New EU rules will help crack down on letter-box companies
MEPs in the European Parliament legal affairs committee today backed new rules governing how companies can move between EU member states. The new proposals will help crack down on companies artificially moving their headquarters to other member states to avoid taxes or social legislation.
S&D MEP and author of the report Evelyn Regner said:
“Being a member of the Single Market makes it easier for business to set up offices in other EU member states, creating jobs and boosting growth. However, in absence of a well-regulated framework, too often companies engage in no real economic activity and simply create letterbox offices in other countries as a way of evading tax or avoiding national labour laws. We have been pressuring the European Commission to crack down on this type of abusive behaviour for years and finally they presented draft proposals to do this earlier this year.
“We have now greatly strengthened these proposals. We have ensured that workers are provided with information and are fully consulted throughout the process whenever a company wants to move offices to another member state. If a company is attempting to merge or relocate then workers must be fully involved and have their rights protected.
“Company mobility should also not lead to forum shopping by multinationals – searching for the lowest tax rates or the laxest labour protections. This would lead to a race to the bottom, with member states competing to offer the lowest standards possible. Authorities need to be able to look to see if a company is relocating for genuine reasons or simply creating an artificial arrangement to avoid their legal responsibilities. If they are engaged in an artificial arrangement then the company should not receive the necessary certificate it needs to finalise the cross-border operation.
“These proposals are important to help rebuild citizens’ trust in the Single Market. We need to show that it brings genuine economic benefit and crackdown on companies abusing it to avoid their taxes and their responsibilities.”