MEPs on the Committee on Economic and Monetary Affairs (ECON) discussed, on Monday 10 October, the proposed ‘unshell’ directive aimed at preventing the abuse of shell entities for tax purposes. They presented their amendments and expressed their wish to strengthen the initial text (see EUROPE 12859/5).
The rapporteur, Lídia Pereira (EPP, Portuguese), stressed the importance of this text. Given the current economic context, with tensions in supply chains and soaring inflation, “fiscal policy must be an instrument for jobs, growth and competitiveness, but only if it is used well”, she stressed. According to her, taxation represents “a direct and effective solution” to reduce the burden on companies and households, without emptying the national coffers, which requires a more effective fight against tax fraud and evasion.
She said that “this legislation is fundamental to fair, equitable and transparent tax competition in Europe” and that it was a “concrete step towards eliminating tax systems that only serve to allow multinationals to avoid their duty”.
Ms Pereira recalled the main points of her draft report, including the fact that the directive should target companies that can pay and the importance of minimum substance tests, which check whether a company is a shell company or not.
Gilles Boyer (Renew Europe, French) said that his group largely supports the European Commission’s proposal. For him, it is important to put in place a system that is both effective in putting an end to abusive practices and operational for the tax authorities and the companies not concerned. He insisted that the rules should be simple. However, he criticised the initial proposal for setting arbitrary criteria on the number of administrative staff and wanted to see more concrete criteria emerge.
Paul Tang (S&D, Dutch) shared this concern. He also wants to include a profitability test because, in his view, shell companies account for only a third of tax evasion and avoidance. He criticised the huge profits made by multinational companies based in his country.
Claude Gruffat (Greens/EFA, French), speaking on behalf of the Spaniard, Ernest Urtasun, pointed to the tax situation in the Netherlands and Luxembourg. “Shell companies will not be eradicated there, since these countries already have similar systems”, he said, underlining the “irony” of the situation. Although he found the “proposal innovative and interesting”, he criticised it for lacking ambition. He therefore suggested limiting the number of exemptions, and supported Ms Pereira on “joint hearing empowerment”.
A total of 200 amendments were tabled to the draft directive. They will be discussed on Thursday 13 October, but a compromise is expected to be reached.
To consult the draft report by Lídia Pereira: https://aeur.eu/f/3iu
And the amendments tabled: https://aeur.eu/f/3iv (Original version in French by Anne Damiani)