Local view for "http://purl.org/linkedpolitics/eu/plenary/2008-01-14-Speech-1-102"
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"en.20080114.15.1-102"2
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"Mr President, I would like to start by emphasising what my report, which is being debated today, is essentially about. While the report is nominally about taxation, the real issue at stake here is the proper functioning of the internal market of the EU.
I would further like to encourage the Commission to push ahead with the CCTB as a longer-term solution, which I hope will also be supported by this House in this report. However, the CCTB is a long-term project, the realisation of which lies far in the future. In the mean time, cross-border laws, relief and consolidation of losses are urgently needed as an intermediate remedy to some serious problems encountered within the functioning of the internal market.
The global economy is developing in a way that puts an increasing amount of pressure on Europe to maintain its competitiveness, a fact that has been underlined and widely agreed upon in various instances, notably in the Lisbon Strategy and its revisions. We must be proactive in rising to the challenge and I believe that a fully-functioning single market is the first priority in achieving this.
In addition to the freedom of movement of goods, people and services, this implies, crucially, a level playing field for European companies to establish business in any location in Europe as if it were a single country, a home market – a genuine home market – where decisions are based according to a real economic advantage, not a distorted one created by red tape.
Obstacles to this freedom do not only lead to suboptimal economic choices but also prevent European businesses from expanding. The fact that some such obstacles still remain is regrettable, as a Europe-wide home market is a stepping stone to growth for European businesses and a precondition for creating more European world leaders.
Cross-border consolidation of losses – the subject of this report – is a step towards such a working home market. Currently, in this respect, the tax treatment of a group operating within a single Member State is heavily preferential compared to a cross-border situation. Within a single Member State a company can usually offset losses incurred by its branches and subsidiaries in the taxation of the parent company. However, in the case of branches and subsidiaries in other Member States, the national legislation varies considerably.
In most cases, if consolidation of losses for tax purposes within the same group is possible, it is nevertheless granted with considerable and varying delays. This discrepancy has grave consequences for the proper functioning of the internal market. It distorts investment decisions, constituting a barrier to entering some markets while tending to unfairly favour the large markets where losses can more easily be absorbed. It particularly hampers the SMEs’ capacity to expand, as they frequently incur start-up losses that they cannot immediately absorb – even the time factor is very relevant to SMEs. The existence of differing Member State legislation obviously also increases compliance costs, ill afforded by SMEs and conducive to tax engineering with larger companies.
Finally, delays in loss relief are understandably costly and burdensome to all European companies. There is a considerable cost burden involved when capital that is legitimately recoverable is tied up, often for years, because the current national loss relief legislation will not allow consolidation without delays.
The report promotes a remedy to this by promoting the possibility to offset losses in the same tax year, which would transfer the unreasonable time burden away from the company and to the public sector. It would also level the playing field, at the same time lowering companies’ compliance costs. It would also mean that the tax domain is one where there is still work to be done to make the most of the internal market. This does not imply harmonising tax rates, rather that tax competition is a healthy feature of the European economy. However, it does mean legislating to facilitate cross-border business, to establish a level playing field where investments are based on undistorted economic benefits.
I therefore welcome the Commission’s activities in this area in promoting cross-border loss relief measures. I would like to see Parliament support this urgently needed legislation, and I am grateful for the messages of support we have received during the process. I think that Parliament’s opinion on the question will also be very timely because the European Court of Justice has called for political guidance on the issue as well."@en1
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