In her draft report published on Friday 17 November, MEP Lídia Pereira (EPP, Portuguese) intends to “increase the ambition” of the proposal for a directive aimed at simplifying the taxation of European small and medium-sized enterprises (SMEs), while “preserving the feasibility of this new system”.
As part of the package of measures to support SMEs presented by the European Commission in September (see EUROPE 13248/21), the proposed ‘HOT’ directive provides for a ‘head office tax system’. Under this text, the profits of SMEs would be taxed entirely in the country where they are based, rather than in all the Member States to which they export their products or services. A single administration would then be responsible for redistributing the income to which other member countries are entitled.
In her report, Ms Pereira calls on the Council of the EU to “adopt the ‘HOT’ initiative quickly and effectively”. Parliament can only give an advisory opinion in tax matters.
The rapporteur firstly proposes shortening the deadline for transposing this directive from the end of 2025 to the end of 2024, so that the new rules can be applied from January 2025. “European businesses need a strong signal of support from the EU in today's complex and volatile environment”, she justifies in the explanatory memorandum.
Secondly, the rapporteur suggests removing or making more flexible certain eligibility conditions in order to widen access to the system while maintaining the scope of application. She also proposes transforming the system and guaranteeing an indefinite period for the application of the rules, thereby relieving SMEs of a greater proportion of the compliance costs associated with the renovation process.
Finally, she wants to shorten the deadlines for applications from SMEs and for the exchange of information between national authorities, with the aim of guaranteeing a faster and more efficient application system.
Pereira concludes: “The ‘HOT’ initiative represents an opportunity for the EU to send a clear signal to European SMEs and to reconfirm our single market as a place of opportunity for European businesses”.
Read the draft report: https://aeur.eu/f/9ni (Original version in French by Anne Damiani)