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S&Ds: No more fake companies to avoid taxes, EU member states must act now!


18 Jan 2023


Euro & Finance

The European Parliament has today adopted a near-unanimous position on the proposed European legislation intended to prevent tax evasion by establishing fake companies, known as the Unshell Directive. The S&Ds, who have always fought for tax justice and advocated for this new law, now call on EU member states to take full account of the Parliament’s strong position and act swiftly to adopt and enforce the new rules. With 637 members voting in favour and only two against, the European Parliament has given a uniquely strong message in support of tax justice.

The Unshell Directive aims to prevent EU companies with zero or minimal economic activity benefiting from any tax advantages in the member states where they are established. Drafted in the wake of the OpenLux scandal, it aims to set transparency standards and objective indicators related to income, staff and company premises that would help tax authorities to detect abuse and single out entities that exist merely on paper.

Paul Tang, MEP and shadow rapporteur on the Unshell directive, said:

"This legislation, the first of its kind, will change the fiscal landscape of the EU. No longer can companies abuse the differences in our tax systems by setting up fake companies. We can make a clean sweep through European businesses by distinguishing legitimate businesses from the letterboxes merely set up to obtain tax benefits. By dismantling these letterboxes, companies will have to pay their fair share of taxes just like everyone else. Consequently, government revenues can increase by €60bn. This is the money we desperately need to bring the bills down."

"The overwhelming support from my colleagues is unprecedented in tax matters and delivers a clear message to EU member states: act now. Implement this directive without exemptions for conduit companies of the financial sector. Act to tax the super-rich and act to tax the big multinationals."

Jonás Fernández, MEP and S&D spokesperson on economic and monetary affairs, added:

“The S&D Group has long called for the introduction of minimum substance requirements related to companies’ premises, bank accounts as well as tax residency of its directors and employees. Shell companies that serve merely as conduits to shift profits to low tax jurisdictions should not benefit from any tax breaks in the EU. With today’s vote, we have confirmed our steadfast commitment to the fight against tax evasion and aggressive tax planning in the EU and across the world.

“We urge the member states to take an ambitious and forward-looking approach to make this proposal a reality as soon as possible.” 


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