud Activities

in the Own Resources, Customs and

Taxation

3 0 3

Financial Management & IT

Procurement 3 0 3

External Communication Strategy

(FU) 14 10 4

Customs Performance Measurement

System (FU) 3 2 1

Procurement And Management of

Studies (FU) 8 8 Audit closed

TOTAL 31 20 11

European Court of Auditors (ECA)

DG TAXUD has systematically examined the observations and recommendations issued

by the European Court of Auditors. Follow up process is supported by IT tool RAD.

1) ECA'S ANNUAL REPORT CONCERNING THE FINANCIAL YEAR 2015

Following DAS audit on "Revenue", in 2016 two important recommendations were issued

by ECA to DG TAXUD:

One asked the Commission to ensure that economic operators receive a similar

treatment in all Member States as regards the time-barring of the debt notifications

following a post-clearance audit. The Commission considers that its proposal for a

Directive on the Union legal framework for customs infringements and sanctions

(COM(2013)884 final) addressed the observations of the Court and that the situation is

expected to improve once the proposal is adopted and applied. However, the outcome

depends on the decision of the legislative authority.

The Court also asked the Commission to facilitate to the extent possible the recovery of

customs debts by the Member States, where the debtors are not based in an EU Member

State. The Commission accepted the recommendation and will in due course (2019)

examine and assess the effectiveness of the new UCC in addressing the issues identified

by the Court.

In the scope of the 2015 DAS audit on expenditures, the ECA sampled a payment

transaction made in the scope of the ITSM2 Lot1 contract. The ECA categorised the

error as accidental and it did not have any impact as regards assurance.

2) SPECIAL REPORT ON MARITIME TRANSPORT

Special Report on Maritime Transport was published by ECA in 2016 with one new

recommendation for DG TAXUD: to ask MS to periodically provide specific information on

the type and number of specific customs procedures at individual core ports in order to

assess whether ports are being treated equally. The Commission did not accept the

recommendation as it would introduce and additional reporting requirement and thus

increase the administrative burden for EU MS administrations without leading to

proportionate benefits. Nevertheless, the Commission acts vigorously against breaches of

the EU customs legislation, by launching infringements procedures when necessary.

3) SPECIAL REPORT ON TACKLING INTRA-COMMUNITY VAT FRAUD

This Special Report was released by ECA in March 2016 and DG TAXUD is following up all

accepted recommendations addressed to it.


Following discussion in the Council, the Court's two requests (to recommend to MS to use

IT environment for information exchanges; to recommend to MS to participate in all

Eurofisc working fields) have been implemented in 2016 by DG TAXUD.

The implementation of remaining five open recommendations is ongoing and the

following progress has been achieved so far:

- Tax Gap Project Group was established under Fiscalis 2020 programme to pool

knowledge and exchange information on the methodologies of tax gap estimations; the

group published a report in March 2016 and is currently exploring ways in which the size

of VAT missing trader fraud can be estimated.

- The Council Working Party on Tax Questions agreed in June 2016 that the Commission should launch the development of the Transaction Network Analysis project with the MS willing to participate. Since October 2016, a project group is preparing the IT-development of a transaction network analysis tool for Eurofisc. Work on Transaction Network Analysis is

ongoing and it will become fully operational in 2018.

- The Commission urged the Eurofisc network to establish a strategic plan covering

performace indicators/targets and Eurofisc network has informed the Commission that

action plans were made in 2016 for each Eurofisc field.

- The Commission planned monitoring visits for 2017 to selected MS in the context of

evaluation of the administrative cooperation.

4) ECA’s Special Report 02/2014 on preferential trade arrangements:

The remaining recommendation which required to promote the replacement of origin and

movement certificates with exporters’ self-certification by end 2017 has been

implemented: A first set of GSP beneficiary countries started to apply the Registered

Exporter (REX) system since 1 January 2017. REX system will also be applied in the

context of CETA; is also proposed in the ongoing or coming negotiations and will also be

applied for the OCTs as from 1 January 2020.

PREVIOUS FINANCIAL YEARS: FOLLOW-UP OF OPEN ECA RECOMMENDATIONS

State of play

5) ECA's Annual Report concerning the financial year 2014:

The Commission has been addressing the Court’s recommendation - to improve guidance

on post clearance audits- within the current framework of the Common Risk Management

Strategy and its Action plan, particularly in the ongoing work on financial risk criteria,

which should be finalised by end 2017.

6) ECA's Annual Report concerning the financial year 2013:

One very important recommendation required the establishment of minimum risk

analysis standards for the customs post-clearance audits, including building upon the

information in the existing database of imports, in order to allow Member States to better

target risky importers. The new version of the Customs Audit Guide (2014) sets out risk

indicators for the post-clearance audits. Changes to the existing database are planned to

be fully operational by 2018.

7) ECA's Special Report 1/2010 on simplified customs procedures for imports:

The Union Customs Code (UCC) (Regulation (EU) No 952/2013) applies as from 1 May

2016 and provides for an improved regulatory framework for simplified customs

procedures and solid environment for companies; the recommendation which required

further simplifications by May 2016 has been thus implemented; only one important

recommendation remains still open: computerisation by end 2015 will only be fully


implemented by end 2020, with the full implementation of the Union Customs Code

provisions on simplified procedures.


2.1.3 Assessment of the effectiveness of the internal control systems

The Commission has adopted a set of internal control standards, based on international

good practice, aimed to ensure the achievement of policy and operational objectives. In

addition, as regards financial management, compliance with these standards is a

compulsory requirement.

DG Taxation and Customs Union has put in place the organisational structure and the

internal control systems suited to the achievement of the policy and control objectives, in

accordance with the standards and having due regard to the risks associated with the

environment in which it operates.

DG TAXUD annually assesses the effectiveness of its key Internal Control Standards

(ICS). The assessment relies on a number of monitoring measures and sources of

information, as described below.

The annual review of the internal control system (ICS 15) was based on desk review,

followed by a screening exercise of the 16 internal control standards involving the

relevant horizontal units responsible for the implementation of the ICSs. In conclusion,

the internal control standards are effectively implemented, although some improvements

could still be achieved in the area of business continuity system (ICS 10) where the DG

will take measures to further improve its efficiency in 2017. This standard will be again

prioritised in 2017.

For the prioritised ICSs in 2016 (exceptions and non-compliance reporting (ICS 8),

business continuity system (ICS 10), and external communication strategy (ICS 12)),

special attention was given throughout the year:

- the procedure for exception and non-compliance reporting (ICS 8) was emphasised,

through the number of awareness raising activities, such as dedicated newsflash and

the update of the relevant TAXUD intranet pages to make them more user-friendly

and understandable. The register of exceptions and non-compliance events was

analysed in order to identify the underlying causes behind these events. When

necessary, corrective and alternative mitigating controls have been implemented;

- as regards Business Continuity (ICS 10), the following specific actions took place in

2016: business impact analysis, new duty officer system setup with a rotating

schedule where each HoU is a Duty Officer, new Business Continuity Correspondent

was appointed. Although progress has been achieved, not all actions which led to the

prioritisation in 2016 have been completed. It is hence proposed to continue to

prioritise this requirement throughout 2017;

- in 2016, the External Communication Strategy (ICS 12) was revised and

communication activities were given a high recognition from the Director General.

Recommendations which derived from the audit on external communication are in the

final implementation phase.

Each year a risk assessment exercise is carried out as part of the Management Plan

process and in accordance with DG BUDG's guidance. The risk identification and

assessment exercise also included the analysis of possible fraud risks. The objectives and


actions set in the DG’s Anti-fraud strategy were based on the results of these fraud risk

analysis.

In order to follow recent IAS' audit on the performance and coordination of anti-fraud

activities in the traditional own resources area, DG TAXUD will ensure that objectives

regarding prevention of fraud in the customs area are clearly reflected in its Annual Risk

Assessment.

As reported in Section 2.1.2, the outstanding audit recommendations are monitored and

in progress.

As the described in Section 2.1.2 these outstanding audit issues do not relate to controls

concerning the implementation of the Commission's budget. They however qualify the

2016 limited assurance conclusion of the IAS on the state of internal control in the DG.

The declarations of the Authorising Officers by sub-Delegation and the auditors’ opinion

on the state of the internal control system do not raise any assurance implications.

DG Taxation and Customs Union has assessed the internal control systems during the

reporting year and has concluded that the internal control standards are implemented

and functioning as intended. In addition, DG Taxation and Customs Union has taken

further measures to further improve the effectiveness of the business continuity control

standard.

2.1.4 Conclusions as regards assurance

This section reviews the assessment of the elements reported above (in Sections 2.1.1,

2.1.2 and 2.1.3) and draws conclusions supporting the declaration of assurance and

whether it should be qualified with reservations.

The information reported in sections 2.1, 2.2 and 2.3 stems from the results of

management and auditor monitoring contained in the reports listed. These reports result

from a systematic analysis of the evidence available. This approach provides sufficient

guarantees as to the completeness and reliability of the information reported and results

in a complete coverage of the budget delegated to the Director-General of DG TAXUD.

Concerning the DG’s assessment of the management of its own resources, in Part 2 the

control results and other relevant elements on the achievement of the internal control

objectives were reported. The brief description of the expenditure areas managed by the

DG showed that its main expenditures fall into the two main categories of procurement

contracts and multi-beneficiary grants.

In part 2.1 these two expenditure areas were analysed. It was demonstrated that the

combination of substantial ex-ante controls (both technical and financial) performed

during the tendering procedures together with the extensive ex-ante controls of financial

transactions and on-the-spot audtis ensures that the assigned resources have been used

for their intended purpose and in accordance with the principles of sound financial

management. The total control cost of EUR 1.277.127,27 for procurement and EUR

444.585,46 for grants, is considered cost-effective. The control strategy for grants is fit

for purpose and in line with the specificities of the grant agreements (beneficiaries

directly identified in the legal base (no calls for proposal), mostly reimbursement of pre-

agreed projects and actions, relatively small amounts). The overall procurement and


grant control procedures put in place give the necessary guarantees concerning the

legality and regularity of the underlying transactions and also aim to prevent and detect

fraud.

DG TAXUD has cross- sub-delegated a relatively limited amount to other Commission

DGs. Information received from other Authorising Officers gives reasonable assurance

that the resources allocated to the activities covered by the crossed sub-delegations were

used in accordance with the purposes and the principle of the sound financial

management.

Concerning the overall state of the DG’s control system, the DG generally complies with

the ICSs. The chosen prioritised standards and requirements for further monitoring

(business continuity) and derived actions clearly reflect and respond to the current risk

environment of the DG. There is a continuous effort to improve the effectiveness of the

internal control system.

Furthermore, it was demonstrated that the results from the audits performed in the past

years, their recommendations and follow-ups support the above mentioned reasonable

assurance about the correct use of the resources. Any on-going issues do not relate to

controls concerning the implementation of the Commission's budget, and do not affect

the expression of the Internal Auditor's overall opinion on the year 2016.

The Antifraud Strategy is monitored regularly and proved to be a reliable tool to follow up

anti-fraud controls in an effective and efficient manner.

In summary, the information reported in part 2 covers the entire budget delegated to DG

TAXUD in 2016. It represents a true and reliable view of the resources used for the

intended purposes and in accordance with the principle of the sound financial

management. The information reported in sections 2.1, 2.2 and 2.3 does not result in

any major issues deserving a reservation:

The amount at risk for the total expenditure managed by DG TAXUD is below the

materiality level.

No critical issues were highlighted by internal or external auditors;

No issues were pointed out by the Authorizing Officers by Sub -delegations;

compliance with the Internal Control Standards; weaknesses are known and

addressed

Taking into account the ECA auditors’ observations together with the management

measures taken in response, the management of DG TAXUD believes that the ECA

recommendations issued do not raise any assurance implications and that they are being

implemented as part of the on-going continuous improvements efforts.

Overall Conclusion

In conclusion, management has reasonable assurance that, overall, suitable controls are

in place and working as intended; risks are being appropriately monitored and mitigated;

and necessary improvements and reinforcements are being implemented. The Director

General, in his capacity as Authorising Officer by Delegation has signed the Declaration of

Assurance.


2.1.5 Declaration of Assurance


DECLARATION OF ASSURANCE

I, the undersigned,

Director-General of DG TAXUD

In my capacity as authorising officer by delegation

Declare that the information contained in this report gives a true and fair view24.

State that I have reasonable assurance that the resources assigned to the activities

described in this report have been used for their intended purpose and in accordance

with the principles of sound financial management, and that the control procedures put

in place give the necessary guarantees concerning the legality and regularity of the

underlying transactions.

This reasonable assurance is based on my own judgement and on the information at my

disposal, such as the results of the self-assessment, ex-post controls, the limited

conclusion of the Internal Auditor on the state of control and the lessons learnt from the

reports of the Court of Auditors for years prior to the year of this declaration.

Confirm that I am not aware of anything not reported here which could harm the

interests of the institution or those of the Commission".

Brussels, 29 March 2017

(Signed)

Stephen Quest

24 True and fair in this context means a reliable, complete and correct view on the state of affairs in the

DG/Executive Agency.


2.2 Other organisational management dimensions

The examples of efficiency and economy mentioned in the 2016 Management

Plan have been established.

TAXUD Study Management Business Process

In 2016, DG TAXUD ran for the first time the full annual cycle of the study

management business process. The tool supporting the business process

allowed collecting all relevant information for each study in one place "the study

information fiche". As such, study owners complete and update their study fiche

instead of contributing to different tables and planning exercises while planning

units obtained their relevant planning information from a cross reading of these

fiches created and updated by the study owner. The tool reduced the time

invested in planning and enforced the usage of a single working title for each

study, reducing possible duplications and errors.

EU Customs Data Model

DG TAXUD was instrumental in the development of the EU Customs Data

Model (EUCDM), launched by the Commission in June 2016. The EUCDM is a

reference framework and a working instrument that defines and models the data

requirements for the functioning of Customs in the EU. The EUCDM is reproduced

in the EU Customs' legislation in order to give it a legally binding character. It

presents a single and genuine source of information for the daily operations of

economic operators and customs officials, as well as the developments of the

different electronic customs systems that are used for data processing by

customs in the EU. The data model defines the data elements and their

organisation for customs declarations, notifications, decisions, etc. It provides

the stakeholders exact information on what data need to be provided for each of

the customs procedures. The EUCDM is implemented in the new UCC compatible

versions of all EU Customs trans-European systems and national customs

systems required by the UCC. The EUCDM is an example of a further

harmonisation within the EU by applying and developing in further detail

international standards, here provided by the World Customs Organisation.

The EUCDM provides the backbone and organisation of the data provided by

traders to customs authorities through the different declarations and

notifications. The EUCDM tool in its native proprietary format (licence required)

also produces the text adopted in EU Customs' legislation. Member States using

the same data mapping tool, may inherit the EUCDM and complement it in

accordance with their national needs. The EUCDM is also an ideal tool to

integrate the requirements of other administrations with those of customs and

will help very much progress on the EU Single Window environment.


Others may exploit free of cost the EUCDM as published under other formats,

such as this html presentation, on the Commission's EUROPA website. The

EUCDM also maps the data against the WCO Data Model. In the future the scope

of the EUCDM by will be further extended and other formats that can be used

free of costs may be added (e.g. CSV or excel).

2.2.1 Human resource management

Due to the replacement of one female head of Unit by a man, the indicator for

female representation in middle management decreased. In principle however, a

sufficient number of middle management posts would become vacant between

now and 2020 through (compulsory) inter-DG mobility and retirements and

would allow to reach the 2020 target. The indicator on wellbeing slightly

decreased in 2016, beyond the general context of internal and external events,

this might however be the result of DG TAXUD specific issues as important move

operations/open space discussions and the feeling of insecurity in the Maelbeek

area after the terrorist attacks.

2.2.2 Better regulation (only for DGs managing regulatory acquis)

TAXUD will continue to focus on both operational and organisational capacity

building, raising awareness of individual staff regarding the principles of better

regulation and reinforcing our evaluation and better regulation culture. Both will

be pursued through a series of activities like targeted training, information

sessions and awareness-raising activities.

2.2.3 Information management aspects

DG TAXUD continued to ensure that appropriate processes and procedures are in

place for a secure and efficient document management compliant with the e-

Domec principles.

DG TAXUD is coordinating DG for the "PANA" Committee, the European

Parliament Investigating Committee set up in the wake of the Panama Papers

leaks. At the same time, DG TAXUD is confronted with an increasing number of

access to document (ATD) requests. Frequently, these concern a very large

number of documents and/or documents originating from third parties on which

these parties need to be consulted. In 2016, DG TAXUD replied to 247 requests

for access of documents.

2.2.4 External communication activities

The communication actions during the year included promotion of the entry into

force of the UCC on 1 May 2016 with an explanatory video in all EU languages

together with supporting material for Member States and internet, and media


coverage. Similarly, communication packages consisting of internet, explanatory

videos and media measures were the main actions to accompany the principle

policy proposals during the year; anti-tax avoidance package; VAT action plan;

VAT environment for ecommerce; corporate tax package (CCCTB), and the

proposal for a new cash controls regulation. Examples of the communication

material produced (visuals, webpages and video links) are provided within the

report alongside the relevant policy subject.

Social media is becoming of increasing importance and during the year the DG

enhanced its Twitter account and has been included in the FORBES “100 Must-

Follow Tax Twitter Accounts For 2017” TAXUD also launched its own You Tube

and Flickr accounts during the year.

https://twitter.com/EU_Taxud

http://www.forbes.com/sites/kellyphillipserb/2016/12/31/100-must-follow-tax-twitter-accounts-for-2017/#75a3d0d1b61d

https://www.youtube.com/EUTaxationandCustomsUnion

https://www.flickr.com/photos/146315122@N05

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