Unshell directive: MEPs adopt position on legislation to clamp down on shell companies 

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MEPs propose to widen the scope and toughen sanctions of proposed legislation aimed at clamping down on shell companies used for tax purposes.

MEPs adopted their opinion on Tuesday in plenary by 637 votes in favour, 2 against and 6 abstentions amending the Commission’s proposal for a directive setting out criteria for determining a shell company used for tax avoidance and tax evasion, the ensuing penalties as well as reporting requirements.

In their opinion, drafted by Lídia Pereira (EPP, PT), MEPs amend the Commission proposal, notably by slightly lowering the thresholds below which a company is exempt of the reporting requirements of the directive, and by providing for penalties to be levied also on companies with zero or low revenue. They also say that companies subject to the reporting requirements should be obliged to provide more detailed information.

To allow a better distinction between legitimate shell companies and those existing for tax purposes, MEPs also amended the information sharing requirements between member states to ensure a better quality and completeness of data being exchanged.

Specifically on penalties, MEPs say that these 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.

During Monday’s plenary debate, the rapporteur Lídia Pereira (EPP, PT) said: The fight against tax fraud and tax evasion has never been as important as it is today for citizens. This house is united in wanting to fight this fraud and evasion. We must be uncompromising when it comes to tax abuse and, at the same time, avoid creating unnecessary barriers for companies to set up. This directive is essential for delivering tax policy which is just, fair and transparent and the Parliament has proposed amendments to it aiming at balance, transparency and toughness.

Next steps

This opinion is now transmitted to the Council which must consider it when adopting the directive.