According to a European diplomat contacted by EUROPE on Thursday, 23 February, EU Member States are concerned about the consequences of the ‘Unshell’ directive on bilateral tax agreements that pertains to shell companies.
A meeting of the working group on the ‘Unshell’ proposal was held in the Council of the EU on Tuesday, 21 February. The Swedish Presidency had developed a second compromise text, which was discussed. Member States notably discussed the tax consequences of the directive.
According to the same European source, the main concern regards the ban on double taxation, which prevents income from being taxed twice in two different Member States. In fact, the directive provides that should an entity be fictitious, tax that has not been levied may be levied.
Although this ban is specified in EU legislation, it primarily depends on the bilateral agreements that Member States have with each other, which are based on the OECD model.
If adopted, the directive could have an impact on double taxation and the benefits that companies currently have thanks to those agreements.
For its part, the European Parliament has already adopted its opinion on the directive (see EUROPE 13101/5). (Original version in French by Anne Damiani)