A4-0299/98

Proposal for a Council Directive on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States (COM(98)0067 - C4-0195/98 - 98/0087(CNS))

The proposal was approved with the following amendments:

(Amendment 1)

Recital 2a (new)

>Original text>

>Text following EP vote>

Whereas administrative formalities and cash flow problems are particularly relevant for small and medium-sized enterprises, possibly limiting flexible intra-group financing arrangements while at the same time discouraging forms of cross-border cooperation;

(Amendment 2)

Recital 4a (new)

>Original text>

>Text following EP vote>

Whereas it is important to extend the provisions of this Directive also to taxes levied on interest and royalty payments made between companies which are not associated, as part of the further development of the Single Market;

(Amendment 3)

Recital 5a (new)

>Original text>

>Text following EP vote>

Whereas the synchronism in the legislative progress of the various elements of the tax package(1) should be taken as a broad target to be achieved in the medium term, and should not be used, on the contrary, as a tool by Member States to delay the approval of the various elements of the package;

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(1) 'Conclusions of the ECOFIN Council meeting on 1 December 1997 concerning taxation policy, OJ C 2, 6.1.1998, p. 1" and

'A package to tackle harmful tax competition in the European Union¨, 5.11.1997, COM(97)0564

(Amendment 4)

Article 6(2)

>Original text>

2. A Member State may withdraw the benefit of or refuse to apply this Directive in the case of any transaction which has as its principal objective or as one of its principal objectives tax evasion or tax avoidance.

>Text following EP vote>

2.

A Member State may withdraw the benefit of or refuse to apply this Directive only in the case of a transaction which has as its principal objective tax evasion or tax avoidance.

(Amendment 5)

Article 7(2a) (new)

>Original text>

>Text following EP vote>

2a. Member States shall undertake to re-examine their existing laws and established practices, in line with the principles set out in the Code of Conduct for business taxation(1), in order to guarantee a wide application of the provisions of the Directive by the time it enters into force.

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(1) 'Resolution of the Council and the representatives of the Governments of the Member States, meeting within the Council, of 1 December 1997 on a code of conduct for business taxation¨, OJ C 2, 6.1.1998, p. 2.

(Amendment 6)

Article 10

>Original text>

Three years after the date referred to in Article 9(1), the Commission shall report to the Council on the operation of this Directive, in particular with a view to extending its coverage to companies or undertakings other than those covered by this Directive, and to reviewing the application of Article 7.

>Text following EP vote>

Three years after the date referred to in Article 9(1), the Commission shall report to the Council on the operation of this Directive, in particular with a view to extending its coverage to companies or undertakings other than those covered by this Directive,

to eliminating the exemptions granted under Article 7 and to ensuring the consistency of this Directive with the other elements of the tax package implemented by the Commission.

Legislative resolution embodying Parliament's opinion on the proposal for a Council Directive on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States (COM(98)0067 - C4-0195/98 - 98/0087(CNS))(Consultation procedure)

The European Parliament,

- having regard to the Commission proposal to the Council, COM(98)0067 - 98/0087(CNS) ((OJ C 123, 22.4.1998, p. 9.)),

- having been consulted by the Council pursuant to Article 100 of the EC Treaty (C4-0195/98),

- having regard to Rule 58 of its Rules of Procedure,

- having regard to the report of the Committee on Economic and Monetary Affairs and Industrial Policy and the opinion of the Committee on Legal Affairs and Citizens' Rights (A4-0299/98),

1. Approves the Commission proposal, subject to Parliament's amendments;

2. Calls on the Commission to alter its proposal accordingly, pursuant to Article 189a(2) of the EC Treaty;

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

4. Asks to be consulted again should the Council intend to make substantial modifications to the Commission proposal;

5. Instructs its President to forward this opinion to the Council and Commission.