At the last meeting of the high-level working group on Wednesday 4 October, it was decided that the proposed ‘UNSHELL’ directive, aimed at preventing the misuse of shell companies for tax purposes, should return to the technical level, a European source told EUROPE on Thursday 12 October.
The Spanish Presidency of the EU Council has presented a new compromise proposal, taking up the negotiations begun under the Swedish Presidency. The previous proposal was submitted in March (see EUROPE 13148/24). The European Commissioner for Economy, Paolo Gentiloni, expressed confidence that the dossier would be finalised during an exchange of views with members of the European Parliament’s Subcommittee on Tax Matters (FISC) in September (see EUROPE 13253/33).
According to the source, Belgium and Germany, in particular, did not approve the compromise proposal because the substantial criteria, which determine whether or not a company is a shell company, were not robust. Germany would like the physical presence of the company’s director in the country to be considered as a substantial criterion. But other countries do not want to see this criterion included in the directive.
Faced with this disagreement, Germany proposed not to agree on the substantial criteria, but simply to share information on the companies, the main characteristics (‘hallmarks’) and the potential risk of these companies. It suggested that each Member State should decide whether or not it is a matter of a shell company. They would also exchange best practice on how to tax shell companies.
Although this solution was accepted by most countries, others, such as Slovakia and Estonia, felt that it would involve too many burdens for a simple exchange of information.
The source also explained that the Spanish Presidency is not expected to present a new compromise and that it has cancelled the next working group. The issue will no doubt be taken up by the Belgian Presidency. (Original version in French by Anne Damiani)