### the qualifying income of the constituent entities is the sum of the qualifying income of all constituent entities located in the jurisdiction determined in accordance with chapter iii , taking into account , where applicable , the international shipping income exclusion in accordance with article 16; ### the qualifying income of the constituent entities is the sum of the qualifying income of all constituent entities located in the jurisdiction determined in accordance with chapter iii , taking into account , where applicable;


### [...] ### deleted


### article 29 ### deleted


### 5. the outstanding balance , if any , of the deemed distribution tax recapture account at the end of the fourth fiscal year after such account was established , shall be treated as a reduction to the adjusted covered taxes in accordance with article 28(1) for the fiscal year in which such account was established. ### 5. the outstanding balance , if any , of the deemed distribution tax recapture account at the end of the second fiscal year after such account was established , shall be treated as a reduction to the adjusted covered taxes in accordance with article 28(1) for the fiscal year in which such account was established.


### 2. a constituent entity that does not comply with the requirement to file a top-up tax information return pursuant to article 42 for a tax year within the prescribed deadline or makes a false declaration shall be charged an administrative pecuniary penalty amounting to 5 % of its turnover in the relevant fiscal year. this penalty shall only apply after the constituent entity has not provided the top-up tax information return pursuant to article 42 , following any reminder issued , within a period of 6 months. ### 2. a constituent entity that does not comply with the requirement to file a top-up tax information return pursuant to article 42 for a tax year within the prescribed deadline or makes a false declaration shall be charged an administrative pecuniary penalty amounting to 10 % of its turnover in the relevant fiscal year. this penalty shall only apply after the constituent entity has not provided the top-up tax information return pursuant to article 42 , following any reminder issued , within a period of 6 months.


### article 46 ### deleted


### article 47 ### deleted


### article 48 ### deleted


### article 50 ### deleted


### member states shall ensure that the management body develops specific plans and quantifiable targets to monitor and address the risks arising in the short , medium and long-term from the misalignment of the business model and strategy of the institutions , with the relevant union policy objectives or broader transition trends towards a sustainable economy in relation to environmental , social and governance factors.; ### member states shall ensure that the management body develops specific plans , quantifiable targets and clearly defined procedures to monitor and address the risks arising in the short , medium and long-term from the misalignment of the business model and strategy of the institutions , with the relevant union policy objectives or broader transition trends towards a sustainable economy in relation to environmental , social and governance factors and take all necessary measures to prevent these risks to arise in the future.;


### however , where it is strictly necessary to replace a member of the management body immediately , the entities may assess the suitability of such replacement members after they have taken up their positions. the entities shall be able to duly justify such immediate replacement. ### however , where it is strictly necessary to replace a member of the management body immediately , the entities should assess the suitability of such replacement members before they have taken up their positions. the entities shall be able to duly justify such immediate replacement.


### 4. competent authorities that request from the entities additional information or documentation , including interviews or hearings , may extend the assessment period for a maximum of 40 working days. however , the assessment period shall not exceed 120 working days. request for additional information or documentation shall be made in writing and shall be specific. the entities shall acknowledge receipt of request for additional information or documentation within two working days and provide the requested additional information or documentation within 10 working days as of the date of the written acknowledgement of the request from competent authorities. ### 4. competent authorities that request from the entities additional information or documentation , including interviews or hearings , may extend the assessment period for a maximum of 40 working days. however , the assessment period shall not exceed 120 working days. request for additional information or documentation shall be made in writing and shall be specific. the entities shall acknowledge receipt of request for additional information or documentation within two working days and provide the requested additional information or documentation strictly within 10 working days as of the date of the written acknowledgement of the request from competent authorities. failure by the entities to provide the requested information within that deadline shall result in the procedure being closed.


### 4. competent authorities that request from the entities referred to paragraph 1 additional information or documentation , including interviews or hearings , may extend the assessment period for maximum 40 working days. however , the assessment period shall not exceed 120 working days. request for additional information or documentation shall be made in writing and shall be specific. the entities referred to paragraph 1 shall acknowledge receipt of request for additional information or documentation within two working days and provide the requested additional information or documentation within 10 working days as of the date of the written acknowledgement of the request from competent authorities. ### 4. competent authorities that request from the entities referred to paragraph 1 additional information or documentation , including interviews or hearings , may extend the assessment period for maximum 40 working days. however , the assessment period shall not exceed 120 working days. request for additional information or documentation shall be made in writing and shall be specific. the entities referred to paragraph 1 shall acknowledge receipt of request for additional information or documentation within two working days and provide the requested additional information or documentation strictly within 10 working days as of the date of the written acknowledgement of the request from competent authorities. failure by the entities to provide the requested information within that deadline shall result in the procedure being closed.


### (16) small and medium-sized enterprises and start-ups should not be subject to excessive administrative burdens. offers to the public of crypto-assets in the union that do not exceed an adequate aggregate threshold over a period of 12 months should therefore be exempted from the obligation to draw up a crypto-asset white paper. however , eu horizontal legislation ensuring consumer protection , such as directive 2011/83/eu of the european parliament and of the council38 , directive 2005/29/ec of the european parliament and of the council39 or the council directive 93/13/eec of 5 april 1993 on unfair terms in consumer contracts40 , including any information obligations contained therein , remain applicable to these offers to the public of crypto-assets where involving business-to-consumer relations. ### (16) small and medium-sized enterprises and start-ups should not be subject to excessive administrative burdens. however , eu horizontal legislation ensuring consumer protection , such as directive 2011/83/eu of the european parliament and of the council38 , directive 2005/29/ec of the european parliament and of the council39 or the council directive 93/13/eec of 5 april 1993 on unfair terms in consumer contracts40 , including any information obligations contained therein , remain applicable to these offers to the public of crypto-assets where involving business-to-consumer relations.


### (18) in order to enable supervision , issuers of crypto-assets should , before any public offer of crypto-assets in the union or before those crypto-assets are admitted to trading on a trading platform for crypto-assets , notify their crypto-asset white paper and , where applicable , their marketing communications , to the competent authority of the member state where they have their registered office or a branch. issuers that are established in a third country should notify their crypto-asset white paper , and , where applicable , their marketing communication , to the competent authority of the member state where the crypto-assets are intended to be offered or where the admission to trading on a trading platform for crypto-assets is sought in the first place. ### (18) in order to enable supervision , issuers of crypto-assets should , before any public offer of crypto-assets in the union or before those crypto-assets are admitted to trading on a trading platform for crypto-assets , notify their crypto-asset white paper and , where applicable , their marketing communications , to the competent authority of the member state where they have their registered office or a branch. issuers that are established in a third country should notify their crypto-asset white paper , and , where applicable , their marketing communication , to the competent authority of the member state where the crypto-assets are intended to be offered or where the admission to trading on a trading platform for crypto-assets is sought in the first place. in both cases , any public offer or admission to trading or a trading platform is dependent on authorisation by the competent authority.


### (19) undue administrative burdens should be avoided. competent authorities should therefore not be required to approve a crypto-asset white paper before its publication. competent authorities should , however , after publication , have the power to request that additional information is included in the crypto-asset white paper , and , where applicable , in the marketing communications. ### (19) undue administrative burdens should be avoided. competent authorities should , after publication , have the power to request that additional information is included in the crypto-asset white paper , and , where applicable , in the marketing communications.


### (20) competent authorities should be able to suspend or prohibit a public offer of crypto-assets or the admission of such crypto-assets to trading on a trading platform for crypto-assets where such an offer to the public or an admission to trading does not comply with the applicable requirements. competent authorities should also have the power to publish a warning that an issuer has failed to meet those requirements , either on its website or through a press release. ### (20) competent authorities should be able to suspend or prohibit a public offer of crypto-assets or the admission of such crypto-assets to trading on a trading platform for crypto-assets where such an offer to the public or an admission to trading does not comply with the applicable requirements. competent authorities should also have the power to publish a warning that an issuer has failed to meet those requirements , either on its website and/or through a press release.


### (21) crypto-asset white papers and , where applicable , marketing communications that have been duly notified to a competent authority should be published , after which issuers of crypto-assets should be allowed to offer their crypto-assets throughout the union and to seek admission for trading such crypto-assets on a trading platform for crypto-assets. ### (21) crypto-asset white papers and , where applicable , marketing communications that have been duly notified to a competent authority and authorised by a competent authority should be published , after which issuers of crypto-assets should be allowed to offer their crypto-assets throughout the union and to seek admission for trading such crypto-assets on a trading platform for crypto-assets.


### 1. issuers of asset-references tokens shall at all times constitute and maintain a reserve of assets. ### 1. issuers of asset-references tokens shall at all times constitute and maintain a reserve of assets. the aggregate value of reserve assets shall always be at least equal to the aggregate face value of the claims on the issuer from holders of asset-referenced tokens in circulation


### 5. without prejudice to article 30(11) , issuers of asset-referenced tokens shall mandate an independent audit of the reserve assets every six months , as of the date of its authorisation as referred to in article 19. ### 5. without prejudice to article 30(11) , issuers of asset-referenced tokens shall mandate an independent audit of the reserve assets every six months , as of the date of its authorisation as referred to in article 19. the result of the audit shall be notified to the competent authority without delay , at the latest within six weeks of the reference date of the valuation. the result of the audit shall be published within two weeks of the date of notification to the competent authority. the competent authority may instruct the issuer to delay the publication in the event that


### 1. issuers of asset-referenced tokens shall establish , maintain and implement clear and detailed policies and procedures on the rights granted to holders of asset-referenced tokens , including any direct claim or redemption rights on the issuer of those asset-referenced tokens or on the reserve assets. ### 1. issuers of asset-referenced tokens shall redeem these tokens at the request of any holder at all times at a price that is not lower than the face value of the holder’s claim on the issuer.


### 2. where holders of asset-referenced tokens are granted rights as referred to in paragraph 1 , issuers of asset-referenced tokens shall establish a policy setting out: ### 2. by way of derogation from paragraph 1:


### the conditions , including thresholds , periods and timeframes , for holders of asset-referenced tokens to exercise those rights; ### the issuer of an asset-referenced token may , in accordance with the applicable national law and subject to the conditions set out in the crypto-asset white paper , temporarily suspend the redemption of its tokens. in the event of a temporary suspension , the issuer shall , without delay , communicate its decision to its home member state competent authorities.


### the mechanisms and procedures to ensure the redemption of the asset-referenced tokens , including in stressed market circumstances , in case of an orderly wind-down of the issuer of asset-referenced tokens as referred to in article 42 , or in case of a cessation of activities by such issuer; ### the issuer’s home member state may allow its competent authorities to require the suspension of the redemption of tokens in the interest of the token holders or of the public. the temporary suspension referred to in point (a) of the first subparagraph shall be provided for only in exceptional cases where circumstances so require and where suspension is justified having regard to the interests of the token holders.


### the valuation , or the principles of valuation , of the asset-referenced tokens and of the reserve assets when those rights are exercised by the holder of asset-referenced tokens; ### deleted


### the settlement conditions when those rights are exercised; ### deleted


### the fees applied by the issuers of asset-referenced tokens when the holders exercise those rights. ### deleted


### 3. where issuers of asset-referenced tokens do not grant rights as referred to in paragraph 1 to all the holders of asset-referenced tokens , the detailed policies and procedures shall specify the natural or legal persons that are provided with such rights. the detailed policies and procedures shall also specify the conditions for exercising such rights and the obligations imposed on those persons. ### deleted


### issuers of asset-referenced tokens that do not grant rights as referred to in paragraph 1 to all the holders of such asset-referenced tokens shall put in place mechanisms to ensure the liquidity of the asset-referenced tokens. for that purpose , they shall establish and maintain written agreements with crypto-asset service providers authorised for the crypto-asset service referred to in article 3(1) point (12). the issuer of asset-referenced tokens shall ensure that a sufficient number of crypto-asset service providers are required to post firm quotes at competitive prices on a regular and predictable basis. ### the issuer of asset-referenced tokens shall ensure that a sufficient number of crypto-asset service providers are required to post firm quotes at competitive prices on a regular and predictable basis.


### where the market value of asset-referenced tokens varies significantly from the value of the reference assets or the reserve assets , the holders of asset-referenced tokens shall have the right to redeem the crypto-assets from the issuer of crypto-assets directly. in that case , any fee applied for such redemption shall be proportionate and commensurate with the actual costs incurred by the issuer of asset-referenced tokens. ### if issuers offer holders the possibility to acquire and redeem the token by paying in funds the sum equivalent to the market value of the assets referenced by the token , the issuer shall establish policies and procedures to:


### 6. redemption may be subject to a fee only if stated in the crypto-asset white paper. any such fee shall be proportionate and commensurate with the actual costs incurred by issuers of e-money tokens. ### 6. redemption may be subject to a fee only. if stated in the crypto-asset white paper and only in any of the following cases:


### 1. crypto-asset service providers shall , at all times , have in place prudential safeguards equal to an amount of at least the higher of the following: ### 1. crypto-asset service providers shall , at all times , meet , at least , the requirement for own funds and eligible liabilities , as applicable:


### the amount of permanent minimum capital requirements indicated in annex iv , depending on the nature of the crypto-asset services provided; ### for credit institutions authorised to provide crypto-asset services in accordance with this regulation the requirements for own funds and eligible liabilities in accordance with regulation (eu) 575/2013 and directive 2013/36/eu;


### one quarter of the fixed overheads of the preceding year , reviewed annually; ### for investment firms authorised to provide crypto-asset services in accordance with this regulation the requirements for initial capital and own funds in accordance with regulation (eu) 2019/2033 and directive 2019/2034/eu;


### 2. the prudential safeguards referred to in paragraph 1 shall take any of the following forms: ### deleted


### 3. crypto-asset service providers that have not been in business for one year from the date on which they started providing services shall use , for the calculation referred to in paragraph 1 , point (b) , the projected fixed overheads included in their projections for the first 12 months’ of service provision , as submitted with their application for authorisation. ### deleted


### 4. the insurance policy referred to in paragraph 2 shall have at least all of the following characteristics: ### deleted


### 5. the insurance policy referred to in paragraph 2 , point (b) shall include , coverage against the risk of: ### deleted


### 6. for the purposes of paragraph 1 point (b) , crypto-asset service providers shall calculate their fixed overheads for the preceding year , using figures resulting from the applicable accounting framework , by subtracting the following items from the total expenses after distribution of profits to shareholders in their most recently audited annual financial statements or , where audited statements are not available , in annual financial statements validated by national supervisors: ### deleted


### 1. crypto-asset service providers that are authorised to execute orders for crypto-assets on behalf of third parties shall take all necessary steps to obtain , when executing orders , the best possible result for their clients taking into account the best execution factors of price , costs , speed , likelihood of execution and settlement , size , nature or any other consideration relevant to the execution of the order , unless the crypto-asset service provider concerned executes orders for crypto-assets following specific instructions given by its clients. ### 1. crypto-asset service providers that are authorised to execute orders for crypto-assets on behalf of third parties shall take all necessary steps to obtain , when executing orders , the best possible result for their clients taking into account the best execution factors of price , costs , speed , likelihood of execution and settlement , size , nature or any other consideration relevant to the execution of the order , unless the crypto-asset service provider concerned executes orders for crypto-assets following specific instructions given by its clients. where a crypto-asset service provider executes an order on behalf of a retail client , the best possible result shall be determined in terms of the total consideration , representing the price of the crypto-assets and the costs relating to execution , which shall include all expenses incurred by the client which are directly relating to the execution of the order , including execution venue fees , clearing and settlement fees and any other fees paid to third parties involved in the execution of the order.


### 1. crypto-asset service providers that are authorised to provide advice on crypto-assets shall assess the compatibility of such crypto-assets with the needs of the clients and recommend them only when this is in the interest of the clients. ### 1. crypto-asset service providers that are authorised to provide advice on crypto-assets shall assess the compatibility of such crypto-assets with the requirements and preferences demands and needs of the clients or potential client and recommend them only when they are suitable for and in the interest of the clients or potential client and , in particular , are in accordance with his or her risk tolerance and ability to bear losses.


### crypto-asset service providers that are authorised to provide advice on crypto-assets shall warn clients that , due to their tradability , the value of crypto-assets may fluctuate. ### crypto-asset service providers that are authorised to provide advice on crypto-assets shall warn clients that , due to their tradability , the value of crypto-assets may fluctuate , that the crypto-assets may lose their value in part or in full , that the crypto-assets may not always be transferable and that the crypto-assets may not be liquid.


### specify the clients’ demands and needs; ### specify the clients’ requirements and preferences;


### 1. articles 4 to 14 shall not apply to crypto-assets , other than asset-referenced tokens and e-money tokens , which were offered to the public in the union or admitted to trading on a trading platform for crypto-assets before [please insert date of entry into application]. ### 1. crypto-assets , other than asset-referenced tokens and e-money tokens , which were offered to the public in the union or admitted to trading on a trading platform for crypto-assets before [please insert date of entry into application] can operate for a period of 6 months after [please insert date of entry into application] before articles 4 to 14 shall apply.


### a detailed description of the issuer and a presentation of the main participants involved in the project's design and development; ### a detailed description of the issuer , including a summary of key financial information regarding the issuer and a detailed description of the main participants involved in the project's design and development;


### 1. competent authorities shall not require an ex ante approval of a crypto-asset white paper , nor of any marketing communications relating to it before their publication. ### 1. competent authorities shall require an ex ante approval of a crypto-asset white paper , and of any marketing communications relating to it before their publication.


### 1. issuers of crypto-assets , other than asset-referenced tokens or e-money tokens , shall publish their crypto-asset white paper , and , where applicable , their marketing communications , on their website , which shall be publicly accessible , by no later than the starting date of the offer to the public of those crypto-assets or the admission of those crypto-assets to trading on a trading platform for crypto-assets. the crypto-asset white paper , and , where applicable , the marketing communications , shall remain available on the issuer’s website for as long as the crypto-assets are held by the public. ### 1. issuers of crypto-assets , other than asset-referenced tokens or e-money tokens , shall publish their crypto-asset white paper , and , where applicable , their marketing communications , following authorisation , on their website , which shall be publicly accessible , by no later than the starting date of the offer to the public of those crypto-assets or the admission of those crypto-assets to trading on a trading platform for crypto-assets. the crypto-asset white paper , and , where applicable , the marketing communications , shall remain available on the issuer’s website for as long as the crypto-assets are held by the public.


### 2. issuers of crypto-assets , other than asset-referenced tokens or e-money tokens , that have published a crypto-asset white paper in accordance with article 8 , and where applicable article 11 , shall not be subject to any further information requirements , with regard to the offer of those crypto-assets or the admission of such crypto-assets to a trading platform for crypto-assets. ### deleted


### 1. issuers of crypto-assets , other than asset-referenced tokens or e-money tokens , shall modify their published crypto-asset white paper , and , where applicable , published marketing communications , to describe any change or new fact that is likely to have a significant influence on the purchase decision of any potential purchaser of such crypto-assets , or on the decision of holders of such crypto-assets to sell or exchange such crypto-assets. ### 1. issuers of crypto-assets , other than asset-referenced tokens or e-money tokens , shall modify their published crypto-asset white paper , and , where applicable , published marketing communications , to describe any change or new fact that is likely to have a significant influence on the purchase decision of any potential purchaser of such crypto-assets , or on the decision of holders of such crypto-assets to sell or exchange such crypto-assets. any such modification requires authorisation from the competent authority.


### b. whereas although tax policy largely remains a member state responsibility , the single market requires a minimum degree of coordination in setting tax policy1 ; ### b. whereas although tax policy largely remains a member state responsibility , the single market requires a minimum degree of coordination in setting tax policy1 ,especially concerning the fight against tax evasion;


### c. whereas tax policy fragmentation creates various obstacles for companies and citizens in the single market , including legal uncertainty , red tape , the risk of double taxation and difficulties claiming tax refunds; whereas these obstacles discourage cross-border economic activity in the single market; whereas policy fragmentation also creates risks for tax authorities such as double non-taxation and arbitrage possibilities (such as tax planning); ### c. whereas policy fragmentation may create room for tax arbitrage and so risks such as double non-taxation; whereas it can also create various obstacles for sme wanting to engage in cross-border economic activity and citizens in the single market , including legal uncertainty and red tape;


### d. whereas within the eu’s social market economy , adequate tax levels and simple and clear tax laws should not distort economic actors’ decision-making; whereas sound tax policies should support the creation of jobs and economic growth and improve the competitiveness of the eu and its member states; ### d. whereas sound tax policies should collect tax revenue to finance public policies and should be design in a progressive fashion , in order to fulfil their redistributive role;


### e. whereas the overall level of taxation differs considerably between member states , as demonstrated by the fact that the tax-to-gdp ratio varied between 22.1 % in ireland and 46.1 % in denmark in 20192 ; whereas on aggregate , the tax burden in the eu (40.1 %) is high even when compared to other advanced economies (the organisation for economic co-operation and development (oecd) average was 34.3 % in 2018); ### e. whereas the overall level of taxation differs considerably between member states , as demonstrated by the fact that the tax-to-gdp ratio varied between 22.1 % in ireland and 46.1 % in denmark in 20192 ;


### 1. recalls that member states are free to decide on their own economic policies and in particular their own tax policies; recalls , however , that member states must exercise this competence consistently with union law; ### 1. recalls that member states are free to decide on their own economic policies and in particular their own tax policies; recalls , however , that the last decades have been marked by unfair competition and , consequently , by a decreasing trend of corporate tax rates leading to a race to the bottom; stresses the urgent need for coordination in tax policy by member states;


### 3. highlights that differences in national tax regimes present obstacles to smes trying to operate across borders; stresses that compared to multinational enterprises , smes have fewer resources to spend on tax compliance and tax optimisation; points out that the share of expenditure used for tax compliance purposes is higher for smes than for multinational enterprises; ### 3. highlights that differences in national tax regimes present obstacles to smes trying to operate across borders; stresses that compared to multinational enterprises , smes have fewer resources to spend on tax compliance and tax planning and are therefore jeopardized by national measures aimed at attracting multinationals’ profits;


### 4. notes that tax base harmonisation such as the common corporate tax base or the ‘business in europe: framework for income taxation’ could reduce the cost of tax compliance for smes that operate in more than one member state; ### 4. notes that tax base harmonisation such as the common corporate tax base or the ‘business in europe: framework for income taxation’ could reduce the cost of tax compliance for smes that operate in more than one member state , while also contributing to design a fairer taxation system in the eu;


### 5. notes that many member states as well as the eu have introduced dedicated regimes favouring smes such as special vat rules in order to offset the higher effective tax rates and higher tax compliance costs for smes; stresses that such special treatment , while generally positive , could risk introducing further distortions and further increasing the overall complexity of the system; ### 5. notes that many member states as well as the eu have introduced dedicated regimes favouring smes such as special vat rules in order to offset the higher effective tax rates and higher tax compliance costs for smes; stresses that such special treatment , while generally positive , could risk introducing further distortions , further possibilities of tax dodging and further increasing the overall complexity of the system;


### 6. notes that the eu has developed coordination mechanisms such as peer review procedures within the code of conduct group and country-specific recommendations in the context of the european semester; points out that the commission has recommended to six member states that they curb aggressive tax planning as part of the 2020 country-specific recommendations; ### 6. notes that the eu has developed coordination mechanisms such as peer review procedures within the code of conduct group and country-specific recommendations in the context of the european semester; regrets however the criteria used to assess member states is weaker than the one used regarding third-country jurisdictions in the eu listing process; points out that the commission has recommended to cyprus , hungary , ireland , luxembourg , malta and the netherlands that they curb aggressive tax planning as part of the 2020 country-specific recommendations;


### 7. highlights that the ideal level for tax policy coordination is on the international stage through the g20/oecd; notes that eu tax proposals based on international agreements have historically been more likely to be adopted by the council; ### 7. highlights that the ideal level for tax policy coordination is on the international stage through the g20/oecd; stresses nevertheless that developing countries should be fully included in the negotiation process; notes that eu tax proposals based on international agreements have historically been more likely to be adopted by the council; stresses , however , that neither oecd nor g20 have legislative authority , in this sense , calls on the commission to make progresses by transposing the last results from the negotiations to eu law , and to be more ambitious by implementing a 25% minimum corporate tax rate;


### 9. notes that digitalisation and a heavy reliance on intangible assets that pose challenges to the current tax system warrant a high degree of policy coordination; deplores the fact that some member states have pressed ahead with the introduction of national digital taxes despite ongoing negotiations at eu and oecd levels; stresses that these national measures should be phased out following the implementation of an effective international solution; ### 9. notes that digitalisation and a heavy reliance on intangible assets that pose challenges to the current tax system warrant a high degree of policy coordination notes that digital businesses models in the eu face a lower effective average tax burden than traditional business models , a cross-border digital business model is subject to an effective average tax rate of only 9.5% , which represents a significant difference when compared to a rate of 23.2% of a cross-border traditional business4a;


### 10. deplores the debt equity bias in corporate taxation that allows for generous tax deductions on interest payments , while equity financing costs cannot be deducted in a similar manner; highlights the structural disadvantage facing companies that rely on equity financing , which are often young and small companies with poor access to credit; ### 10. recognizes as a problem the debt equity bias in corporate taxation that allows for generous tax deductions on interest payments , creating room for harmful tax practices from multinationals via intra-group operations; calls for the commission to take a more complete impact assessment on the debra initiative , specifically showing estimates of tax revenue losses , comparing the scenario of limiting interest deduction or implementing an allowance for corporate equity (ace);


### 11. notes that debt equity bias varies considerably between the member states; welcomes the fact that some member states have introduced allowances for corporate equity to address this issue; stresses that a common european approach would be preferable in order to avoid distortions in the single market; ### 11. notes that debt equity bias varies considerably between the member states; notes that some member states have introduced allowances for corporate equity to address this issue; stresses that a common european approach would be preferable in order to avoid distortions in the single market;


### 12. looks forward to the commission’s proposal for a debt equity bias reduction allowance5 ; ### deleted


### 13. notes that the effective marginal tax rate (emtr) is often a decisive factor for corporations making investment decisions; notes that there is considerable variation in the emtr across member states; invites the commission to look into whether some member states are distorting competition by artificially lowering their emtr , e.g. through accelerated depreciation schedules or adjusting the tax deductibility of certain items; ### 13. notes that the effective marginal tax rate (emtr) is often used to engage in unfair competition practices; notes that there is considerable variation in the emtr across member states; invites the commission to look into whether some member states are distorting competition by artificially lowering their emtr , e.g. through accelerated depreciation schedules or adjusting the tax deductibility of certain items;


### 14. highlights that tax incentives for private research and development (e.g. via tax credits , enhanced allowances or adjusted depreciation schedules) can help to lift an economy’s overall spending towards research and development , which often comes with positive externalities; is concerned , however , that certain types of tax incentives such as patent box / intellectual property box regimes do little to increase research and development spending and may actually distort the single market; ### 14. stresses that certain types of tax incentives such as patent box / intellectual property box regimes do little to increase research and development spending , may actually distort the single market and be used as a profit-shifting instrument , leading to significant revenue losses; notes that the italian government has recently repealed the country’s patent box regime due to its inefficiency in stimulating innovation; stresses that other member-states should follow this example;


### 16. takes note of the commission’s ongoing work on an eu taxation scoreboard and calls on the commission to inform parliament about its political intentions and the possible financial implications of this system; ### 16. welcomes the commission’s ongoing work on an eu taxation scoreboard and calls on the commission to inform parliament about its political intentions and the possible financial implications of this system; stresses that the criteria used to assess the ms should be: the existing criteria used by the code of conduct group on business taxation; the criteria used to list third country jurisdictions as part of the eu list of non-cooperative jurisdictions; the past and ongoing infringement procedures launched against member states for lack of conformity or lack of implementation of european legislation on tax and money laundering matters; the inclusion of economic criteria , in particular to consider whether fdi and passive income are disproportionate compared to the country gdp;


### 6. notes that a significant amount of government funding is channeled through tax expenditure in the form of exemptions , deductions , credits , deferrals and reduced tax rates13 ; ### 6. notes that a significant amount of government funding is channeled through tax expenditure in the form of exemptions , deductions , credits , deferrals and reduced tax rates13 ; stresses that many of those exemptions are directed towards sectors which are not sustainable;


### 7. notes that covid-19 has demonstrated that the current disproportionate reliance on labour income taxes and social contributions , which puts the onus on continued high levels of employment and consumption to fund government spending and policies , is neither sustainable nor economically effective; ### 7. notes that covid-19 has demonstrated that the current disproportionate reliance on labour income taxes and social contributions , which puts the onus on continued high levels of employment and consumption to fund government spending and policies , is neither sustainable nor economically effective; underlines that the world inequality database shows that in developed countries , tax represent 50% of the income of all the citizens , regardless their income level , and that this percentage is even lower for the wealthiest households;


### 8. notes with concern that the impact of the covid-19 pandemic is highly regressive , with the poorest households being the most severely hit14 ; regrets that large companies that realise excess profits , such as e-commerce businesses and wealthy individuals who realise significant capital gains through speculation , are often undertaxed; ### 8. notes with concern that the impact of the covid-19 pandemic is highly regressive , with the poorest households being the most severely hit14 ; highlights that some multinational enterprises sharply increased their profits in the context of the crisis such as amazon that tripled its profits and netflix ; underlines that , as calculated by the ngo oxfam , the increase of profits and wealth is such that that jeff bezos could pay each of amazon’s 876 000 employees a 105 000 dollars bonus and still be as wealthy as he was at the onset of the pandemic; regrets that large companies that realise excess profits , such as e-commerce businesses and wealthy individuals who realise significant capital gains through speculation , are often undertaxed;


### 9. highlights that environmental taxes have the potential to cover the need for additional revenue while supporting a resilient , competitive , sustainable and carbon-free economy; calls on member states to consider expanding the tax base for environmental taxes through inter alia natural resource taxes , distance-based charges in the transport sector , fuel prices , and the taxation of deforestation , landfill , incineration , pesticides and fertilizers; ### 9. highlights that environmental taxes have the potential to cover the need for additional revenue while supporting a resilient , competitive , sustainable and carbon-free economy; calls on member states to consider expanding the tax base for environmental taxes through inter alia natural resource taxes , distance-based charges in the transport sector , fuel prices , and the taxation of deforestation , landfill , incineration , pesticides and fertilizers; underlines that distance-based charges in the transport sector should not penalize citizens who are not able to afford housing in big cities and so need to commute every day to work;


### 12. calls on member states to revise tax expenditure in all tax areas; calls on member states to perform annual , detailed and public cost-benefit analyses of each tax provision; ### 12. calls on member states to revise tax expenditure in all tax areas; calls on member states to perform annual , detailed and public cost-benefit analyses of each tax provision; further urges member states to end exemptions which have harmful social and environmental impact;


### 13. observes that there is also room for significant revenue and efficiency gains at tax administration level; notes that an effective and efficient tax administration , as well as a high degree of tax certainty , can encourage investment and foster competitiveness; ### 13. observes that there is also room for significant revenue and efficiency gains at tax administration level; notes that an effective and efficient tax administration , as well as a high degree of tax certainty , can encourage investment and foster competitiveness; recalls that cuts in budgets of tax administrations harm states’ capacity to fight against tax dodging and have a negative impact on their tax revenues;


### 15. calls on the commission to publish a roadmap and toolkit to guide member states in reforming their tax systems post covid-19; calls on the commission to launch a comprehensive evaluation , to be followed by an action plan , on existing and important distortions in all tax areas that could severely impede member states in reforming their tax systems; ### 15. calls on the commission to publish a roadmap and toolkit to guide member states in reforming their tax systems post covid-19; underlines that this roadmap should push for an economically , socially and environmentally sustainable european tax system by shifting the tax burden to the wealthiest households and multinational enterprises; calls on the commission to launch a comprehensive evaluation , to be followed by an action plan , on existing and important distortions in all tax areas that could severely impede member states in reforming their tax systems;


### a. whereas the european semester plays an essential role in coordinating economic and budgetary policies in the member states; ### a. whereas the european semester is supposed to coordinate economic and budgetary policies in the member states; deplores that from the introduction of the european semester in 2011 to 2018 , the commission recommended 63 times that governments cut spending on healthcare or privatise health services;


### h. whereas reference values of up to 3 % of planned or actual government deficit and 60 % of debt to gdp are defined by the tfeu; ### h. whereas the reference values of up to 3 % of planned or actual government deficit and 60 % of debt to gdp , as defined by the tfeu , are not underpinned by solid economic reasoning , are detached from current reality and no longer viable;


### i. whereas aspects relating to the possible future of the eu economic governance framework were dealt with by the review of the macroeconomic legislative framework in the report of the committee on economic and monetary affairs of 22 june 2021 dedicated to that issue; ### i. whereas aspects relating to the possible future of the eu economic governance framework were dealt with by the review of the macroeconomic legislative framework in the report of the committee on economic and monetary affairs of 22 june 2021 dedicated to that issue; regrets the lack of ambition in this report to call for changes to the treaties and fundamentally transform the eu's economic governance in a progressive spirit;


### 3. points out that the roll-out of the recovery and resilience facility (rrf) will help to make eu economies and societies more sustainable , inclusive , resilient and better prepared for the green and digital transitions; notes that the facility , which is the centrepiece of nextgenerationeu , will provide large-scale financial support to member states of up to eur 672.5 billion in grants and loans to finance reforms and investments; ### 3. points out that the roll-out of the recovery and resilience facility (rrf) is supposed to make eu economies and societies more sustainable , inclusive , resilient and better prepared for a just green and digital transition; notes that the facility , which is the centrepiece of nextgenerationeu , will provide large-scale financial support to member states of up to eur 672.5 billion in grants and loans to finance reforms and investments; regrets that larger part of the financial support consists of loans; highlights that investment financed through loans is projected to have less of a positive impact on output in comparison to investment financed through grants1a;


### 5. notes that the general escape clause of the stability and growth pact will continue to be applied in 2022 and is expected to be deactivated as of 2023; notes , furthermore , that the decision to deactivate the general escape clause should be taken as an overall assessment of the state of the economy based on quantitative criteria , with the level of economic activity in the eu compared to pre-crisis levels as the key quantitative criterion; points out that country-specific situations will continue to be taken into account after the deactivation of the general escape clause; ### 5. notes that the general escape clause of the stability and growth pact will continue to be applied in 2022 and is concerned that it is expected to be deactivated as of 2023; insists that it needs to remain activated until the eu framework for fiscal policy has been fundamentally transformed; notes that the existing headline debt and deficit benchmarks are completely detached from reality and insists that their application is discontinued;


### 6. is concerned that according to the baseline scenario of the commission’s latest debt sustainability monitor , the debt ratio in the euro area is to peak at 104.6 % in 2024 and 2025 , while the debt ratio in the union is to peak at 96.5 % in 2024 , before declining once again; ### 6. notes that according to the baseline scenario of the commission’s latest debt sustainability monitor , the debt ratio in the euro area is to peak at 104.6 % in 2024 and 2025 , while the debt ratio in the union is to peak at 96.5 % in 2024 , before declining once again; however , recognises that the low interest rate environment reduces pressure on fiscal policy by reducing sovereign debt servicing costs; insists that the implications of the low interest rates and monetary policy measures be properly factored into the analysis of the medium-term sustainability of sovereign debt;


### 7. is convinced that coordination of national fiscal policies remains crucial in underpinning the recovery; notes that the overall fiscal stance , taking into account national budgets and the rrf , should remain supportive in 2021 and 2022; ### 7. is convinced that coordination of national fiscal policies remains crucial in underpinning the recovery; notes that the overall fiscal stance , taking into account national budgets and the rrf , should remain supportive;


### 8. highlights that fiscal policy should remain agile and adjust to the evolving situation as warranted , and that a premature withdrawal of fiscal support should be avoided; further highlights the expectation that economic activity will gradually normalise in the second half of 2021 and agrees that member states’ fiscal policies should become more differentiated in 2022 , duly taking into account the state of the recovery , fiscal sustainability and the need to reduce economic , social and territorial divergences; ### 8. highlights that fiscal policy should remain agile and adjust to the evolving situation as warranted , and that a premature withdrawal of fiscal support should be avoided; urges the commission and council to not return to austerity policies as implemented in response to the global financial crisis and sovereign debt crisis; stresses that cuts to public spending have a contractionary impact on the economy and calls for a rejection of this approach in the recovery from the pandemic; notes that these damaging policies are enshrined in the stability and growth pact rules as well as the six-pack and two-pack , and that a break with this framework will require significant legislative change;


### 9. notes that member states with high debt should use the rrf to finance additional investment to support the recovery , while pursuing a prudent fiscal policy; stresses the importance of the member states using the potential of the rff to support the necessary structural changes and the transformation to more globally competitive , future-proof , agile industries; agrees that the growth of nationally financed current expenditure should be kept under control and be limited for member states with high debt , allowing fiscal measures to maximise support to the recovery without pre-empting future fiscal trajectories and creating a permanent burden on public finances; ### 9. stresses the importance of the member states using the potential of the rff to support the necessary structural changes and the just transformation to future fit industries; highlights the significance of public investment , which should be excluded from the constraints of debt and deficit rules; allowing fiscal measures to maximise support to the recovery and the digital , ecological and social transformation;


### 14. calls for a focus on fiscal structural reforms , including reforms enhancing efficient spending , and acknowledges that high-quality public finance resource management is crucial; ### 14. calls for reforms enhancing efficient spending , and acknowledges that high-quality public finance resource management is crucial; calls on the member states to take action to further tackle tax fraud , tax avoidance , and tax evasion , as well as money laundering; reiterates that effective actions in this area from member states instil confidence in the governance of public finances;


### 15. welcomes the fact that the updated new european industrial strategy , the european digital strategy and all the other relevant strategies set out the framework for speeding up europe’s recovery and transition towards a cleaner , more digital , and more resilient economic and industrial model , as well as for building a stronger and more resilient single market; ### 15. notes the fact that the updated new european industrial strategy , the european digital strategy and all the other relevant strategies set out the framework for speeding up europe’s recovery and transition towards a cleaner , more digital , and more resilient economic and industrial model; highlights that all measures , and notably those linked to the digital and green transformations , should also be assessed from a social perspective in order to avoid risks for job destruction or labour market disruption , risks of employment polarization due to the destruction of middle skilled jobs and ensure that digitalisation and green transition processes of companies are not used as an excuse for labour cost reduction strategies;


### 16. highlights that tackling structural challenges is crucial for a sustainable recovery and continued growth , and that implementing reforms to address structural vulnerabilities is key not only to improving the ability to withstand and cope with existing challenges but also to accomplishing the twin transitions in a sustainable and fair manner; ### 16. highlights that tackling structural challenges is crucial for a sustainable recovery and continued growth , and that implementing reforms is key not only to improving the ability to withstand and cope with existing challenges but also to accomplishing the twin transitions in a sustainable and just manner; stresses , however , that reforms must not aim for the promotion of cost competitiveness through downward wage flexibility; instead , calls for measures that promote wage-led growth by means of high quality employment ensuring stable contracts , decent wages , collective bargaining coverage and social protection floors , including decent pensions substantially above the poverty threshold;


### 17. is concerned that the commission identified macroeconomic vulnerabilities related to imbalances and excessive imbalances in 12 member states; is particularly worried that the nature and source of member states’ imbalances remain largely the same as prior to the pandemic; calls on the member states to take advantage of the unprecedented opportunity provided by the rrf to significantly reduce existing macroeconomic imbalances; ### deleted


### 19. recalls that member states , in their recovery and resilience plans , are required to effectively address all or a significant subset of challenges identified in the relevant csrs , including the fiscal aspects thereof , and that beyond the scope of the rrf , those recommendations that are not addressed remain valid and will continue to be monitored under the european semester framework; ### 19. regrets that member states , in their recovery and resilience plans , are required to address all or a significant subset of challenges identified in the relevant csrs; rejects the policy-conditionality attached to the rrf as past experiences with policy-conditionality gave rise to valid opposition given the lack of democratic legitimacy and the inadequacy of the policy-measures that caused social damage;


### 20. regrets the fact that the commission has not promoted fiscal csrs that promote medium-term fiscal sustainability , despite the fact that the activation of the general escape clause obliges member states not to endanger fiscal sustainability in the medium term; ### deleted


### 3. takes the view that applying a multitude of reduced rates aggravates the complexity and opacity of the tax system , facilitates fraud and increases compliance costs; ### 3. takes the view that applying a multitude of reduced rates aggravates the complexity and opacity of the tax system , facilitates fraud and increases compliance costs; stresses , however , that any measure of simplification should not lead to higher vat rates;


### 7. notes digitalisation’s potential to reduce compliance costs; maintains that digital innovations23 are likely to reduce compliance costs and help increase the transparency of commercial transactions; stresses the need to ensure data security and individual and corporate privacy; ### 7. notes digitalisation’s potential to reduce compliance costs; maintains that digital innovations23 are likely to reduce compliance costs and help increase the transparency of commercial transactions and fight vat fraud; stresses the need to ensure data security and individual and corporate privacy; highlights the potential of distributed ledger technology (dlt) to prevent vat fraud as , e.g. missing trader intra-community fraud;


### 9. stresses that a well-designed vat system is neutral and should not affect trade , but that in practice this principle is difficult to verify at global level given the application of vat exemptions , the ineffectiveness of refund systems , the wide variety of rates – incurring higher compliance costs – and the fact that vat has superseded income taxes with a view to encouraging trade; ### 9. recognises that the vat system is not neutral , potentially affecting trade , given the application of vat exemptions , refund systems , the wide variety of rates and the fact that vat has superseded income taxes with a view to encouraging trade;


### 10. observes that the application of reduced rates does not systematically give rise to permanent price reductions for the consumer; that the effectiveness of a reduced rate depends on a number of factors , such as the extent to which businesses pass it on to consumers , its duration over time , the size of the reduction and the complexity of the rate system; that the passing-on of reductions in their entirety is therefore a random process and should not be the basis for policy-making; that it is impossible to target low-income households; ### 10. observes that the application of reduced rates does not systematically give rise to permanent price reductions for the consumer; that the effectiveness of a reduced rate depends on a number of factors , such as the extent to which businesses pass it on to consumers and its duration over time; considers that price interventions might be necessary to ensure reduced vat rates translate into reduced prices for consumers;


### 11. recalls that for it to have a leverage effect , green taxation must be inclusive , strive for social equity and not undermine businesses’ international competitiveness; observes that the effectiveness of reduced rates in promoting this type of goods and services or , in a broader sense , merit goods (e.g. culture , health , biodiversity) is chiefly a function of the extent to which they are used to promote such goods; ### 11. recalls that for it to have a leverage effect , green taxation must be inclusive and strive for social equity; observes that the effectiveness of reduced rates in promoting this type of goods and services or , in a broader sense , merit goods (e.g. culture , health , biodiversity) is also a function of the extent to which they are used to promote such goods;


### 12. stresses that reduced rates are not an effective way of achieving social or environmental objectives since they incur high costs for governments owing to the size of the rate gap , reduced tax revenues , increased administrative costs , costly checks and inspections , pressure from lobby groups , compliance costs , economic distortions or even tax evasion , and the difficulty of reaching the target groups; ### deleted


### 13. takes the view that direct tax incentives , such as direct grants or tax credits targeting specific consumers and producers , are more effective , flexible , visible and cost-effective tools for achieving these social and environmental objectives; ### 13. takes the view that direct tax incentives , such as direct grants or tax credits targeting specific consumers and producers , can also be effective , flexible , visible and cost-effective tools for achieving these social and environmental objectives;


### 14. stresses that a uniform vat system , combined with a direct tax incentive tool such as the income-based tax credit scheme for low-income households , together with a raft of social reforms , would be a winning strategy; recalls that new zealand has a flat-rate vat system and applies tax credit for low-income households; points out that flat-rate subsidies and information campaigns are an option for the promotion of merit goods; ### 14. considers that a uniform vat system , combined with a direct tax incentive tool such as the income-based tax credit scheme for low-income households , could be a coherent strategy , as long as these do not place an administrative burden on low-income households; considers that new zealand has a flat-rate vat system and applies tax credit for low-income households; points out that subsidies and information campaigns are an option for the promotion of merit goods;


### 15. recalls that vat revenue is one of the chief sources of public revenue , accounting for some 21% of total tax revenue in the eu on average; that the vat gap stands at 10% on average; and that vat also constitutes an own resource for the eu budget; stresses that any reduction in the vat base leads to less revenue for public finances; calls on national tax authorities to take initiatives to reduce the vat gap in order to help lift member states out of the current socio-economic crisis; ### 15. recalls that vat revenue is one of the chief sources of public revenue , accounting for some 21% of total tax revenue in the eu on average; that the vat gap stands at 10% on average; and that vat also constitutes an own resource for the eu budget; calls on national tax authorities to take initiatives to reduce the vat gap in order to help lift member states out of the current socio-economic crisis;


### 16. endorses the findings of the diw econ study which stresses that on average the standard rate was applied to 71% of the total tax base in the member states in 2019; points out that diversified vat systems impose costs on businesses , particularly smes via increased compliance costs , create distortions in the internal market and trade , and incur costs on government through lost revenue; adds that reduced rates are an insufficient means of achieving revenue-distribution or environmental objectives; ### 16. endorses the findings of the diw econ study which stresses that on average the standard rate was applied to 71% of the total tax base in the member states in 2019;


### 17. notes the difficulties in reducing the vat gap between member states owing to the need to maintain a number of vat exemptions for certain goods and services and the willingness of member states to maintain reduced rates of at least 5%; acknowledges that member states need to conserve the flexibility to set their own vat rates given the importance of this tax as a budgetary instrument; ### 17. notes the difficulties in reducing the vat gap between member states owing to the justified need to maintain a number of vat exemptions for certain goods and services and the willingness of member states to maintain reduced rates of at least 5%; acknowledges that member states need to conserve the flexibility to set their own vat rates given the importance of this tax as a policy instrument;


### 18. calls for a simplified vat system with limits on exemptions and non-standard rates to be introduced with a view to promoting competitiveness; ### 18. calls for a simplified vat system , without increasing standard or non-standard rates , with a view on promoting distributional justice;


### 19. stresses that the vat gap is chiefly attributable to the ineffectiveness of enforcement and control measures , particularly those against tax evasion and avoidance and aggressive tax planning; ### 19. stresses that the vat gap is chiefly attributable to the ineffectiveness of enforcement and control measures , particularly those against tax fraud , evasion and avoidance and aggressive tax planning; calls on the commission to assess how the introduction and implementation of reverse-charge procedures to combat missing trader intra-community fraud can be simplified and made more effective in the eu;


### a. whereas the unprecedented impact and magnitude of the covid-19 crisis on the economy has led to a decrease in tax revenues and an increase in fiscal expenditures to protect society and the economy , and is leading to a sharp increase in government debt; whereas tax fraud and tax evasion undermines government revenues , as well as the sustainability of public finances and taxation systems; whereas it is paramount to keep taxes low to support the growth of the economy; ### a. whereas the unprecedented impact and magnitude of the covid-19 crisis on the economy has led to a decrease in tax revenues and an increase in fiscal expenditures to protect society and the economy , and is leading to a sharp increase in government debt; whereas tax fraud and tax evasion undermines government revenues , as well as the sustainability of public finances and taxation systems; whereas throughout european history , when facing crisis , some countries greatly modified their taxation system , for example france introduced an excess profit tax during world war i , which sometimes led to a long-term modification of their taxation system;


### b. whereas a swift recovery requires a strong economic and fiscal policy response ensuring , inter alia: (i) an effective level playing field for businesses , including less red tape to promote both domestic trade and trade within the single market , supported by a simple and more predictable tax environment; (ii) securing tax revenues for member states to finance the recovery and reduce debt to gdp and (iii) fair taxation of businesses and citizens , enhancing both trust in society and fair competition; ### b. whereas a swift recovery requires a strong economic and fiscal policy response ensuring , inter alia: (i) an effective level playing field for businesses , reducing or eliminating tax benefits that unfairly create disadvantages to smes , including less red tape to promote both domestic trade and trade within the single market , supported by a simple and more predictable tax environment; (ii) securing tax revenues for member states to finance the recovery and reduce debt to gdp and (iii) fair taxation of businesses and citizens , enhancing trust in society;


### c. whereas the commission’s action plan is part of a wider union tax strategy in the area of vat , business and individual taxation; whereas the action plan sets out a dual approach combining actions for combating tax fraud and tax evasion and simplifying steps to remove unnecessary obstacles and administrative burdens for taxpayers; ### c. whereas the commission’s action plan is part of a wider union tax strategy in the area of vat , business and individual taxation; whereas the action plan sets out a dual approach combining actions for combating tax fraud and tax evasion and simplifying steps to remove unnecessary obstacles and administrative burdens for citizens and smes;


### g. whereas increased transparency in the area of corporate taxation can improve tax collection and is also necessary to strengthen fair competitiveness in the single market , which will make the work of tax authorities more efficient; whereas the use of technology and digitalisation focused on a more efficient use of the available data can support efficiency and transparency of tax authorities and reduce the costs of compliance and increase the trust of the public; ### g. whereas increased transparency in the area of corporate taxation can improve tax collection and is also necessary to strengthen fair competitiveness in the single market , which will make the work of tax authorities more efficient; whereas the final agreement on the public country-by-country reporting is far from being enough as it will not provide disaggregated data for more than 80% of the countries in the world; whereas the use of technology and digitalisation focused on a more efficient use of the available data can support efficiency and transparency of tax authorities and reduce the costs of compliance and increase the trust of the public;


### 1. welcomes the commission's action plan and supports its thorough implementation; observes that the majority of the 25 actions are related to vat , which is appropriate due to the high level of revenue losses in the area of vat; considers however that an impact assessment should be carried out , before presenting concrete legislative proposals to better apprehend the potential effects on taxpayers and businesses; ### 1. welcomes the commission's action plan and supports its thorough implementation; observes that the majority of the 25 actions are related to vat , due to the high level of revenue losses in the area of vat; supports the effort of reducing the vat gap in order to prevent the possible need to increase the tax rates on consumption; considers however that an impact assessment should be carried out , before presenting concrete legislative proposals to better apprehend the potential effects on taxpayers and businesses; stresses , however , that the commission’s action plan should have also a focus on corporate taxation and anti-money laundering mechanisms in alignment with the international momentum;


### 3. welcomes the commission's proposal to modernise , simplify and harmonise vat requirements , using transaction-based 'real time' reporting and e-invoicing; notes that such reporting needs to be taxpayer-friendly while allowing tax administrations to have an overview of the various transactions in real-time , facilitating the prevention and detection of fraud and risky economic operators; considers that reporting requirements and tax forms should converge across the member states; believes that the use of the data-mining tool transaction network analysis (tna) represents an available way to reduce tax fraud and promotes its further development and sharing of best practices among member states; ### 3. welcomes the commission's proposal to modernise , simplify and harmonise vat requirements , using transaction-based 'real time' reporting and e-invoicing; notes that such reporting needs to be taxpayer-friendly while allowing tax administrations to have an overview of the various transactions in real-time , facilitating the prevention and detection of fraud and risky economic operators; considers that reporting requirements and tax forms should converge across the member states; believes that the use of the data-mining tool transaction network analysis (tna) represents an available way to reduce tax fraud and promotes its further development and sharing of best practices among member states; however , stresses that , according to a study requested by tax 3 in 20181a , no data is collected regarding business activity in member states that do not participate in it , and that each participating member state is allowed to set a ‘white list’ of actors in respect of which the tna will not be able to collect vies and vow data;


### 4. recalls that any tax measures , temporary or not , should foster and not hamper the competitiveness of european businesses; stresses that the reporting requirements should not generate higher administrative costs for economic actors , notably for small and medium-sized enterprises (smes); notes that to effectively address lost tax revenues , better quality and possible higher quantities of data may be needed , but only data effectively used , and collected from taxpayers only once with utmost security , should be collected; notes that data should aim to simplify various obligations of taxpayers , while artificial intelligence (ai) and various softwares should be used to maximise the effectiveness of the use of data; ### 4. stresses that the reporting requirements should not generate higher administrative costs for economic actors , notably for small and medium-sized enterprises (smes); notes that to effectively address lost tax revenues , better quality and possible higher quantities of data may be needed , collected in a way that respects taxpayers security; notes that data should aim to simplify various obligations of taxpayers , while artificial intelligence (ai) and various softwares should be used to maximise the effectiveness of the use of data;


### 5. is of the opinion that better estimates of overall tax losses in the union are essential for efficient proposals on ways to effectively reduce tax losses; ### 5. is of the opinion that better estimates of overall tax losses in the union are essential for efficient proposals on ways to effectively reduce tax losses; calls on the commission to launch a coordinated effort by the member states to establish a joint system of collecting statistics on vat ‘carousel fraud’; points out that such a system could build upon practices already used in some member states;


### 7. notes that the union decision-making process is not promoting change , as tax policy is a national prerogative and subject to unanimity; regrets that the current situation sometimes leads to an uneven or inconsistent application of tax regulations; calls on the commission and the member states to ensure more harmonised and consistent tax rules and their implementation , to protect the functioning of the single market and to assure the principle of “taxing where profit is generated”; ### 7. notes that the union decision-making process is not promoting change , as tax policy is a national prerogative and subject to unanimity; regrets that the current situation sometimes leads to an uneven or inconsistent application of tax regulations; calls on the commission and the member states to ensure more harmonised and consistent tax rules and their implementation , to assure the principle of “taxing where profit is generated”;


### 8. takes note of the existing limits on decision making in the council and calls for exploring all legal options as provided in the treaties on taxation especially in order to ensure functionality of the single market and preserve union competitiveness in the global market; ### 8. takes note of the existing limits on decision making in the council and calls for exploring all legal options as provided in the treaties on taxation especially to fight harmful competition practices;


### 11. highlights that the current global tax environment is outdated , and can only be fully addressed on a global level; considers that a multilateral agreement negotiated oecd/g20 inclusive framework on beps is a unique opportunity to make international tax architecture more consistent with the development of the economy by further addressing the distortions of fair competition in the market , which was accentuated during the covid-19 crisis and highlighted problems related to the taxing of large multinational enterprises (mnes); ### 11. highlights that the current global tax environment is outdated , and can only be fully addressed on a global level; considers that the multilateral agreement negotiated oecd/g20 inclusive framework on beps was a unique opportunity to make international tax architecture more consistent with the development of the economy by further addressing the distortions of fair competition in the market , which was accentuated during the covid-19 crisis and highlighted problems related to the taxing of large multinational enterprises (mnes);


### 12. welcomes the efforts of the commission to address the problem at least partially by introducing various initiatives , but stresses the high importance of the union in contributing to the success of global negotiations towards the ongoing necessary reforms; ### 12. welcomes the efforts of the commission to address the problem at least partially by introducing various initiatives; stresses in particular the proposal on the fight against abusive use of shell companies; recalls that recent research by the imf shows that two member states (luxembourg and the netherlands) host nearly half of the globe’s phantom foreign direct investment (fdi) through empty corporate shells with zero or few employees in the host country4a; calls for the definition of substance requirements to assess legal entities and to further banning them if those requirements are not met;


### 14. welcomes the two-pillar agreement reached at the g7/g20 levels on the allocation of taxing rights and the application of a minimum effective tax rate of at least 15% on the global profits of mnes; notes the need for effective implementation; calls on the commission to make the necessary legislative proposals to implement the agreement into union law as quickly as possible after the finalisation of the technical work on the oecd approach; ### 14. welcomes the two-pillar agreement reached at the g7/g20 levels on the allocation of taxing rights and the application of a minimum effective tax rate of 15% on the global profits of mnes; regrets however the low level of the rate agreed , given that it had originally been set at 21%; stresses that the union needs to undertake an effective implementation; calls on the commission to make the necessary legislative proposals to implement the agreement into union law as quickly as possible after the finalisation of the technical work on the oecd approach;


### 15. recalls that future union policy options and political choices in the area of business taxation should be based on tax fairness , efficiency and transparency , leading to fairly shared taxes for all types of multinational companies , while reducing costs of compliance for taxpayers , as well as removing sources of business distortions in the union single market , trade and investments; ### 15. recalls that future union policy options and political choices in the area of business taxation should be based on tax fairness , efficiency and transparency , while also taking into account the need to strengthen member states tax revenues , given the decisive role of the governments in fostering a sustainable economic recovery from the pandemic; in this sense , stresses that these policy choices should lead to fairly shared taxes for all types of multinational companies , while reducing costs of compliance for taxpayers , specially low-income earners and smes , as well as removing sources of business distortions in the union single market , trade and investments;


### 17. considers , however , that the befit initiative should be supported by the political process in building political support for change and that the initiative should be accompanied by a thorough impact assessment to shape future proposals , which should contribute to reaching a consensus between member states; ### 17. regrets the fact that previous cctb and ccctb proposals were not approved in the council; looks forward to the details on the befit initiative; notes that , in order to build political support for change , the initiative should be accompanied by a thorough impact assessment to shape future proposals , which should contribute to reaching a consensus between member states;


### 18. considers that the new corporate tax agenda should include a mechanism to address the debt-equity bias through an incentive system , helping to support the resilience of companies in adverse economic circumstances in the future; ### 18. recognises as a problem the debt-equity bias in the treatment of tax benefits , creating room for multinationals that engage in harmful tax practices via intra-group operations; considers that the best option to tackle it should be the limitation of interest deductions , in line with the legislative spirit already introduce by atad in article 4;


### 2. notes , however , that some types of income and assets are still excluded from the scope , which presents a risk of circumventing tax obligations; calls on the commission to assess the need and the most appropriate way to include the following ownership information , items of income and non-financial assets in the automatic exchange of information (aeoi): (a) the beneficial owners of immovable property and companies; (b) capital gains related to immovable property and capital gains related to financial assets , in particular to find ways for tax administrations to be better informed to identify realised capital gains; (c) non-custodial dividend income; (d) non-financial assets such as cash , art , gold or other valuables held at free ports , customs warehouses or safe deposit boxes; and (e) ownership of yachts and private jets; ### 2. regrets , however , that this process has been extremely slow and some types of income and assets are still excluded from the scope , which presents a risk of circumventing tax obligations; calls on the commission to assess the most appropriate way and to present concrete proposals to include the following ownership information , items of income and non-financial assets in the automatic exchange of information (aeoi): (a) the beneficial owners of immovable property and companies; (b) capital gains related to immovable property and capital gains related to financial assets , in particular to find ways for tax administrations to be better informed to identify realised capital gains; (c) non-custodial dividend income; (d) non-financial assets such as cash , art , gold or other valuables held at free ports , customs warehouses or safe deposit boxes; and (e) ownership of yachts and private jets;


### 4. observes that the definition of reporting financial institutions (fis) and types of accounts that need to be reported in dac2 involves a risk of circumvention and increased bureaucracy; calls for an assessment by the commission of the need to extend the reporting obligations to other relevant types of fis , to review the definition of excluded accounts and to remove the thresholds applicable to pre-existing entity accounts; ### 4. observes that the definition of reporting financial institutions (fis) and types of accounts that need to be reported in dac2 involves a risk of circumvention and increased bureaucracy; calls for the commission to extend the reporting obligations to other relevant types of fis , to review the definition of excluded accounts and to remove the thresholds applicable to pre-existing entity accounts;


### 10. notes that the commission monitors the transposition of the dac legislation in the member states; points out , however , that it has so far neither taken direct and effective action to address the lack of quality of the data sent between member states , nor carried out visits to member states , nor has it ensured the effectiveness of sanctions imposed by member states for breaches of the dac reporting provisions; calls on the commission to step up its activities in this regard and to launch infringement procedures , using , among others , the global forum13 and financial action task force reviews; ### 10. notes that the commission monitors the transposition of the dac legislation in the member states; points out , however , that it has so far neither taken direct and effective action to address the lack of quality of the data sent between member states , nor carried out visits to member states , nor has it ensured the effectiveness of sanctions imposed by member states for breaches of the dac reporting provisions; urges the commission to step up its activities in this regard and to launch infringement procedures , using , among others , the global forum13 and financial action task force reviews;


### 15. deplores the fact that one member state , malta , has received an overall ‘partially compliant’ score in the peer review by the global forum for eoir; regrets the fact that material deficiencies have been identified in 18 member states15 ; ### 15. deplores the fact that one member state , malta , has received an overall ‘partially compliant’ score in the peer review by the global forum for eoir; regrets the fact that material deficiencies have been identified in 18 member states15 ; calls on the commission to think about some sanctions which could be taken against those member states;


### 18. notes that there is no common eu framework for monitoring the system’s performance and achievements; ### 18. notes that there is no common eu framework for monitoring the system’s performance and achievements; notes that the establishment of an eu tax intelligence centre , as suggested by the ngo tax justice network , could not only help to improve the process of monitoring risks related to illicit financial flows , but also allow for the development of greater analytical capacity in the eu;


### — having regard to the eurosystem staff macroeconomic projections for the euro area published on 10 june 2021 , ### — having regard to the eurosystem staff macroeconomic projections for the euro area published on 9 september 2021 ,


### a. whereas , according to the commission’s summer 2021 economic forecast , gdp contracted in 2020 by 6 % in the eu and 6.5 % in the euro area; whereas gdp is forecast to grow by 4.8 % in 2021 and 4.5 % in 2022 in both the eu and the euro area , with significant growth inequalities persisting between and within the member states; ### a. whereas , according to the commission’s summer 2021 economic forecast , gdp contracted in 2020 by 6 % in the eu and 6.5 % in the euro area; whereas gdp is forecast to grow by 4.8 % in 2021 and 4.5 % in 2022 in both the eu and the euro area , with significant growth inequalities persisting between and within the member states; whereas uncertainty and risks surrounding the growth outlook are high depending on the emergence and spread of covid-19 virus variants and further picking up the pace up of vaccination campaigns;


### b. whereas , according to eurostat , the unemployment rate in july 2021 stood at 6.9 % in the eu and 7.6 % in the euro area , spread in an uneven way across the eu and with unemployment rates among young people and women remaining much higher; ### b. whereas , according to eurostat , the unemployment rate in august 2021 stood at 6.8 % in the eu and 7.5 % in the euro area , spread in an uneven way across the eu and with unemployment rates among young people and women remaining much higher (16.2 % in the eu and 16.4 % in the euro area and 7.2 % in the eu and 7.9 % in the euro area , respectively);


### c. whereas , according to the eurosystem staff macroeconomic projections of june 2021 , annual inflation for the euro area in the harmonised index of consumer prices (hicp) will be 1.9 % in 2021 , 1.5 % in 2022 and 1.4 % in 2023 on average; whereas inflation projections show substantial variance across the euro area; ### c. whereas , according to the eurosystem staff macroeconomic projections of september 2021 , annual inflation for the euro area in the harmonised index of consumer prices (hicp) will be 2.2 % in 2021 , 1.7 % in 2022 and 1.5 % in 2023 on average; whereas inflation projections show substantial variance across the euro area;


### d. whereas , at the end of 2020 , the size of the eurosystem balance sheet had reached its all-time peak of eur 6 979 324 million , an increase of almost 50 % (eur 2 306 233 million) compared with the end of 2019 , mainly due to the increase in eurosystem refinancing operations; ### d. whereas , at the end of 2020 , the size of the eurosystem balance sheet had reached its all-time peak of eur 6 979 324 million , an increase of almost 50 % (eur 2 306 233 million) compared with the end of 2019 , mainly due to the increase in eurosystem refinancing operations , as a result of the third series of targeted longer-term refinancing operations (tltro iii) , and the securities purchased under the pandemic emergency purchase programme (pepp) and the asset purchase programme (app);


### 2. welcomes the ecb monetary policy strategy review adopted unanimously and announced on 8 july 2021 , which sets out how to achieve the primary objective of maintaining price stability and contribute to the achievement of the union’s objectives without prejudice to the objective of price stability; ### 2. welcomes the ecb monetary policy strategy review adopted unanimously and announced on 8 july 2021 , which sets out how to achieve the primary objective of maintaining price stability and contribute to the achievement of the union’s objectives without prejudice to the primary objective of price stability; calls on the ecb to set climate change , just transition , social , economic and territorial cohesion and full and high-quality employment as priority objectives;


### 6. underlines the importance of a central fiscal capacity capable of providing a counter-cyclical stabilisation function and timely and adequate support in the event of economic shocks; ### 6. underlines the importance of a central fiscal capacity capable of providing a counter-cyclical stabilisation function and timely and adequate support in the event of economic shocks; agrees with president lagarde that ‘such a central fiscal capacity could help steer the aggregate euro area fiscal policy stance and ensure a more appropriate macroeconomic policy mix’;


### 7. echoes president lagarde’s call for the revision and simplification of the stability and growth pact to be carried out before the deactivation of the general escape clause; ### 7. echoes president lagarde’s call for the revision and simplification of the stability and growth pact (sgp) to be carried out before the deactivation of the general escape clause; calls for an enhanced debate on the future of the eu economic governance framework in order to facilitate the economic and social recovery , promote fair , inclusive and sustainable growth and boost full and high-quality employment;


### 9. welcomes the ecb’s decision to continue to conduct net asset purchases at a significantly higher pace under the pepp until at least the end of march 2022; ### 9. notes that the pepp total envelope stands at eur 1 850 billion and that the ecb will continue to conduct net asset purchases under the pepp until at least the end of march 2022; welcomes the ecb’s decisions on 11 march 2021 , 22 april 2021 , 10 june 2021 and 22 july 2021 to conduct net asset purchases at a significantly higher pace than during the first months of 2021; notes the position of the ecb’s governing council on 9 september 2021 that favourable financing conditions can be maintained with a moderately lower pace of net asset purchases under the pepp; calls on the ecb to carry out a thorough impact assessment before implementing such a lower pace and to inform the parliament accordingly; agrees with president lagarde’s statement on 10 june 2021 that ‘any discussion about exit from the pepp (...) would be premature , it’s too early and it will come in due course’; calls on the ecb to continue these purchases for as long as necessary; notes that the pepp envelope can be recalibrated if required to maintain favourable financing conditions;


### 10. welcomes the ecb’s expectation that monthly net asset purchases under the asset purchase programme (app) will continue to run for as long as necessary to reinforce the accommodative impact of its policy rates; ### 10. welcomes the fact that net purchases under the asset purchase programme (app) will continue at a monthly pace of eur 20 billion; welcomes ecb’s expectation that monthly net asset purchases under the app will continue to run for as long as necessary to reinforce the accommodative impact of its policy rates;


### 11. notes that the amount of eurosystem refinancing operations increased to eur 1 850 billion at the end of 2020 , mainly due to the third series of targeted longer-term refinancing operations (tltro iii); ### 11. notes that the amount of eurosystem refinancing operations increased to eur 1 850 billion at the end of 2020 , mainly due to the third series of targeted longer-term refinancing operations (tltro iii); notes , moreover , that the weighted average maturity of outstanding eurosystem refinancing operations increased to around 2.4 years at the end of 2020;


### 12. notes the ecb’s decision on a new symmetric inflation target of 2 % over the medium term and its commitment to maintain a persistently accommodative monetary policy stance in order to meet its inflation target; notes with concern that inflation rose to a decade-high 3 % in august 2021; calls on the ecb to evaluate and address this upward trend and its consequences more attentively; ### 12. notes the ecb’s decision on a new symmetric inflation target of 2 % over the medium term and its commitment to maintain a persistently accommodative monetary policy stance in order to meet its inflation target; notes with concern that inflation rose to a decade-high 3.4 % in september 2021; stresses that increases in inflation can be particularly harmful to the poorest parts of the population and result in increasing economic and social inequalities; calls on the ecb to evaluate and address this upward trend and its consequences more attentively;


### 13. notes the ecb’s decision to include the costs related to owner-occupied housing in the hicp to better represent the inflation rate that is relevant for households; ### 13. notes the ecb’s decision to include the costs related to owner-occupied housing in the hicp to better represent the inflation rate that is relevant for households; acknowledges that this inclusion is a multi-year project; stresses that such inclusion could result to raising the price indices and , at least temporarily , bringing inflation above the medium-term target thus reducing ecb’s room for manoeuvre; calls on the ecb to prepare for and effectively address such risks;


### 15. agrees with the ecb that tackling the climate emergency touches not only upon its secondary but also upon its primary mandate , given that climate change and its consequences pose a threat to price stability; ### 15. agrees with the ecb that tackling the climate emergency touches not only upon its secondary but also upon its primary mandate , given that climate change and its consequences pose a threat to price stability by hampering the transmission of monetary policy to the real economy , affecting growth and increasing macroeconomic instability; stresses that the eu has already decided on the priority of economic policies steered towards achieving climate neutrality by 2050 at the latest , hence the ecb is already obliged to adopt specific policies contributing to the eu climate policies and targets;


### 16. welcomes the ecb’s new action plan and its detailed roadmap of climate change-related actions to further incorporate climate change considerations into its policy framework; ### 16. welcomes the ecb’s new action plan and its detailed roadmap of climate change-related actions to further incorporate climate change considerations into its policy framework; notes , however , that the action plan focuses on climate-related risks , sidelining the issue of environmental impacts and thus potentially disregarding the double materiality principle that is at the heart of the eu sustainable finance framework; calls on the ecb to develop further its action plan to fully integrate environmental impacts;


### 17. believes that the market neutrality principle falls short of the commitments under the paris agreement and the eu’s objective of achieving climate neutrality by 2050 at the latest; notes that the ecb has already deviated from market neutrality in several instances; ### 17. believes that the market neutrality principle falls short of the commitments under the paris agreement and the eu’s objective of achieving climate neutrality by 2050 at the latest; stresses that in the presence of market failures , adhering to the market neutrality principle may reinforce pre-existing inefficiencies; notes that the ecb has already deviated from market neutrality in several instances; calls on the ecb to adopt a new approach that fully accounts for market failures and the need to align its policies with the eu environmental objectives;


### 18. regrets the fact that green bond issuance in the eu represents only 2.6 % of the eu’s total bond issuance; ### 18. regrets the fact that green bond issuance in the eu represents only 2.6 % of the eu’s total bond issuance , despite the fact that , in 2020 , 51 % of global bond issuance was concentrated in the eu and 49 % of global green bond issuance was denominated in euro; notes that the ecb has increased the share of green bonds in its own funds portfolio from 0.5 % in january 2020 to 3.5 % with a view of further increasing this percentage in the coming years; underlines , however , that this share remains considerably low; calls on the ecb to speed up its work on increasing the share of green bonds in its portfolio; welcomes , in this regard , ecb’s decision to use part of its own funds portfolio to invest in the euro-denominated green bond investment fund for central banks (eur bisip g2);


### 19. welcomes the fact that the ecb is taking steps to incorporate climate-related risks into its collateral framework but warns against delays in its implementation; is concerned about the fact that the ecb continues to rely exclusively on private external credit rating agencies (cras) for risk assessment; ### 19. welcomes the fact that the ecb is taking steps to incorporate climate-related risks into its collateral framework but warns against delays in its implementation; is concerned about the fact that the ecb continues to rely exclusively on private external credit rating agencies (cras) for risk assessment , particularly considering the fact that incorporation of climate risks in external cras is still an underdeveloped process in an unregulated field; calls on the ecb to develop a harmonised in-house climate and environment credit risk assessment framework in order to identify and eventually exclude polluting assets from monetary policy operations;