EU details crackdown on shell companies

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The European Commission Wednesday outlined planned tougher rules on shell companies alongside details of its implementation of an international agreement to impose a minimum 15-per cent tax on big multinationals.

The rules have the goal of “tightening the screws on shell companies — or letterbox companies — used as vehicles for tax avoidance or evasion”, EU economy commissioner Paolo Gentiloni told a media conference.

It consists of three benchmarks, looking at a company’s passive income, whether most of its transactions are cross-border, and if its management and administration are outsourced. Also, one EU country could require another EU country to carry out a tax audit of a firm with shell company characteristics.

The European Commission at the same time presented its proposed legislative text to impose a 15-per cent minimum tax on corporations as worked out between OECD countries and then approved by the G20.

 

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