Activities of Michiel HOOGEVEEN related to 2021/0434(CNS)
Plenary speeches (1)
Rules to prevent the misuse of shell entities for tax purposes (debate)
Shadow reports (1)
REPORT on the proposal for a Council directive laying down rules to prevent the misuse of shell entities for tax purposes and amending Directive 2011/16/EU
Amendments (10)
Amendment 32 #
Proposal for a directive
Recital 1 a (new)
Recital 1 a (new)
(1a) The lack of an international instrument on the misuse of shell entities for tax purposes creates a significant loophole in the global efforts to combat tax fraud and evasion and aggressive tax planning. The absence of such an instrument confirms the importance of the legal standards laid down in this Directive. It is essential to guarantee that the obligations provided for in this Directive are proportionate, effective and neutral from a taxation point of view, preserving the competitiveness of European undertakings.
Amendment 34 #
Proposal for a directive
Recital 1 b (new)
Recital 1 b (new)
(1b) The misuse of shell entities for tax purposes leads to a reduction in tax liability and the tax loss within the Union, which is estimated at around EUR 20 billion per year. It is therefore essential that this Directive set ambitious and proportionate standards for the definition of common minimum substance requirements, for the improvement of exchange of information between national tax administrations and for the dissuasion of the use of shell entities promoted by certain intermediaries.
Amendment 35 #
Proposal for a directive
Recital 2
Recital 2
(2) It is acknowledged that undertakings with no minimal substance may be set up in a Member State with the main objective of obtaining a tax advantage, notably by eroding the tax base of another Member State. While some Member States have developed a legislative or administrative framework to protect their tax base from such schemes, the relevant rules often have a limited effect, as they only apply in the territory of a single Member State and do not effectively capture situations that involve more than one Member State. Furthermore, the national rules that apply in this field significantly differ across the Union while some Member States have no rules at all, to tackle the misuse of undertakings with no or minimal substance for tax purposes. It is therefore important to create a Union- wide legal approach to ensure a framework for loyal and fair tax competition and safeguard the integrity of the internal market.
Amendment 39 #
Proposal for a directive
Recital 3 a (new)
Recital 3 a (new)
(3a) Taking into consideration the real risk of low capacity of Member States’ tax administrations and the risk that the existing administrative cooperation may at this point be inadequate for the purpose of this Directive, it is of utmost importance that the capacities of tax administrations be reinforced and that the exchange of information be improved across the Union. It is necessary that Member States share the relevant information to which they have access, implement systems supporting the exchange of that information and as a final step, enforce proposed sanctions against non-complying entities. In support of this Directive, the Commission should suggest specific activities within the Fiscalis programme.
Amendment 46 #
Proposal for a directive
Recital 5
Recital 5
(5) To ensure the proper functioning of the internal market, the proportionality and effectiveness of potential rules, it would be desirable to limit their scope to undertakings which are at risk of being found to lack minimal substance and used with the main objective ofmainly to obtaining a tax advantage. It would therefore be important to establish a gateway criterion, in the form of a set of three cumulative, indicative conditions, in order to conclude which undertakings are sufficiently at risk as aforementioned to justify that they be subjected to reporting requirements. Undertakings should do the gateway test themselves in the form of a self-assessment. A first condition should enable the identification of undertakings presumably engaged mainly in geographically mobile economic activities, as the place where such activities are actually carried out is usually more challenging to identify. Such activities normally give rise to important passive income flows. Hence, undertakings, which income consists predominantly of passive income flows would meet this condition. It should also be taken into account that entities holding assets for private use, such as real estate, yachts, jets, artworks, or equity alone, may have no income for longer periods of time, but still enable significant tax benefits by way of owning those assets. As purely domestic situations would not pose a risk for the good functioning of the internal market and would be best addressed at domestic level, a second condition should focus on undertakings engaged in cross- border activities. Engagement in cross- border activities should be established as having regard, on the one hand, to the nature of the transactions of the undertaking, domestic or foreign, and on the other, to its property, given that entities that only hold assets for private, non-business, use may not engage in transactions for a considerable time. Additionally, a third condition should point out to those undertakings which have no or inadequate own resources to perform core management activities. In this regard, undertakings that do not have adequate own resources tend to engage third party providers of administration, management, correspondence and legal compliance services or enter into relevant agreements with associated enterprises for the supply of such services in order to set up and maintain a legal and tax presence. Outsourcing of certain ancillary services only, such as bookkeeping services alone, while core activities remain with the undertaking, would not suffice in itself for an undertaking to meet this condition. While such service providers might be regulated for other, non-tax purposes, their obligations for such other purposes cannot always mitigate the risk that they enable the set up and maintenance of undertakings misused for tax avoidance and evasion practices.
Amendment 62 #
Proposal for a directive
Recital 13
Recital 13
(13) To ensure effectiveness of the proposed framework, it is necessary to establish appropriate tax consequences for undertakings that do not have minimal substance for tax purposes . Undertakings that have crossed the gateway criterion and are presumed to be lacking substance for tax purposes while, additionally, have not provided evidence to the contrary or evidence that they do not serve the objective of also not having disproven that they are attempting to obtaining a tax advantage, should not be allowed to benefit from the provisions of agreements and conventions that provide for the elimination of double taxation of income, and, where applicable, capital, to which the Member State of their tax residence is a party and. These undertakings may neither benefit from provisions stipulated by relevant international agreements for the promotion and protection of investments, nor may they benefit from any other agreements, including provisions in international agreements for the promotion and protection of investments, with equivalent purpose or effect. Such undertakings should not be allowed to benefit from Council Directive 2011/96/EU14 and Council Directive 2003/49/EC15. To this effect, those undertakings should not be entitled to a certificate of tax residence to the extent that this serves to obtain those benefits. The Member State where the undertaking is resident for tax purposes should therefore denyrefuse to issue a certificate of tax residence. Alternatively, that Member State should be able to issue such certificate while indicating, by means of a warn and issue a warning statement detailing, that it should not be used by the undertaking to obtain tax benefits as above. This denial of a certificate of tax residence, or alternatively the issue of a special certificate of tax residence,e grounds on which the decision was based. This denial of a certificate of tax residence should not set aside the national rules of the Member State of the undertaking with regard to the tax residence and relevant obligations linked thereto. It would rather serve to communicate to other Member States, and third countries, that no relief or refund should be granted with regard to transactions involving this undertaking based on any treaty with the Member State of the undertaking or Union directives, if applicable. __________________ 14 Council Directive 2011/96/EU of 30 November 2011 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (OJ L 345, 29.12.2011, p. 8). 15 Council Directive 2003/49/EC of 3 June 2003 on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States (OJ L 157, 26.6.2003, p. 49).
Amendment 71 #
Proposal for a directive
Recital 16
Recital 16
(16) In order to improve effectiveness, Member States should lay down penalties against the violation of the national rules that transpose this Directive. Such penalties should be effective, proportionate and dissuasive. To ensure tax certainty and a minimum level of coordination across all Member States, it is necessary to fix a minimum monetary penalty, also taking into account the situation of each specific undertaking. The envisaged rules rely on a self-assessment performed by the undertakings as regardsto determine whether or not they meet the gateway criteria. To achieve effectiveness of the provisions, incentivising adequate compliance across the Union, and taking into account that a shell undertaking in one Member State may be used to erode the tax base of another Member State, it is important that any Member State has the right to request another Member State to conduct tax audits of undertakings at risk ofor not fulfilling minimum substance as defined in this Directive. Accordingly, to reinforce effectiveness, it is essential that the requested Member State has an obligation to carry out such an audit and to share information on the outcome, even where there is no finding of a ‘shell’ entity. Joint audits allow for the pooling of expertise, thereby ensuring a complete picture of the facts and promoting acceptance of the audit results. Council Directive (EU) 2021/5141a created a uniform framework for joint audits and where appropriate, this is the metric that may be used. ______________________ 1a Council Directive (EU) 2021/514 of 22 March 2021 amending Directive 2011/16/EU on administrative cooperation in the field of taxation (ABl. L 104 vom 25.3.2021, S. 1).
Amendment 94 #
Proposal for a directive
Article 6 – paragraph 1 – point c – introductory part
Article 6 – paragraph 1 – point c – introductory part
(c) in the preceding two tax years, the undertaking outsourced the administration of day-to-day operations and the decision- making on significant functions to an entity that is not an associated enterprise within the same jurisdiction as the undertaking in question.
Amendment 114 #
Proposal for a directive
Article 6 – paragraph 2 – point e
Article 6 – paragraph 2 – point e
(e) undertakings with at least five own full-time equivalent employees or members of staff exclusively carrying out the activities generating the relevant incomeorking in the jurisdiction where the undertaking is resident for tax purposes;
Amendment 172 #
Proposal for a directive
Article 12 – paragraph 1 a (new)
Article 12 – paragraph 1 a (new)
When denying a request for a certificate of tax residence, the Member State shall issue an official document duly justifying such decision and prescribing that the undertaking is not entitled to the benefits of agreements and conventions that provide for the elimination of double taxation of income, and, where applicable, capital, or of international agreements with a similar purpose or effect and of Articles 4, 5 and 6 of Directive 2011/96/EU and Article 1 of Directive 2003/49/EC.