MEPs in the Committee on Economic and Monetary Affairs (ECON) are due to meet on Wednesday 30 November to vote on the ‘Unshell’ directive aimed at preventing the misuse of shell entities for tax purposes (see EUROPE 13039/23). According to our sources, there is a consensus on the text and the proposed amendments should be adopted.
Contacted by EUROPE, the rapporteur, Lídia Pereira (EPP, Portuguese), said: “The ‘Unshell’ initiative is a concrete step towards eliminating tax schemes that only serve to allow multinationals to avoid their duty”. It wants to differentiate between the legitimate use of companies to invest and create jobs and the misuse of complex legal schemes to avoid taxes.
MEPs have been working to establish concrete minimum common indicators of economic substance that will identify what is a company and what is a tax shelter. Specifically, they have sought to establish criteria that will allow national tax authorities to better identify the real purpose of a company and to react to a situation of misuse of a jurisdiction to avoid taxes or promote aggressive tax planning. “In addition, we are clarifying the consequences of being considered a shell entity, with concrete penalties”, she concluded.
Among the minimum substance indicators, companies will have to demonstrate that they have their own premises in the Member State, premises for exclusive use or premises shared with entities in the same group. They will also have to have at least one bank or e-money account of their own active in the Union through which the relevant income is received.
Contacted by EUROPE, Greens/EFA negotiator Ernest Urtasun (Spanish) welcomed the agreement: “Tomorrow, the Parliament will vote a strong position on the Directive. The Parliament is stricter on carve-outs, and on penalties. The Parliament will also allow for joint audits in order to allow cross-control by Member States”. For him, this consensus on the Commission’s proposal, “with some more ambitious caveats”, “is a strong message to the resistance of some Member States in the Council to adopt it”.
MEPs fear that the EU Council will water down the text. According to a leak obtained by Members of the Parliament, it seems that the Council is still negotiating hard on the directive, to the extent that an agreement could not be reached before the Spanish Presidency, starting in June 2023. Sweden, which will hold the Presidency of the Council from January 2023, may not give it priority.
The Council would have decided to merge the entry criteria and the substance test into one article, leading to one set of rules. On issues such as sanctions, exclusions and tax consequences, there is still no compromise.
To read the compromise text: https://aeur.eu/f/4cl (Original version in French by Anne Damiani)