Activities of Ernest URTASUN 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 (48)
Amendment 37 #
Proposal for a directive
Recital 2 a (new)
Recital 2 a (new)
(2a) This Directive should be implemented consistently with other areas of the EU acquis. The same artificial constructions used for the purpose of obtaining a tax advantage can also be relied upon to minimise or evade social security and cross-border labour law obligations. In particular, EU posting and social security rules require substance and evidence of habitual work in the Member State of alleged establishment for an undertaking to enjoy the benefits of free provision of services.
Amendment 38 #
Proposal for a directive
Recital 3
Recital 3
Amendment 47 #
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 of obtaining a tax advantage. It would therefore be important to establish a gateway criterion, in the form of a set of three cumulativefour , indicative conditions, in order to conclude which undertakings are sufficiently at risk as aforementioned to justify that they be subjected to reporting requirements. 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 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. Finally, a fourth condition should look at the profitability and productivity rates at the level of the undertaking. High rates could be indicative of a lack of substance.
Amendment 48 #
Proposal for a directive
Recital 6
Recital 6
Amendment 55 #
Proposal for a directive
Recital 9
Recital 9
(9) To ensure tax certainty, it is imperative to lay down common rules on the content of undertakings’ declarations. Undertakings that pass the gateway criterion and are consequently subject to reporting requirements should be presumed not to have sufficient substance for tax purposes if they also declare not to possess one or more of the elements that cumulatively constitute a minimum level of substance, or do not provide the required supporting evidence. Undertakings that declare to possess all the elements of the minimum level of substance and provide the required supporting documentation should instead be presumed to have minimal substance for tax purposes and should incur no further obligations and consequences under this Directive. This, however, should be without prejudice to any applicable law and the right of the administration to perform an audit, including on the basis of the supporting documentation, and possibly, arrive at a different conclusion. To allow Member States to efficiently allocate tax administration’s resources, Member States may consider for a period of three years that the undertaking is presumed to have minimum substance on the condition that the factual and legal circumstances of the undertaking remain unchanged during this period.
Amendment 57 #
Proposal for a directive
Recital 10
Recital 10
(10) It is recognised that whether an undertaking is actually performing economic activities for tax purposes or serves mainly tax avoidance or evasion purposes is ultimately a matter of facts and circumstances. This should be assessed on a case by case basis in respect of each specific undertaking. Therefore, undertakings presumed not to have minimal substance for tax purposes should be entitled to prove the contrary, including to prove that they do not serve primarily tax objectives, and rebut such presumption. After fulfilling their reporting obligations under this Directive, they should provide additional information to the administration of the Member State where they reside for tax purposes. While they may provide any additional information that they deem appropriate, it is essential to set common requirements of what may constitute appropriate additional evidence and should thus be required in all cases. Where the Member State, based on such additional evidence, considers that an undertaking has rebutted a presumption of lack of substance in a satisfactory manner, it should be able to issue a decision to certify that the undertaking has minimal substance for tax purposes in accordance with this Directive. Such decision may remain valid for the period during which factual and legal circumstances of the undertaking remain unchanged and up to 63 years from the time the decision is issued. This will allow to limit the resources allocated to cases that have been evidenced not to be a shell for the purposes of the Directive.
Amendment 60 #
Proposal for a directive
Recital 11
Recital 11
(11) As the objective of this Directive is to prevent tax avoidance and evasion that are likely to flourish through actions by undertakings without minimal substance, and in order to ensure tax certainty and enhance the proper functioning of the internal market, it is paramount to provide for a possibility of exemptions for undertakings which meet the gateway criterion, but fail on only one of the minimum substance criteria, yet whose interposition has no actual advantageous impact on the overall tax position of the undertaking’s group or of the beneficial owner(s). For that reason, such undertakings should be entitled to request the administration of the Member State, where they reside for tax purposes, to issue a decision which exempts them from complying with the proposed rules altogether and upfront. Such exemption should also be limited in time, 3 years, to allow the administration to verify on a regular basis that the factual and legal circumstances justifying the exemption decision remain valid. At the same time a potential extended duration of such decision will allow to limit the resources allocated to cases that should be exempt from the scope of the Directive.
Amendment 63 #
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 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 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 deny to issue a certificate of tax residence. Alternatively, that Member State should be able to issue such certificate while indicating, by means of a w and issue a statement regarnding, 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 68 #
Proposal for a directive
Recital 14 a (new)
Recital 14 a (new)
(14a) With a view to ensure an effective implementation of the EU acquis and to help the fight against unfair terms and conditions of employment, the competent authorities performing labour inspections and social security assessment should have timely access to the information pointing at possible lack of substance.
Amendment 73 #
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 self-assessment by the undertakings as regards 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 joint tax audits of undertakings at risk for 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 audit and to share information on the outcome, even where there is no finding of ‘shell’ entity.
Amendment 78 #
Proposal for a directive
Article 3 – paragraph 1 – point 5
Article 3 – paragraph 1 – point 5
(5) ‘beneficial owner’ means beneficial owner as defined in Article 3, point (6), of Directive (EU) 2015/849 of the European Parliament and of the Councilany natural person owning directly or indirectly at least one share of the undertaking (or the equivalent minimum unit of interest in a legal person);
Amendment 81 #
Proposal for a directive
Article 6 – paragraph 1 – introductory part
Article 6 – paragraph 1 – introductory part
1. Member States shall require that undertakings meeting at least two of the following criteria to report to the competent authorities of Member States in accordance with Article 7:
Amendment 83 #
Proposal for a directive
Article 6 – paragraph 1 – point a
Article 6 – paragraph 1 – point a
(a) more than 750% of the revenues accruing to the undertaking in the preceding two tax years is relevant income;
Amendment 87 #
Proposal for a directive
Article 6 – paragraph 1 – point b – point i
Article 6 – paragraph 1 – point b – point i
(i) more than 650% of the book value of the undertaking’s assets that fall within the scope of Article 4, points (e) and (f), was located outside the Member State of the undertaking in the preceding two tax years;
Amendment 89 #
Proposal for a directive
Article 6 – paragraph 1 – point b – point i a (new)
Article 6 – paragraph 1 – point b – point i a (new)
(ia) more than 50% percentage of the book value of the undertaking is derived directly or indirectly from immovable property;
Amendment 91 #
Proposal for a directive
Article 6 – paragraph 1 – point b – point ii
Article 6 – paragraph 1 – point b – point ii
(ii) at least 650% of the undertaking’s relevant income is earned or paid out via cross-border transactions;
Amendment 97 #
Proposal for a directive
Article 6 – paragraph 1 – point c – paragraph 1
Article 6 – paragraph 1 – point c – paragraph 1
An undertaking which holds assets that can generate income falling within the scope of Article 4, points (e) and (f), shall also be deemed to meet the criterion set out in point (a) of the first subparagraph, irrespective of whether income from these assets has accrued to the undertaking in the preceding two tax years, if the book value of these assets is more than 750% of the total book value of the undertaking’s assets.
Amendment 99 #
Proposal for a directive
Article 6 – paragraph 1 – point c – paragraph 2
Article 6 – paragraph 1 – point c – paragraph 2
An undertaking which holds assets that can generate income falling within the scope of Article 4, point (c), shall also be deemed to meet the criterion set out in point (a) of the first subparagraph, irrespective of whether income from these assets has accrued to the undertaking in the preceding two tax years, if the book value of these assets is more than 750% of the total book value of the assets of the undertaking.
Amendment 101 #
Proposal for a directive
Article 6 – paragraph 1 – point c a (new)
Article 6 – paragraph 1 – point c a (new)
(ca) in the preceding two tax years, the undertaking has not exceeded 3 times the average of the sector in the Union in the following categories: (i) profitability per employee; (ii) profitability of assets; (iii) productivity per employee; (iv) turnover on assets.
Amendment 106 #
Proposal for a directive
Article 6 – paragraph 2 – point b
Article 6 – paragraph 2 – point b
Amendment 110 #
Proposal for a directive
Article 6 – paragraph 2 – point e
Article 6 – paragraph 2 – point e
Amendment 118 #
Proposal for a directive
Article 6 – paragraph 2 – subparagraph 1
Article 6 – paragraph 2 – subparagraph 1
Amendment 120 #
Proposal for a directive
Article 6 – paragraph 2 a (new)
Article 6 – paragraph 2 a (new)
2a. The Commission shall be empowered to adopt delegated acts, after 2 years of the entry into force of this Directive, to extend the categories in scope of paragraph 2.
Amendment 129 #
Proposal for a directive
Article 7 – paragraph 1 – point c – introductory part
Article 7 – paragraph 1 – point c – introductory part
(c) one of the following indicators:
Amendment 134 #
Proposal for a directive
Article 7 – paragraph 1 – point c – point ii
Article 7 – paragraph 1 – point c – point ii
(ii) the majority of the full-time equivalent employees of the undertaking are resident for tax purposes in the Member State of the undertaking, or at no greater distance fromhave their habitual place of work as defined by Regulation (EC) No 593/2008 in thate Member States insofar as such distance is compatible with the proper performance of their duties, of the undertaking and such employees are qualified to carry out the activities that generate relevant income for the undertaking.
Amendment 138 #
Proposal for a directive
Article 7 – paragraph 2 – point a a (new)
Article 7 – paragraph 2 – point a a (new)
(aa) taxes paid in the Union, disaggregated by country and type of tax;
Amendment 143 #
Proposal for a directive
Article 7 – paragraph 2 – point g a (new)
Article 7 – paragraph 2 – point g a (new)
(ga) profitability and productivity rates as indicated in Article 6(1);
Amendment 146 #
Proposal for a directive
Article 7 – paragraph 2 – point g b (new)
Article 7 – paragraph 2 – point g b (new)
(gb) list of core income generating activities;
Amendment 148 #
Proposal for a directive
Article 7 – paragraph 2 – point g c (new)
Article 7 – paragraph 2 – point g c (new)
(gc) entity structure and justification.
Amendment 149 #
Proposal for a directive
Article 8 – paragraph 1 a (new)
Article 8 – paragraph 1 a (new)
1a. Member States may consider for a period of three years that the undertaking is presumed to have minimum substance as set out in paragraph 1 on the condition that the factual and legal circumstances of the undertaking remain unchanged during this period.
Amendment 156 #
Proposal for a directive
Article 9 – paragraph 4
Article 9 – paragraph 4
4. After the end of the tax year for which the undertaking rebutted the presumption successfully, in accordance with paragraph 3, a Member State may consider for a period of fivthree years that the undertaking has rebutted the presumption on the condition that the factual and legal circumstances of the undertaking remain unchanged during this period.
Amendment 157 #
Proposal for a directive
Article 10 – paragraph 1
Article 10 – paragraph 1
1. A Member State shall take the appropriate measures to allow an undertaking that meets the criteriadoes not meet one of the minimum substance indicators laid down in Article 6(1)7 to request an exemption from its obligations under this Directive if the existence of the undertaking does not reduce the tax liability of its beneficial owner(s) or of the group, as a whole, of which the undertaking is a member.
Amendment 160 #
Proposal for a directive
Article 10 – paragraph 3
Article 10 – paragraph 3
3. After the end of the tax year for which an exemption was granted in accordance with paragraph 2, a Member State may extend the validity of the exemption for fivthree years on the condition that the factual and legal circumstances of the undertaking, including of the beneficial owner(s) and the group, as the case may be, remain unchanged in the relevant period.
Amendment 162 #
Proposal for a directive
Article 11 – paragraph 2 – introductory part
Article 11 – paragraph 2 – introductory part
2. The Member State of the undertaking’s shareholder(s) shall tax the relevant income or assets of the undertaking in accordance with its national law as if it had directly accrued to the undertaking’s shareholder(s) and deduct any tax paid on such income at the Member State of the undertaking, where the following conditions are met:
Amendment 163 #
Proposal for a directive
Article 11 – paragraph 2 – subparagraph 2
Article 11 – paragraph 2 – subparagraph 2
Where the payer is not resident for tax purposes in a Member State, the Member State of the undertaking’s shareholder(s) shall tax the relevant income or assets accruing to the undertaking in accordance with its national law as if it had directly accrued to the undertaking’s shareholder(s), without prejudice to any agreement or convention that provides for the elimination of double taxation of income, and where applicable, capital, in force between the Member State of the undertaking’s shareholders and the third country jurisdiction of the payer;
Amendment 165 #
Proposal for a directive
Article 12 – paragraph 1 – introductory part
Article 12 – paragraph 1 – introductory part
Where an undertaking does not have minimum substance for tax purposes in the Member State where it is resident for tax purposes, that Member State shall take any of the following decisionsdeny any request for a certificate of tax residence to the undertaking for use outside the jurisdiction of this Member State:
Amendment 166 #
Proposal for a directive
Article 12 – paragraph 1 – point a
Article 12 – paragraph 1 – point a
Amendment 168 #
Proposal for a directive
Article 12 – paragraph 1 – point b
Article 12 – paragraph 1 – point b
Amendment 170 #
Proposal for a directive
Article 12 – paragraph 1 a (new)
Article 12 – paragraph 1 a (new)
When denying such certificate, the Member State shall issue an official statement 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.
Amendment 178 #
Proposal for a directive
Article 13 – paragraph 1 – point 2 a (new)
Article 13 – paragraph 1 – point 2 a (new)
Directive 2011/16/EU
Article 16 – paragraph 1 – subparagraph 2
Article 16 – paragraph 1 – subparagraph 2
(2a) in Article 16(1), the first subparagraph is replaced by the following: ‘Such information may also be used for the assessment and enforcement of other taxes and duties covered by Article 2 of Council Directive 2010/24/EU of 16 March 2010 concerning mutual assistance for the recovery of claims relating to taxes, duties and other measures, or for the assessment and enforcement of compulsory social security contributions. and cross-border labour law obligations.’
Amendment 180 #
Proposal for a directive
Article 13 – paragraph 1 – point 4
Article 13 – paragraph 1 – point 4
Directive 2011/16/EU
Article 21 – paragraph 5 – subparagraph 4 a (new)
Article 21 – paragraph 5 – subparagraph 4 a (new)
The competent authorities performing labour inspections and social security assessment shall have access to the information recorded under Article 8ad (1), (2) and (3) when this information is relevant for the assessment and enforcement of compulsory social security contributions and cross-border labour law obligations.
Amendment 183 #
Proposal for a directive
Article 14 – paragraph 2
Article 14 – paragraph 2
Member States shall ensure that those penalties include an administrative pecuniary sanction of at least 5% of the undertaking’s turnover in the relevant tax year, if the undertaking that is required to report pursuant to Article 6 does not comply with such requirement for a tax year within the prescribed deadline or makes a false declaration in the tax return under Article 7. In case of zero or low turnover, defined as below 1 million EUR, the penalty should be based on the undertaking’s total assets.
Amendment 187 #
Proposal for a directive
Article 15 – paragraph 1
Article 15 – paragraph 1
Where the competent authority of one Member State has reason to believe that an undertaking which is resident for tax purposes in another Member State has not met its obligations under this Directive, the former Member State may request the competent authority of the latter to conduct a joint tax audit of the undertaking based on Article 12a of Council Directive (EU) 2021/514.
Amendment 189 #
Proposal for a directive
Article 15 – paragraph 2
Article 15 – paragraph 2
Amendment 192 #
Proposal for a directive
Article 16 – paragraph 1 – point f
Article 16 – paragraph 1 – point f
(f) number of audits and joint audits to undertakings that meet the conditions laid down in Article 6(1),
Amendment 194 #
Proposal for a directive
Article 17 – paragraph 1
Article 17 – paragraph 1
1. By 31 December 2028Every three years from the entry into force of this Directive, the Commission shall present a report to the European Parliament and the Council on the implementation of this Directive.
Amendment 197 #
Proposal for a directive
Article 17 – paragraph 2
Article 17 – paragraph 2
2. When drawing up the report, the Commission shall take into account the information communicated by the Member States pursuant to Article 156.
Amendment 198 #
Proposal for a directive
Article 17 a (new)
Article 17 a (new)
Article 17a Review 1. By ... [5 years after the entry into force of this Directive], the Commission shall review the application of this Directive and report to the Council on its operation. The report shall address whether there is a need to amend this Directive in view to increase the effectiveness this directive. 2. The report shall in particular assess the impact of this Directive on tax revenues in Member States, on tax administration’s capacities, and, amongst others, the need to expand the application of Article 6(2) and the need to review Articles 6 and 7.