EU takes significant step to end letterbox companies in the EU and to protect workers
Date
14 Mar 2019
Sections
Social Europe & Jobs
Negotiators from the European Parliament, Commission and Council, today backed new rules governing how companies can move between EU member states. The S&D Group ensured that these new rules will prevent fraudulent or abusive company set-ups to avoid taxes or social legislation.
S&D MEP and chief-negotiator for the European Parliament for the company mobility rules, Evelyn Regner, said:
“The agreement this afternoon introduces for the first time a procedure with clear rules to follow for companies wanting to move into another member state. Meanwhile, they will help crackdown on companies who artificially move for the purpose of evading tax, social contributions or national labour laws. This is something we have been pressuring the European Commission to do for years. This afternoon’s agreement is an important step forward for companies who use their right to relocate and for workers' whose rights are now better protected.
“We ensured that workers will be fully informed and consulted whenever a company wants to move offices to another member state. We also ensured that their participation rights will be strengthened in all cross-border operations covered by this new law: conversions, mergers and divisions within the single market. If a company attempts to merge or relocate, then workers must have their rights protected.
“We fully support companies expanding to other member states for genuine economic activity that boosts growth and creates jobs but not those who do it to find lower labour protections or tax rates. The single market cannot mean a race to the bottom. These new rules will mean that companies involved in fraudulent or abusive practices circumventing national or Union law on for example employee rights, taxation or social security, will not receive the necessary certification to finalise a cross-border operation. On the other side, the law creates, for the first time, legal certainty for companies using their right for freedom of establishment.
“We urge national governments to now approve these measures and crack down on those who exploit tax inequalities and workers’ rights.”