Brussels, 28/05/2014 (Agence Europe) - The unanimous agreement hoped for at the Coreper meeting on Wednesday 28 May on the parent company-subsidiary directive, 2011/96/EU, did not ultimately materialise. The idea pursued is to prevent companies using differences between member states' legal systems to avoid tax by sending profits to subsidiaries in other countries. Sweden had been objecting to the deal, but a solution was found and a statement issued in which the Commission and Sweden make a number of clarifications demanded by Stockholm, but Malta refused to go along with the draft directive at the Coreper meeting.
The Greek Presidency of the Council of the EU was well aware of Malta's reservations because Malta says it informed EU experts of its doubts in April, doubts which were repeated at a ministerial meeting in May by Maltese minister Edward Scicluna. The Maltese government is unhappy at how few technical meetings have been held - only one has taken place - since the last Ecofin Council. The Presidency says it is not planning to bring the matter before Coreper on 4 June. Malta says there is political hastiness to reach agreement among the ministers, who have officially agreed to conclude the first part of the directive (hybrid loans) in June.
Malta is unhappy about Article 4, which lays down how double taxation is to be avoided. The idea is to prevent parent companies from getting tax deductions in countries where they have a subsidiary while also having a tax deduction in the country where the parent company is registered. Malta says that the wording suggested by the European Commission is better than the Greek Presidency's compromise. The Maltese government recognises the need to find a solution as soon as possible but, given that the member states have until 31 December 2015 to transpose the directive into their legal systems, it says ministers should allow more time for fine-tuning. Malta says that the aims can be achieved with wording that better respects member states' powers over taxation.
The Greek Presidency does not seem to want to re-open Pandora's Box on the grounds that the directive is ready to be discussed by the politicians, and says that Malta should raise its concerns at ministerial level again. The next Ecofin Council will be the last chaired by Greece. Several different wordings are being examined to win Malta's approval by 20 June. One solution might be to add an explanatory sentence. (EL)