The S&D Group welcomed proposals from the European Commission designed to create clearer rules for when a company wants to move across borders, and also to crack down on companies artificially moving their headquarters to other member states to avoid taxes or social legislation. The S&D Group will now fight to ensure that the final legislation is as strong as possible.
S&D Group President, Udo Bullmann, said:
“The European Commission has listened to our call and comes forward with proposals to crack-down on the increasing number of ‘letter box’ companies. These are companies which move their headquarters to jurisdictions where they have little or no genuine economic activity, simply to benefit from lower taxes or lower social protections for their workers. The recent ECJ ruling showed that this was perfectly allowed under current EU law, creating a 'free for all' situation highlighting that existing rules were not fit for purpose. Without new laws this would lead to a race to the bottom between member states, offering lower protections and sweetheart tax deals to multinational firms.
“We will look at these proposals in detail and will fight to ensure that we have clear and binding rules for how and when a company moves to a new EU member state. These must uphold the principle that taxes are paid where profits are made and ensures strong social standards are not undercut.”
S&D Group spokesperson for legal affairs, Sylvia-Yvonne Kaufmann, added:
“We want to ensure that companies are registered in the country where a dominant part of their economic activities take place. Companies should relocate only when there is a genuine reason to do so, not simply as a way of shopping for the lowest tax rate or as a way of circumventing workers’ rights. Any move should involve workers from the company being fully consulted and involved in the process"
“These proposals must go hand-in-hand with greater transparency over company ownership. Following the revelations from both LuxLeaks and the Panama Papers, there is a clear need to show citizens that the EU is acting to tackle tax avoidance and dodgy financial engineering by companies. These proposals from the European Commission are a step in the right direction, but we will now fight to make them as strong as possible.”