On Friday, December 24, Executive Vice President of the European Commission for An Economy that Works for People Valdis Dombrovskis said that the EU intends to continue to fight those who evade taxes with the help of shell companies.
The European Commission is of the opinion that organizations operating in the EU, which practically do not conduct commercial activities, should not be able to receive any tax benefits, as well as burden European taxpayers.
Unfortunately, shell companies continue to provide their services to criminals, thereby abusing tax obligations. Numerous scandals with large organizations are direct proof of this, Dombrovskis stressed.
It is worth noting that the European Commission has recognized that shell companies may have legitimate reasons for their activities, both in terms of their commercial and business functions, they can be used by individuals or groups to drastically reduce their tax obligations or completely evade taxes.
Some businesses direct financial flows to front organizations in jurisdictions where taxes are absent or very low, or where taxes can be easily circumvented. Similarly, some people may use shell companies to protect assets and real estate from taxes either in their country of residence or in the country where their assets are located, for example, real estate, the commissioner noted.
Dombrovskis said that the new monitoring and reporting requirements for fictitious organizations will benefit EU member states in two ways:
- Firstly, they will prevent these organizations from taking advantage of tax benefits designed to help honest companies conduct legitimate commercial activities.
- Secondly, they will help the tax authorities and other national authorities in their efforts to identify and track any illegal activities of shell companies.
There is no place in Europe for those who use tricks to evade taxes or money laundering. Everyone should pay their fair share of taxes, Dombrovskis said.
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