Common system of taxation applicable to interest and royalty payments * European Parliament legislative resolution of 11 September 2012 on the proposal for a Council directive on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States (recast) (COM(2011)0714 – C7-0516/2011 – 2011/0314(CNS))
Date: 2012-09-11
Institutions: Committee on Economic and Monetary Affairs, European Parliament
Subjects: EU Member State, corporation tax, deduction at source, double taxation, firm governed by commercial law, interest, transnational corporation








CE2013353EN.01019602.xml










3.12.2013   


EN


Official Journal of the European Union


CE 353/196





Tuesday 11 September 2012Common system of taxation applicable to interest and royalty payments *
P7_TA(2012)0318
European Parliament legislative resolution of 11 September 2012 on the proposal for a Council directive on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States (recast) (COM(2011)0714 – C7-0516/2011 – 2011/0314(CNS))
2013/C 353 E/36
(Special legislative procedure – consultation – recast)

The European Parliament,






—


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










—


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










—


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










—


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










—


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










—


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










A.


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










1.


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










2.


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










3.


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










4.


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










5.


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






TEXT PROPOSED BY THE COMMISSION


AMENDMENT





Amendment 1






Proposal for a directive


Recital 1











(1)


Council Directive 2003/49/EC of 3 June 2003 on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States has been amended several times. Since further amendments are to be made, it should be recast in the interests of clarity.












(1)


Council Directive 2003/49/EC of 3 June 2003 on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States has been amended several times. Since further amendments are to be made, it should be recast in the interests of clarity. 
On 19 April 2012, the European Parliament called for concrete ways to combat tax fraud and tax evasion, drawing attention to tax evasion via hybrid financial instruments and calling on the Member States to ensure smooth cooperation and coordination between their tax systems to avoid unintended non-taxation and tax evasion.











Amendment 2






Proposal for a directive


Recital 1 a (new)





 










(1a)






Persistent and considerable public deficits are closely linked to the current social, economic and financial crisis.











Amendment 3






Proposal for a directive


Recital 4











(4)


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












(4)


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









Amendment 4






Proposal for a directive


Recital 5











(5)


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












(5)


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









Amendment 5






Proposal for a directive


Recital 12











(12)


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












(12)


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









Amendment 6






Proposal for a directive


Recital 20 a (new)





 










(20a)






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











Amendment 7






Proposal for a directive


Article 1 – paragraph 1





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


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







Amendment 8






Proposal for a directive


Article 1 – paragraph 3





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


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







Amendment 10






Proposal for a directive


Article 2 – paragraph 1 – point d – point ii











(ii)


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












(ii)


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









Amendment 11






Proposal for a directive


Article 2 – paragraph 1 – point d – point iii











(iii)


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












(iii)


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









Amendment 12






Proposal for a directive


Article 4 – title














Amendment 13






Proposal for a directive


Article 4 – paragraph 2





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


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





Amendment 14






Proposal for a directive


Article 6 – paragraph 1 – subparagraph 1





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


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





Amendment 15






Proposal for a directive


Article 6 – paragraph 2 a (new)





 




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







Amendment 16






Proposal for a directive


Article 7





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


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





Amendment 17






Proposal for a directive


Article 8





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


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










(1)  OJ C 77, 28.3.2002, p. 1.