European Parliament wants Member States to change tax treaties and the EU to change the Parent-Subsidiary Directive and the Interests and Royalties Directive!

The European Parliament yesterday adopted a resolution whereby the European Parliament urges the European Commission and EU member states to take measures against tax fraud and tax evasion.

For example the European Parliament wants Member States to change their tax treaties and the EU to change the Parent-Subsidiary Directive and the Interest and Royalty Directive!

For complete text refer to the link.

Most notable of the resolution we find:

  • automatic exchange of information for taxation of savings;
  • an end to banking secrecy;
  • further agreements about this with Switzerland;
  • a common consolidated corporate tax base to combat tax fraud
  • stricter regulation of company registries;
  • stricter registration of registres of trusts;
  • change of the Parent-Subsidiary Directive and change of the Interests and Royalties Directive to combat tax evasion through hybrid financial instruments in the EU;
  • implementation of new and innovative strategies to combat VAT fraud in the EU
  • Member States revise their tax treaties insofar as they contribute to tax evasion and complicate effective withholding tax in certain Member States;
  • greater transparency and stricter controls to prevent the use of tax havens, which do not tax or use nominal rates, do not exchange information and where the legislative, legal or administrative provisions are not transparent.

Relevance to practice
It is a call only and not yet law, but it reflects a trend that for corporate and financial structures content, substance, material reality will become more and more important than it already is. Since ages the Netherlands concludes tax treaties to enhance doing business abroad and to avoid double taxation. The EU want the same for trade adn finance between Member States. The European parliament is now of the opinion that the rules have led to abuse. We are curious to what this call will lead and what the consequences will be for companies doing business in the EU.

Click for the entire source text adopted. Source: Resolution European Parliament P7_TA(2012)0137