Tax evasion: front companies in the EU's sights

Brussels on Wednesday proposed to tighten regulations on shell companies in order to fight tax evasion in the EU and paved the way for a transposition by the 27 of the OECD agreement on a minimum taxation of 15% of multinationals.

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The new rules on shell companies "

", explained the European Commission. Its text will have to be voted on by MEPs and Member States before it enters into force scheduled for early 2024. They contain transparency standards "

" such as "

income"

", Essentially cross-border transactions or outsourced management, explained the European Commissioner for the Economy, Paolo Gentiloni, during a press conference.

In addition, an EU state may ask the tax authorities of another member country to "

", he said, seeing it as a "

" of the device.

Among the criteria to identify them: an entity will be qualified as a front company if more than 75% of its total income during the two preceding fiscal years does not come from its own commercial and economic activity or if more than 75% of its assets are real estate or other private assets of high value.

Minimum 15% tax on multinationals from 2023

In which case they will no longer have tax advantages: payments to third countries will be subject to withholding tax at their level. As for companies owning real estate intended for the private use of wealthy people, but not producing income, they will be taxed by the State where they are located as if they were directly owned by the beneficiaries. While these companies can legally be of commercial use, some international groups or individuals "

" them to minimize their taxes or evade taxes by transferring funds to countries with zero or very low taxation. , believes the Commission.

Pinned entities will be able to challenge their classification as a front company. The Commission also presented a directive to transpose the agreement validated in October by 137 countries, under the aegis of the Organization for Economic Cooperation and Development (OECD), on the minimum taxation of 15% of multinationals from from 2023.

Brussels proposes common rules "

".

The Commission aims for these measures to be adopted in the first half of 2022, during the French Presidency of the Union.

This concerns large groups whose annual turnover exceeds 750 million euros "

" said Paolo Gentiloni.

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Asked about the initial reluctance of three Member States - Estonia, Ireland, Hungary - on this minimum rate, Paolo Gentiloni stressed that "

fiscal

" between countries, but of "

”.