European Commission publishes far-reaching legislative tax proposals
On 22 December 2021, the European Commission released several legislative proposals that will impact corporate taxpayers. The proposals build upon the international negotiations on the misuse of shell entities, Pillar Two, and reform plan of the Energy Taxation Directive.
The proposed Directive laying down rules to prevent the misuse of shell entities for tax purposes (“Shell Directive”) aims to avoid the misuse of “shell entities”, which are companies with no or very limited presence and economic activity. The proposed Directive on ensuring a global minimum level of taxation for multinational groups in the EU (“Pillar Two Implementation Directive”) relates to the implementation of most of the Pillar Two rules within the EU and follows the release of these rules by the OECD on 20 December 2021. Finally, proposals complementing the European Commission’s “Fit for 55” package were published concerning the new Carbon Border Adjustment Mechanism and the EU Emissions Trading System. These proposals should support green transition and contribute to the funding of the EU own resources.
These proposals will be tabled for discussion and, finally, adoption in the forthcoming 2022 meetings of the European Council on Economic Affairs. The aim of the European Commission is to have these proposals adopted in 2022 and in force per 2023 and per 2024 as far as the Shell Directive and part of the Pillar Two Implementation Directive are concerned.
Below we describe these proposals in more detail.
Pillar Two Implementation Directive
EU own resources supporting the Fit for 55 package
Next steps/Final note
Natalie ReypensPartner Attorney at Law
Natalie Reypens, attorney at law, is a member of the Loyens & Loeff International Tax Services Practice Group and heads the Belgian Transfer Pricing Team. She is a partner in our Brussels office. She focuses on corporate and international tax law.T: +32 2 743 43 37 E: [email protected]
Charlotte KièsPartner Tax adviser
Charlotte Kiès, tax adviser, is a member of the International Tax Services practice group in our Amsterdam office. She is also a member of the Latin America region team as well as the Spain & Portugal region team, the Energy team, the multilateral instrument (MLI) team and the Digital Taxation team.T: +31 20 578 51 67 M: +31 6 51 88 31 32 E: [email protected]
Pierre-Antoine KlethiSenior Associate Attorney at law / Avocat / Tax Adviser
Pierre-Antoine Klethi, senior associate, is a member of the Tax and Investment Management Practice Groups in our Luxembourg office, and jointly leads the Luxembourg Tax Controversy Team. He focuses on corporate taxation (including relevant international developments), fund structuring and EU State Aid investigations.T: +352 466 230 429 E: [email protected]
Michiel SchulPartner Tax adviser
Michiel Schul is a partner in Loyens & Loeff’s International Tax Services practice group and a member of the Energy Team and the US Region Team. From 2011 to 2013 he worked in Loyens & Loeff’s New York office.T: +31 20 578 53 38 M: +31 6 51 88 64 01 E: [email protected]