Brussels is not impressed with the level of cooperation afforded by Malta to EU authorities when recovering taxes, according to a European Commission report.
In fact, Malta is among the countries mentioned as needing to step up efforts in this area, particularly by increasing the human resources necessary to deal with the EU mechanism in place.
In its first evaluation report of a directive introduced in 2012 to facilitate recovery of claims relating to taxes, duties and other measures across the EU, Brussels noted that, despite Malta receiving a very small number of claims from other Member States, it was still not cooperating enough, such that its recovery rate was below two per cent of all the claims received so far.
Last year, Malta received 39 requests for the recovery of taxes due to other Member States. However, the report noted that not much had been done and most of the tax due had not been recovered yet.
According to the report, one of the main problems highlighted by the Maltese tax authorities was that the human resources engaged to carry out the work generated by the EU mechanism were insufficient.
Together with Estonia, Malta is the country with the lowest number of tax officials working on EU tax recovery, and not even a single full-time person is specifically dedicated to the system.
The Commission said the Maltese official responsible for the implementation of the directive only dedicated half his time to the recovery of taxes.
Responding to a dossier by the Commission, Malta’s tax authorities declared that they viewed the requests by other Member States to be “burdensome” and that they could not really cope with the consequent workload.
The Commission noted that 18 Member States argued that the number of tax recovery requests by other Member States was very burdensome for them, and many members expressed concern about the lack of resources.
“In this regard, it is significant that one Member State – Malta – complained that the €1,500 threshold for requests for recovery or precautionary measures – which is imposed by the EU directive in order to take account of the workload generated by such requests – is too low, although Malta received only about 22 requests for recovery for the reporting period between 2013 and 2015,” the report said.
The EU directive aims to provide Member States with mutual assistance for the purposes of recovery of taxes and EU claims. According to the report, five years down the line, the directive is bearing fruit, so much so that about €76 million in tax due in the EU was recovered in 2016.
The Commission said that although more needed to be done by all Member States, there had to be the will to cooperate for the mechanism to be successful.
How it works
A person does not pay tax in Member State A and moves to Member State B. He owns property in Member State C.
The tax authorities of Member State A can ask the tax authorities of Member States B and C to help recover the taxes due to Member State A.
ivan.camilleri@timesofmalta.com