No Match Found
As part of the EU Commission's Communication on Business Taxation for the 21st century (see our previous release), the Commission proposed to take action to table a legislative proposal setting out union rules to neutralise the misuse of shell entities for tax purposes. This measure will be actionable by Q4 2021.
Although the EC notes that there can be valid reasons for the use of such "shell" companies, they believe that there is a need for further action to tackle misuse and abuse of existing rules that leads to tax avoidance. A new legislative initiative is proposed to be introduced to neutralise the misuse of shell entities (with no or minimal substance and which exist for tax purposes only). The proposed measure would include requiring companies to report to the tax authorities information to enable the tax authority to assess whether there is real and substantial presence and economic activity. Tax benefits may be denied where abusive shell companies are found to exist. Improved information exchange, monitoring and transparency would be required to facilitate such investigations.
In responding to a public consultation which the EC initiated on this measure, PwC refers to two broad themes:
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