Summary
On 30 November the ECON Committee of the European Parliament (EP) adopted (55 votes in favour, 1 against, and no abstentions) its draft report on the European Commission (EC)’s proposal for a legislation setting out criteria for determining a shell company used for tax avoidance, the ensuing penalties, as well as reporting requirements (UNSHELL Directive). The rapporteur is Lidia Pereira (EPP, PT). The draft report represents the EP’s opinion on the legislative proposal, but the Council is not legally obliged to take it into account. The ECON is in favour of amending the EC proposal, notably by:
- Slightly lowering the thresholds below which a company is exempt from the reporting requirements of the directive.
- Providing for penalties to be levied also on companies with zero or low revenue.
- Obliging companies subject to the reporting requirements to provide more detailed information.
- Amending the information sharing requirements between member states to ensure a better quality and completeness of data being exchanged.
- Stating that penalties should amount to a minimum of 2% of an undertaking’s revenue in the relevant tax year for failure to report correctly and 4% of revenue for making false declarations. In the case of zero or revenue falling below a threshold set by the national tax authority, the penalty should be based on the undertaking’s total assets.
The adopted draft report is not available yet, but it will shortly be published on the online pages of the ECON Committee and of the Council. Members can also find the initial draft report and the initially proposed amendments.
Next steps
- The draft report was transmitted to the Council which must consider it when adopting the directive, but, under the consultation procedure, is not legally obliged to take it into account.
- Once adopted by the Member States, the Directive should come into effect on 1 January 2024.