MEPs have also warned against the EU’s new corporate ’28th regime’ being used to create a European equivalent to the US state of Delaware.
Benjamin Fox
EU lawmakers gave a cautious green light to new plans to set up an EU-wide corporate framework that would allow small firms to operate across the bloc.
In a vote in the European Parliament on Thursday (9 July), MEPs backed plans to include a consolidated corporate tax base, standardised tax returns and simplified value added tax procedures as part of a so-called ‘EU Inc.’
The proposal – tabled by the EU Commission in March and also referred to as the ’28th Regime’ – would be an optional rulebook aimed primarily at making it easier and faster for start-up firms to register.
It would be possible to create a company online for €100, with no minimum capital requirement, under the commission proposal.
“While focusing specifically on taxation, this report supports the ultimate goal of the overall EU. Inc endeavour: to create an ambitious, yet still caring space for European talent in business, and future growth and prosperity,” said Slovakian liberal Ludovít Ódor in a debate in Strasbourg on Thursday morning.
Delaware example
He pointed to the US state of Delaware, where many companies domicile their US base, commenting that “I do not advocate to simply copy that situation, mainly because of worker rights and others, but still, we need one regime for having scale in Europe, because what is the alternative?”
Ireland, which now holds the EU’s six-month rotating presidency, could be one of the main beneficiaries from the new regime, having positioned itself as a low corporate tax and low regulation model that has attracted a host of Big Tech companies as well as online retail giants such as Amazon and Temu.
“A central focus will be progressing key legislative files to enhance the operating environment for companies across the EU,” said Ireland’s minister for enterprise, tourism and employment, Peter Burke, in a statement on Wednesday.
But leftwing lawmakers have warned that the EU Inc proposal could lead to social and regulatory “regime shopping” by allowing companies to choose where they are registered without harmonising labour law. That, they argue, could undermine collective agreements and lead to social dumping.
Last week, the S&D lawmaker, René Repasi, who has been tasked with piloting parliament’s position on the ‘EU Inc’ law, complained that the commission proposal was “skewed towards more liberalisation without addressing the necessary European safeguards for the protection of workers and against money laundering.”
Repasi has proposed that the law include provisions on employee board-level participation, allowing EU Inc. companies to become steward-owned and encouraging member states to set up specialised judicial chambers and alternative dispute resolution mechanisms.
