On Tuesday 25 January MEPs adopted recommendations to prevent national ‘withholding tax regimes’ from facilitating tax evasion, while reducing barriers for companies and investors operating abroad.
The resolution, drafted by Pedro Marques (S&D, Portugal), was adopted by 52 votes to 5 with one abstention in the Committee on Economic and Monetary Affairs.
It points out that the system of withholding taxes between Member States has remained largely fragmented in terms of rates and relief procedure, creating loopholes and legal uncertainty. The current system is abused to shift profits, allows aggressive tax planning and creates the undesirable effect of double taxation, in addition to barriers to cross-border investment in the single market.
This is the first time that the European Parliament has focused so much on withholding taxes and the need for minimum rates. This resolution is strategic in view of the European Commission’s forthcoming legislative proposal focused on withholding tax procedures in the EU, scheduled for spring/summer 2022.
With this resolution, MEPs are reiterating their request to the Commission to present a legislative proposal meaning that all payments (dividends, interest, royalties, capital gains, etc.) made within the EU are taxed at least once before leaving it. This proposal could also contain a minimum effective tax rate.
The committee also calls on the Commission and Member States to establish a common and standardised withholding tax framework and to strengthen cooperation and mutual assistance between tax authorities, financial market supervisors and law enforcement authorities.
The draft resolution will be put to a vote in the European Parliament’s March plenary session. (Original version in French by Anne Damiani)