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DRAFT REPORT (COM(2023)0528 – C90340/2023 – 2023/0320(CNS))

On the proposal for a Council directive establishing a Head Office Tax system for micro, small and medium sized enterprises, and amending Directive 2011/16/EU

ECON-PR-755999

Committee on Economic and Monetary Affairs · Rapporteur: Lídia Pereira

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Written by a language model from the full text only; every figure comes from the text. The paragraph links open the paragraph a statement rests on — check the text itself before relying on it.

The rapporteur's draft report approves the Commission proposal for a Council directive establishing a Head Office Tax system for micro, small and medium-sized enterprises (SMEs), as amended. The amendments widen access by removing the turnover condition and shortening the residence requirement to one fiscal year. They make the head office taxation rules apply indefinitely instead of five fiscal years, with termination on two months' notice or when the SME moves its tax residence. They shorten deadlines for notifications and information exchanges between tax authorities to one or two months. They bring forward the transposition deadline to 31 December 2024, with application from 1 January 2025.

Committee position. The rapporteur proposes to approve the Commission proposal with amendments that widen access by removing the turnover condition, make the rules apply indefinitely, and shorten deadlines for applications and information exchange.

Key points

  1. Parliament approves the Commission proposal as amended and calls on the Commission to alter its proposal accordingly.
  2. The eligibility condition that the joint turnover of permanent establishments not exceed double the head office turnover is deleted.
  3. The head office must have been resident for tax purposes in the head office Member State during the last fiscal year, and have met the Article 2(1)(d) conditions for the last fiscal year.
  4. The head office must notify its choice to apply the rules at least two months before the end of the preceding fiscal year.
  5. The filing authority must verify eligibility and inform the head office within one month, and inform host Member State tax authorities within one month.
  6. The head office taxation rules apply for an indefinite period of time, and the head office may terminate them with two months' notice.
  7. The filing authority must regularly check that the head office continues to meet the eligibility requirements.
  8. The option terminates when the SME transfers its tax residence out of the head office Member State, and the rules cease to apply from the following fiscal year.
  9. The renewal procedure in Article 9 and the exclusion for exceeding turnover thresholds are deleted.
  10. The competent authority of the head office Member State must communicate the application of the rules to the permanent establishment Member State within one month.
  11. The permanent establishment Member State must communicate the applicable tax rate within two months.
  12. Member States must adopt and publish transposition measures by 31 December 2024 and apply them from 1 January 2025.

Who is affected

  • Micro, small and medium-sized enterprises operating in other Member States through permanent establishments.
  • Tax authorities of the head office Member State and host Member States.
  • Member States, which must transpose the directive by 31 December 2024.

Figures and deadlines

  • At least two months before the end of the fiscal year preceding application, the head office must notify its choice.
  • Within one month of notification, the filing authority must verify eligibility and inform the head office.
  • Within one month of notification, the filing authority must inform host Member State tax authorities.
  • The head office may terminate the rules by notifying at least two months before the end of the fiscal year.
  • Within one month of receipt of termination notification, the filing authority must inform host Member State tax authorities.
  • Within one month from notification of the option, the head office Member State must communicate to the permanent establishment Member State.
  • Within two months from notification of the decision, the permanent establishment Member State must communicate the applicable tax rate.
  • Personal data must not be retained for more than five years.

Legal basis: Article 115 of the Treaty on the Functioning of the European Union