Debate: European Withholding Tax framewor
Date: WEDNESDAY, 9 MARCH 2022
Speaker: Pedro Marques
Country: Czechia
Language: EN

I am pleased that in this report we managed to achieve a broad majority supporting fairer and simpler taxation in the field of withholding taxes, guaranteeing progress in different issues within our discussions. There was a positive environment of discussion between those more actively participating in the negotiations, and even at this late hour in the evening many of the shadow rapporteurs are here with us – I see as Isabel, Billy, I see Ernest, some of our colleagues that were our shadows and probably others are at home, but they were certainly intensely involved in the debate. I want to thank them and want to thank the secretariat, obviously, of the FISC Subcommittee, but also our Group's team and my own team that helped with all this work and endeavour we did together.  The final result, I think, mirrors this positive environment and constructive debate we had. We want to increase the effectiveness of our tax systems, reducing avoidance and fraud risks. We want to improve cross-border investments and lower the administrative burden. These efforts should go and in hand, and this is the tone of this report on the European Withholding Tax framework.  After the many recent scandals regarding tax abuse, the European Parliament has the responsibility to address the shortcomings that still allow profit-shifting and aggressive tax planning to continue. The report starts by welcoming the OECD Inclusive Framework Agreement, including the global minimum effective corporate tax for multinational corporations. This is an historic moment, and we call on the Council to ensure the agreement comes into effect already in 2023. In light of this positive momentum created, we expect the Commission to present a legislative proposal for an EU-wide withholding tax in order to ensure that payments generated within the Union are taxed at least once before leaving it. This is particularly important in the current environment we are living in. We cannot allow financial resources to leave the Union without being subject to taxation while facing inflationary pressure due to the severe shocks in the supply of energy, of essential goods, all the consequences of what we are facing at these moments.  The report calls on the Commission and the Member States to ensure that all payments, including dividends, royalties and interest generated in the EU are taxed at an effective rate. These payments should cease to be a means of profit-shifting. The review of the IRD and PSD directives should be on the table and then in light of the ‘Cum-ex’ and Cum—cum’ scandals, it is clear that further cooperation and assistance between tax authorities is needed. This fraud was responsible for EUR 140 billion lost in revenues in just 11 Member States. Therefore we must act swiftly and decisively. Therefore we call on the Commission to extend the mandatory exchange of information to dividend arbitrage schemes and capital gains, including granting refunds, but also to assess the extension of reporting requirements to cross-border arrangements.  The final chapter of the report is focused on simpler taxation and removing barriers to investments in the single market, building on the commitment to complete the Capital Markets Union, which is also something very important for the completion of our monetary union.  Repayments of withholding taxes remain predominantly a paper-driven process: slow, burdensome and more prone to fraud. In the past, the Commission issued recommendations about simplification, but the results, unfortunately, are not totally convincing. With this in mind, we welcome the intention of the Commission to pursue legislative harmonisation for a common and standardised system of withholding taxes. There is more than one way to go in this direction, as it was exposed in the impact assessment. For the moment, pursuing legal harmonisation of procedures is the most sensible and feasible path. This can be complemented with the use of digital technologies, making the resulting system more efficient in the countries, but also to facilitate seamless procedures between different national systems.  A full relief-at-source system should only be considered at a later stage and cannot be in any way detrimental to the fight against tax abuse.  Colleagues I think the negotiation team managed to find a very positive and balanced text that delivers a win-win approach. Again, I thank you for your support in those negotiations, and I certainly call on your support in the vote tomorrow on this important report about fairer and simpler taxation in the EU.