European Commission proposes to end the misuse of shell entities for tax purposes within the EU
Commission proposes to end the misuse of shell entities for tax purposes within the EU
The proposal should ensure that entities in the European Union that have no or minimal economic activity are unable to benefit from any tax advantages and do not place any financial burden on taxpayers. This will also protect the level playing field for the vast majority of European businesses, who are key to the EU’s recovery, and will ensure that ordinary taxpayers do not suffer additional financial burden due to those that try to avoid paying their fair share.
While shell, or letterbox, entities can serve useful commercial and business functions, some international groups and even individuals abuse them for aggressive tax planning or tax evasion purposes… Read the full press release here: https://ec.europa.eu/taxation_customs/news/commission-proposes-end-misuse-shell-entities-tax-purposes-within-eu-2021-12-22_en
Questions and Answers on the Commission’s proposal to end the misuse of shell entities
What did the European Commission propose? Why are shell companies a problem? What will the new rules do? What are the standards and indicators used to determine if a company has real economic activity? The question and answers page includes responses to these questions plus much more… Read the full Questions and Answers here: https://ec.europa.eu/commission/presscorner/detail/en/qanda_21_6968
Factsheet
The factsheet is a short one-pager with a couple of quick questions to consider… Read the Factsheet here: https://ec.europa.eu/taxation_customs/system/files/2021-12/Factsheet%20Unshell.pdf
Full text of proposal for shell companies
The full text of 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 can be found here: https://ec.europa.eu/taxation_customs/system/files/2021-12/COM_2021_565_1_EN_ACT_part1_v7.pdf
Impact assessment report
The impact assessment report to accompany 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 can be found here: https://ec.europa.eu/taxation_customs/system/files/2021-12/Impact%20Assessment%20-%20Council%20Directive%20laying%20down%20rules%20to%20prevent%20the%20misuse%20of%20shell%20entities%20for%20tax%20purposes%20%28UNSHELL%29.pdf
Unshell
On 22 December 2021, the European Commission presented a key initiative to fight against the misuse of shell entities for improper tax purposes. The Unshell proposal should ensure that entities in the European Union that have no or minimal economic activity are unable to benefit from any tax advantages and do not place any financial burden on taxpayers. This will also protect the level playing field for the vast majority of European businesses, who are key to the EU’s recovery, and will ensure that ordinary taxpayers do not suffer additional financial burden due to those that try to avoid paying their fair share…Read the full text here: https://ec.europa.eu/taxation_customs/taxation-1/unshell_en
Minimum corporate taxation
On 22 December 2021, the European Commission has proposed a Directive ensuring a minimum effective tax rate for the global activities of large multinational groups. The proposal delivers on the EU’s pledge to move extremely swiftly and be among the first to implement the recent historic global tax reform agreement, which aims to bring fairness, transparency and stability to the international corporate tax framework.
The proposal follows closely the international agreement and sets out how the principles of the 15% effective tax rate – agreed by 137 countries – will be applied in practice within the EU. It includes a common set of rules on how to calculate this effective tax rate, so that it is properly and consistently applied across the EU…Read the full text here: https://ec.europa.eu/taxation_customs/taxation-1/minimum-corporate-taxation_en
