It’s time to clamp down on letterbox companies

“LuxLeaks, the Panama Papers, the Paradise Papers, the Pandora Papers... These recurring scandals prove that, too often, the main purpose of shell companies is to facilitate aggressive tax planning or disguise beneficial ownership structures. We need to differentiate the legitimate use of entities to invest and create jobs and the misuse of complex legal schemes to avoid taxes. It’s time to clamp down on shell companies!” said Lídia Pereira MEP.

Her comment comes as the European Parliament will vote today on its position on the EU law proposal that aims to prevent the misuse of letterbox companies for tax purposes.

The EPP Group has proposed several improvements. As Pereira, Parliament's negotiator, explains: “We have worked to set up concrete common minimum economic substance indicators that will help to identify what constitutes a company and what constitutes a tax shelter. Specifically, we will build criteria that allows national tax authorities to better screen the real purpose of a company and respond to tax avoidance and aggressive tax planning. Moreover, we are clarifying what the consequences are of being considered a shell entity, with concrete penalties.”

“European taxpayers expect the EU to guarantee tax transparency and fairness within the Single Market. The 'Unshell Initiative' is a concrete step towards eliminating tax schemes that only serve to allow multinationals to avoid their duty”, Pereira said.