Procedure : 2011/0314(CNS)
Document stages in plenary
Document selected : A7-0227/2012

Texts tabled :

A7-0227/2012

Debates :

Votes :

PV 11/09/2012 - 10.15
Explanations of votes

Texts adopted :

P7_TA(2012)0318

REPORT     *
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12 July 2012
PE 487.846v02-00 A7-0227/2012

on the proposal for a Council directive on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States (recast)

(COM(2011)0714 – C7-0516/2011 – 2011/0314(CNS))

Committee on Economic and Monetary Affairs

Rapporteur: Ildikó Gáll-Pelcz

(Recast – Rule 87 of the Rules of Procedure)

AMENDMENTS
DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION
 EXPLANATORY STATEMENT
 ANNEX: LETTER FROM THE COMMITTEE ON LEGAL AFFAIRS
 ANNEX: OPINION OF THE CONSULTATIVE WORKING PARTY OF THE LEGAL SERVICES OF THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COMMISSION
 PROCEDURE

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

on the proposal for a Council directive on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States (recast)

(COM(2011)0714 – C7-0516/2011 – 2011/0314(CNS))

(Special legislative procedure – consultation – recast)

The European Parliament,

–   having regard to the Commission proposal to the Council (COM(2011)0714),

–   having regard to Article 115 of the Treaty on the Functioning of the European Union, pursuant to which the Council consulted Parliament (C7-0516/2011),

–   having regard to the Interinstitutional Agreement of 28 November 2001 on a more structured use of the recasting technique for legal acts(1),

–   having regard to the letter of 6 March 2012 from the Committee on Legal Affairs to the Committee on Economic and Monetary Affairs in accordance with Rule 87(3) of its Rules of Procedure,

–   having regard to Rules 87 and 55 of its Rules of Procedure,

–   having regard to the report of the Committee on Economic and Monetary Affairs (A7-0227/2012),

A. whereas, according to the Consultative Working Party of the legal services of the European Parliament, the Council and the Commission, the proposal in question does not include any substantive amendments other than those identified as such in the proposal and whereas, as regards the codification of the unchanged provisions of the earlier acts together with those amendments, the proposal contains a straightforward codification of the existing texts, without any change in their substance;

1.  Approves the Commission proposal as adapted to the recommendations of the Consultative Working Party of the legal services of the European Parliament, the Council and the Commission and as amended below;

2.  Calls on the Commission to alter its proposal accordingly, in accordance with Article 293(2) of the Treaty on the Functioning of the European Union;

3.  Calls on the Council to notify Parliament if it intends to depart from the text approved by Parliament;

4.  Asks the Council to consult Parliament again if it intends to amend the Commission proposal substantially;

5.  Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Amendment  1

Proposal for a directive

Recital 1

Text proposed by the Commission

Amendment

(1) 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 has been amended several times. Since further amendments are to be made, it should be recast in the interests of clarity.

(1) 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 has been amended several times. Since further amendments are to be made, it should be recast in the interests of clarity. On 19 April 2012, the European Parliament called for concrete ways to combat tax fraud and tax evasion, drawing attention to tax evasion via hybrid financial instruments and calling on the Member States to ensure smooth cooperation and coordination between their tax systems to avoid unintended non-taxation and tax evasion.

Amendment  2

Proposal for a directive

Recital 1 a (new)

Text proposed by the Commission

Amendment

 

(1a) Persistent and considerable public deficits are closely linked to the current social, economic and financial crisis. At the same time, tax competition among Member States is an important factor impeding the sustainable consolidation of national budgets. Therefore the Commission should bring forward the timely introduction of a minimum rate of corporate taxes. Such a minimum rate would decrease tax competition and would therefore strengthen the freedom of Member States to tax companies. Thus, the principle of subsidiarity would not be negatively affected.

Amendment  3

Proposal for a directive

Recital 4

Text proposed by the Commission

Amendment

(4) The abolition of taxation on interest and royalty payments in the Member State where they arise, whether collected by deduction at source or by assessment, is the most appropriate means of eliminating the aforementioned formalities and problems and of ensuring the equality of tax treatment as between national and cross-border transactions; it is particularly necessary to abolish such taxes in respect of such payments made between associated companies of different Member States as well as between permanent establishments of such companies.

(4) The abolition of taxation on interest and royalty payments in the Member State where they arise, whether collected by deduction at source or by assessment, is the most appropriate means of eliminating the aforementioned formalities and problems and of ensuring the equality of tax treatment as between national and cross-border transactions; it is particularly necessary to abolish such taxes in respect of such payments made between associated companies of different Member States as well as between permanent establishments of such companies in order to ensure a simplified and more transparent system of taxation.

Amendment  4

Proposal for a directive

Recital 5

Text proposed by the Commission

Amendment

(5) It is necessary to ensure that interest and royalty payments are subject to tax once in a Member State and that the benefits of the Directive should only be applicable when the income derived from the payment is effectively subject to tax in the Member State of the receiving company or in the Member State where the recipient permanent establishment is situated.

(5) It is necessary to ensure that interest and royalty payments are subject to tax once in a Member State and that the benefits of the Directive should only be applicable when the income derived from the payment is effectively subject to tax in the Member State of the receiving company or in the Member State where the recipient permanent establishment is situated, without there being the possibility of exemption or a substitution or replacement by payment of another tax.

 

Amendment  5

Proposal for a directive

Recital 12

Text proposed by the Commission

Amendment

(12) It is moreover necessary not to preclude Member States from taking appropriate measures to combat fraud or abuse.

(12) It is moreover necessary to take appropriate measures in order not to preclude Member States from combating tax fraud, tax evasion and abuse.

Amendment   6

Proposal for a directive

Recital 20 a (new)

Text proposed by the Commission

Amendment

 

(20a) To ensure smooth and cost-efficient implementation of the provisions of this Directive, companies should prepare their annual accounts together with all relevant tax data in eXtensible Business Reporting Language (XBRL).

Amendment  7

Proposal for a directive

Article 1 – paragraph 1

Text proposed by the Commission

Amendment

1. Interest or royalty payments arising in a Member State shall be exempt from any taxes imposed on those payments in that Member State, whether by deduction at source or by assessment, provided that the beneficial owner of the interest or royalties is a company of another Member State or a permanent establishment situated in another Member State of a company of a Member State and is effectively subject to tax on the income deriving from those payments in that other Member State.

1. Interest or royalty payments arising in a Member State shall be exempt from any taxes imposed on those payments in that Member State, whether by deduction at source or by assessment, provided that the beneficial owner of the interest or royalties is a company of another Member State or a permanent establishment situated in another Member State of a company of a Member State and is effectively subject to tax on the income deriving from those payments in that other Member State at a rate not lower than 70% of the average statutory corporate tax rate applicable in the Member States, without there being the possibility of exemption or a substitution or replacement by payment of another tax. Interest or royalty payments shall not be exempted in the Member State in which they arise if the payment is not taxable according to the national tax law to which the beneficial owner is subject due to a different qualification of the payment (hybrid instruments) or a different qualification of the payer and recipient (hybrid entities).

Amendment  8

Proposal for a directive

Article 1 – paragraph 3

Text proposed by the Commission

Amendment

3. A permanent establishment shall be treated as the payer of interest or royalties only insofar as those payments represent an expense incurred for the purposes of the activity of the permanent establishment.

3. A permanent establishment shall be treated as the payer of interest or royalties only insofar as those payments represent an expense incurred for the purposes of the activity of the permanent establishment. Only a permanent establishment that has met its tax liabilities shall be treated as the beneficiary of a tax exemption or a tax benefit.

Amendment   9

Proposal for a directive

Article 2 – paragraph 1 – point d – point i

Text proposed by the Commission

Amendment

(i) the first company has a minimum holding of 10 % in the capital of the second company, or

(i) the first company has a minimum holding of 25 % in the capital of the second company, or

Amendment   10

Proposal for a directive

Article 2 – paragraph 1 – point d – point ii

Text proposed by the Commission

Amendment

(ii) the second company has a minimum holding of 10 % in the capital of the first company, or

(ii) the second company has a minimum holding of 25 % in the capital of the first company, or

Amendment   11

Proposal for a directive

Article 2 – paragraph 1 – point d – point iii

Text proposed by the Commission

Amendment

(iii) a third company has a minimum holding of 10 % both in the capital of the first company and in the capital of the second company.

(iii) a third company has a minimum holding of 25 % both in the capital of the first company and in the capital of the second company.

Amendment   12

Proposal for a directive

Article 4 – title

Text proposed by the Commission

Amendment

Fraud and abuse

Tax fraud, tax evasion and abuse

Amendment   13

Proposal for a directive

Article 4 – paragraph 2

Text proposed by the Commission

Amendment

2. Member States may, in the case of transactions for which the principal motive or one of the principal motives is tax evasion, tax avoidance or abuse, withdraw the benefits of this Directive or refuse to apply this Directive.

2. Member States may, in the case of transactions for which the principal motive or one of the principal motives is tax fraud, tax evasion, tax abuse, or tax avoidance, withdraw the benefits of this Directive or refuse to apply this Directive.

Amendment   14

Proposal for a directive

Article 6 – paragraph 1 – subparagraph 1

Text proposed by the Commission

Amendment

Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with Article 1(1) and (3), Article 2(c) and (d), and Annex I, Part A by 1 January 2012 at the latest . They shall forthwith communicate to the Commission the text of those provisions and a correlation table between those provisions and this Directive .

Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with Article 1(1) and (3), Article 2(c) and (d), and Annex I, Part A by 31 December 2013 at the latest. They shall forthwith communicate to the Commission the text of those provisions and a correlation table between those provisions and this Directive.

Amendment  15

Proposal for a directive

Article 6 – paragraph 2 a (new)

Text proposed by the Commission

Amendment

 

2a. Companies shall prepare their annual accounts together with all relevant tax data in eXtensible Business Reporting Language (XBRL).

Amendment  16

Proposal for a directive

Article 7 – paragraph 1

Text proposed by the Commission

Amendment

By 31 December 2016, the Commission shall report to the Council on the economic impact of this Directive.

By 31 December 2015, the Commission shall report to the European Parliament and to the Council on the economic impact of this Directive.

Amendment  17

Proposal for a directive

Article 8 – paragraph 1

Text proposed by the Commission

Amendment

This Directive shall not affect the application of domestic or agreement-based provisions which go beyond the provisions of this Directive and are designed to eliminate or mitigate the double taxation of interest and royalties.

This Directive shall not affect the application of domestic or agreement-based provisions which go beyond the provisions of this Directive and are designed to eliminate or mitigate the double taxation and double non-taxation of interest and royalties.

(1)

OJ C 77, 28.3.2002, p. 1.


EXPLANATORY STATEMENT

Four years after the outburst of the financial, economic and social crisis, it has outmost importance to clearly see where the Member States are heading when taking into account all the possible solutions to get back Europe to the track of growth and development.

On the one hand it is essential to create and engage in new common policies, with the help of which we will be united and strong enough to evade the crisis in the future, but on the other hand in the difficult times like nowadays, we also have to rethink our existing policies and commitments and we need to test them if needed to see if they are still up to date and adequate enough to face the challenges ahead.

The Council Directive on a common system of taxation applicable to interest and royalty payments made between associated companies of the different Member States have been amended several times in the past years, but there are still some technical refinements to make, which are only minor and - as stated in the Commission's statement as well- for the sake of clarity and accountability.

Having regard the facts that the recast version of the Parent-Subsidiary Directive was adopted in September 2011 and the Common Consolidated Corporate Tax Base Report was adopted this year by the ECON Committee; and taking into account the facts that there are recent estimates indicating that tax evasion and tax avoidance, which cost the governments of the European Union a significant amount of uncollected revenues; whereas the loss of revenues raises the deficit and debt levels of the different Member States; whereas the cooperation between the tax systems of the different Members States would be more and more desirable, it is needed to amend the Directive in order to further tighten the possibility of unintended non-taxation, double taxation or tax-avoidance fraud among the Member States causing more damages to the well functioning of the internal market as stated in the recently adopted Motion for a resolution on 'all for concrete ways to combat tax fraud and tax evasion'.

Among the amendments of the rapporteur, the provisions on 'subject to tax” and the 'permanent establishment' are aimed at excluding any possibility of tax evasion, substitution of taxes or any illegitimate tax exemptions.

The question of the holding requirements (10%) and that of the transitional periods are not modified in the rapporteur's draft report, nevertheless, it is essential to emphasize the role of the European Parliament at the moment of evaluating the impact assessment of the recast Directive by the Commission.


ANNEX: LETTER FROM THE COMMITTEE ON LEGAL AFFAIRS

Ref.: D(2012)12434

Mrs Sharon Bowles

Chair of the Committee on Economic and Monetary Affairs

ASP 10G201

Brussels

Subject:     Proposal for a directive of the Council on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States (recast)

                  (COM(2011)0714 – C7-0516/2011 – 2011/0314(CNS))

Dear Chairman,

The Committee on Legal Affairs, which I am honoured to chair, has examined the proposal referred to above, pursuant to Rule 87 on Recasting, as introduced into the Parliament's Rules of Procedure.

Paragraph 3 of that Rule reads as follows:

"If the committee responsible for legal affairs considers that the proposal does not entail any substantive changes other than those identified as such in the proposal, it shall inform the committee responsible.

In such a case, over and above the conditions laid down in Rules 156 and 157, amendments shall be admissible within the committee responsible only if they concern those parts of the proposal which contain changes.

However, if in accordance with point 8 of the Interinstitutional Agreement, the committee responsible intends also to submit amendments to the codified parts of the proposal, it shall immediately notify its intention to the Council and to the Commission, and the latter should inform the committee, prior to the vote pursuant to Rule 54, of its position on the amendments and whether or not it intends to withdraw the recast proposal."

Following the opinion of the Legal Service, whose representatives participated in the meetings of the Consultative Working Party examining the recast proposal, and in keeping with the recommendations of the draftsperson, the Committee on Legal Affairs considers that the proposal in question does not include any substantive changes other than those identified as such in the proposal and that, as regards the codification of the unchanged provisions of the earlier acts with those changes, the proposal contains a straightforward codification of the existing texts, without any change in their substance.

In conclusion, after discussing it at its meeting of 1 March 2012, the Committee on Legal Affairs, by 22 votes in favour and no abstention(1), recommends that your Committee, as the committee responsible, proceed to examine the above proposal in accordance with Rule 87.

Yours faithfully,

Klaus-Heiner LEHNE

Encl.: Opinion of the Consultative Working Party.

(1)

The following were present for the final vote: Klaus-Heiner Lehne (Chair), Evelyn Regner (Vice-Chair), Raffaele Baldassarre (Vice-Chair), Françoise Castex (Vice-Chair), Sebastian Valentin Bodu (Vice-Chair), Luigi Berlinguer, Piotr Borys, Cristian Silviu Buşoi, Christian Engström, Marielle Gallo, Giuseppe Gargani, Lidia Joanna Geringer de Oedenberg, Sajjad Karim, Kurt Lechner, Eva Lichtenberger, Antonio Masip Hidalgo, Jiří Maštálka, Alajos Mészáros, Angelika Niebler, Bernhard Rapkay, Dagmar Roth-Behrendt, Alexandra Thein, Rainer Wieland, Cecilia Wikström, Jacek Włosowicz, Tadeusz Zwiefka.


ANNEX: OPINION OF THE CONSULTATIVE WORKING PARTY OF THE LEGAL SERVICES OF THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COMMISSION

 

 

 

CONSULTATIVE WORKING PARTY

OF THE LEGAL SERVICES

Brussels, 16 January 2012

OPINION

             FOR THE ATTENTION OF THE EUROPEAN PARLIAMENT

                                                              THE COUNCIL

                                                              THE COMMISSION

Proposal for a Council directive on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States (recast)

COM(2011)0714 of 11.11.2011 – 2011/0314(CNS)

Having regard to the Inter-institutional Agreement of 28 November 2001 on a more structured use of the recasting technique for legal acts, and in particular to point 9 thereof, the Consultative Working Party consisting of the respective legal services of the European Parliament, the Council and the Commission met on 28 November 2011 for the purpose of examining, among others, the aforementioned proposal submitted by the Commission.

At that meeting(1), an examination of the proposal for a Council Directive recasting 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 resulted in the Consultative Working Party’s concluding, without dissent, that the proposal does not comprise any substantive amendments other than those identified as such. The Working Party also concluded, as regards the codification of the unchanged provisions of the earlier act with those substantive amendments, that the proposal contains a straightforward codification of the existing text, without any change in its substance.

C. PENNERA                       H. LEGAL                            L. ROMERO REQUENA

Jurisconsult                            Jurisconsult                            Director General

(1)

The Consultative Working Party had at its disposal the English, French and German language versions of the proposal and worked on the basis of the English version, being the master-copy language version of the text under discussion.


PROCEDURE

Title

Common system of taxation applicable to interest and royalty payments made between associated companies of different Member States (recast)

References

COM(2011)0714 – C7-0516/2011 – 2011/0314(CNS)

Date of consulting Parliament

20.12.2011

 

 

 

Committee responsible

       Date announced in plenary

ECON

17.1.2012

 

 

 

Committee(s) asked for opinion(s)

       Date announced in plenary

JURI

17.1.2012

 

 

 

Rapporteur(s)

       Date appointed

Ildikó Gáll-Pelcz

29.11.2011

 

 

 

Discussed in committee

31.5.2012

25.6.2012

 

 

Date adopted

10.7.2012

 

 

 

Result of final vote

+:

–:

0:

32

3

3

Members present for the final vote

Jean-Paul Besset, Sharon Bowles, Udo Bullmann, Nikolaos Chountis, George Sabin Cutaş, Rachida Dati, Leonardo Domenici, Diogo Feio, Markus Ferber, Elisa Ferreira, Ildikó Gáll-Pelcz, Jean-Paul Gauzès, Sven Giegold, Gunnar Hökmark, Wolf Klinz, Jürgen Klute, Rodi Kratsa-Tsagaropoulou, Philippe Lamberts, Werner Langen, Ivari Padar, Alfredo Pallone, Anni Podimata, Antolín Sánchez Presedo, Olle Schmidt, Edward Scicluna, Peter Simon, Theodor Dumitru Stolojan, Kay Swinburne, Sampo Terho, Marianne Thyssen, Ramon Tremosa i Balcells, Corien Wortmann-Kool, Pablo Zalba Bidegain

Substitute(s) present for the final vote

Thijs Berman, Danuta Maria Hübner, Olle Ludvigsson, Gay Mitchell, Theodoros Skylakakis

Date tabled

12.7.2012

Last updated: 30 August 2012Legal notice