Local view for "http://purl.org/linkedpolitics/eu/plenary/2011-10-25-Speech-2-641-000"
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"en.20111025.32.2-641-000"2
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"Madam President, Mr Langen, it is strange to appear here both as rapporteur and as co-author of the written question to the Commission.
I would like to start with my report. This is all about the fact that the Parent-Subsidiary Directive must be revised and amended, in particular, in the light of the new Treaty of Lisbon. The aim of the directive is clear: avoiding double taxation in the internal market. If profits are returned by a subsidiary to the parent company, it is, of course, important to prevent the profits from being taxed twice within the internal market. That makes sense. The directive ensures that the country where the dividends are paid has no option of levying capital gains tax on the export. Conversely, the country where the profits are returned and where the parent company is based has the choice of whether to exempt these profits or to offset them against the national tax regime.
Unfortunately, this directive has given rise to various consequences. On the one hand, transnational companies are making use of the directive. In principle, it is, of course, right that profits should not be taxed twice even within closely associated companies. Unfortunately, the directive is constantly being abused. Profits subject to low rates of taxation in the country where the subsidiary is based are returned to the parent company’s country and then not taxed effectively there. Some of these profits are also transferred outside the European Union and are still not properly taxed.
I would like to give two current examples of this. Exxon Luxembourg made profits of EUR 3.6 billion and transferred them via Exxon Spain to the USA. No tax was paid at all on these profits. In contrast, Google is well-known for mainly using two tax regimes called Double Irish and Dutch Sandwich which allow it to pay tax on its profits at a rate of just 2.4%. These extreme forms of low taxation or less than single taxation represent an abuse of the directive and, at the same time, a crude form of unfair competition between transnational companies and small and medium-sized enterprises, which, of course, cannot use methods like this.
This is happening at a time when there are major problems with public budgets. We are in a great deal of difficulty and we have had to put in place austerity programmes and tax increases. Mr Rehn has been desperately trying to impose budgetary discipline on the different countries. At the same time, the revision of this directive has, unfortunately, been rubber-stamped by the Commission and has not been used as an opportunity to stop potential abuse. In contrast, the vast majority of the Member States have committed, as part of the Euro Plus Pact, to making progress on tax harmonisation. Unfortunately, that is not in the spirit of this revision. The European Parliament has voted within the Committee on Economic and Monetary Affairs with an overwhelming majority for an amendment to this directive beyond what has been proposed by the Commission. This would mean that profits would only be covered by this directive if they had been taxed in advance at a rate of at least 70% of the nominal average tax rate in the EU, which is a minimum rate of 16%.
For this reason, I can only say to the Council that it should reconsider whether this revision is really appropriate at the moment. The Council should make changes. I would also like to say to the Commission that it should rethink its plans. It should withdraw its proposal and make use of the potential of this directive to levy additional fair taxes."@en1
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