On 9th October 2002, Members of the European Parliament and representatives of the European Commission joined the Confédération Fiscale Européenne and the Tax Executives Institute in a discussion about the European Company organised at the Hanns Seidel Foundation in Brussels. For more information contact:
Mr. Friedrich Rödler, chairman of the C.F.E. Fiscal Committee
E-mail: friedrich.roedler@at.pwcglobal.com
Tel: +43 150 18 83601
Ms. Hilary Robinson, President of the European Chapter of the Tax Executives Institute
E-mail: hilary.robinson@kodak.com
Tel: + 44 1442 844371
On 9th October 2002, Members of the European Parliament and representatives of the European Commission joined the Confédération Fiscale Européenne and the Tax Executives Institute in a discussion about the European Company organised at the Hanns Seidel Foundation in Brussels. The session was opened by Alexander Radwan, MEP, Member of the Committee on Economic and Monetary Affairs and introduced by Prof. Dr. Hans-Peter Mayer, MEP, Rapporteur on the European Company. In addition, M. Robert Verrue, recently appointed Director General for Taxation and Customs Unit at the European Commission commented and Mag. Friedrich Rodler, Chairman of the C.F.E. Fiscal Committee and Hilary Robinson, President of the European Chapter of the TEI spoke.
The European Company Statute will come into force in 2004. During the meandering negotiations, originating from the 1950s, provisions relating to a tax framework for the European Company were gradually whittled away, being finally eliminated altogether in order to reach political agreement on the Statute. Without a suitable tax framework, the European Company will be no more than an academic talking point as businesses would incur unacceptable tax costs if they restructured to adopt the European Company. For example, the transfer of assets or shares into a European Company would attract tax on gains and transfer taxes.
Urgent action on a technical level is required to update the Mergers Directive, in particular to make it applicable to the European Company. Also, updates are required to the Parent/Subsidiary Directive and the Arbitration Convention needs to be given full effect again. Other areas which require action, albeit more challenging, include proper loss consolidation and in the longer term more aligned forms of corporate taxation in Europe. VAT issues also require attention.
Even more importantly, action is needed at the political level. Many members of the European Parliament wish to see rapid progress and the European Commission is anxious to see movement as quickly as possible, certainly before Enlargement makes progress even more difficult. Industry was urged to make the Governments of Member States fully aware of the economic costs of the current arrangements and the value in terms of growth and employment of removing obstacles for European business.
The European Commission is focussing on the short term need to remove fiscal obstacles to the formation of European Companies and to the problems which arise on a change of registered office from one Member State to another. Clearly there must be deferral of the taxes which would otherwise arise. Transfer pricing is being addressed through the Transfer Pricing Forum where the Commission meets together with industry, tax advisers and other experts. In the longer term, various forms of common consolidated tax base are under investigation, perhaps facilitated by the adoption of International Financial Reporting Standards.
In conclusion, the Commission and the European Parliament are ready to advance proposals to create an acceptable fiscal framework for the European Company but the Governments of Member States need to be persuaded to take action and all stakeholders, in particular commerce & industry, are urged to press their Governments to move forward.
Paul V. Morton, member of the C.F.E. Fiscal Committee, 10 October 2002
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