The European Union is preparing to implement significant changes to tax legislation to make the rules simpler for companies and reduce their compliance costs.
This is reported by Finway
Key tax simplification initiatives in the EU
The European Commission has developed a tax simplification plan that aims to reduce business compliance costs with tax legislation by 7 billion euros (8.17 billion dollars) annually. Among the key innovations are the expansion of exemptions from withholding tax on income payments for a broader range of companies, as well as the introduction of a new tax incentive for research and development (R&D) that will be available to all companies within the EU.
Additionally, there are plans to exempt the defense industry from borrowing costs. The European Commission also proposes to exempt small, medium, and large companies from several provisions of EU rules on combating tax evasion.
Approval procedure and expected outcomes
The official presentation of the tax simplification package is scheduled for June 24. After that, EU member states will need to review the document, make their own proposals, and ultimately approve the bill. It is worth noting that unanimous approval from all member states is required for the adoption of tax changes in the EU.
The European Commission emphasizes in the draft that while EU tax rules have contributed to reducing tax evasion and promoting cross-border trade, their complexity has “significantly increased,” making compliance more challenging for businesses and tax administrations in the EU.
According to the plan, exempting large companies from the so-called controlled foreign company rules, which are aimed at preventing profit shifting to low-tax countries, will allow businesses to save about 160 million euros annually.