16.6.2023
EN
Official Journal of the European Union
C 214/229 Tuesday 17 January 2023
Amendment 9 Proposal for a directive Recital 5 Text proposed by the Commission (5)
To ensure the proper functioning of the internal market, the proportionality and effectiveness of potential rules, it would be desirable to limit their scope to undertakings which are at risk of being found to lack minimal substance and used with the main objective of obtaining a tax advantage.
It would therefore be important to establish a gateway criterion, in the form of a set of three cumulative, indicative conditions, in order to conclude which undertakings are sufficiently at risk as aforemen­ tioned to justify that they be subjected to reporting requirements.
A first condition should enable the identification of undertakings presumably engaged mainly in geographically mobile economic activities, as the place where such activities are actually carried out is usually more challenging to identify.
Such activities normally give rise to important passive income flows.
Hence, undertakings, which income consists predomi­ nantly of passive income flows would meet this condition.
It should also be taken into account that entities holding assets for private use, such as real estate, yachts, jets, artworks, or equity alone, may have no income for longer periods of time, but still enable significant tax benefits by way of owning those assets.
As purely domestic situations would not pose a risk for the good functioning of the internal market and would be best addressed at domestic level, a second condition should focus on undertakings engaged in cross-border activities.
Engagement in cross-border activities should be established having regard, on the one hand, to the nature of the transactions of the undertaking, domestic or foreign, and on the other, to its property, given that entities that only hold assets for private, non-business, use may not engage in transactions for a considerable time.
Additionally, a third condition should point out to those undertakings which have no or inadequate own resources to perform core management activities.
In this regard, undertakings that do not have adequate own resources tend to engage third party providers of
Amendment (5)
To ensure the proper functioning of the internal market, the proportionality and effectiveness of potential rules, it would be desirable to limit their scope to undertakings which are at risk of being found to lack minimal substance and used mainly to obtain a tax advantage.
It would therefore be important to establish a gateway criterion, in the form of a set of three cumulative, indicative conditions, in order to conclude which under­ takings are sufficiently at risk as aforementioned to justify that they be subjected to reporting requirements.
Under­ takings should carry out the gateway test by themselves in the form of a self-assessment.
A first condition should enable the identification of undertakings presumably engaged mainly in geographically mobile economic activities, as the place where such activities are actually carried out is usually more challenging to identify.
Such activities normally give rise to important passive income flows.
Hence, undertakings, which income consists predominantly of passive income flows would meet this condition.
It should also be taken into account that entities holding assets for private use, such as real estate, yachts, jets, art, or equity alone, may have no income for longer periods of time, but still enable significant tax benefits by way of owning those assets.
As purely domestic situations would not pose a risk for the good functioning of the internal market and would be best addressed at domestic level, a second condition should focus on undertakings engaged in cross-border activities.
Engagement in cross-border activities should be estab­ lished having regard, on the one hand, to the nature of the transactions of the undertaking, domestic or foreign, and on the other, to its property, given that entities that only hold assets for private use may not engage in transactions for a considerable time.
Additionally, a third condition should point out to those undertakings which have no or inadequate own resources to perform core management activities.
In this regard, undertakings that do not have adequate own resources tend to engage third