|Bob van der Made|
Swedish concerns relate to a possible risk of double taxation of Swedish investment funds, for example when a foreign parent in an EU member state holds a stake in a Swedish investment company which holds shares in a big Swedish company (for example, Volvo Trucks, as mentioned by the Swedish Finance Minister in the May 6 ECOFIN meeting). In that case a dividend might be taxable for the investment company (and deductible upon redistribution to the foreign owner). Under the proposed revised PSD the redistribution dividend would be taxable at the level of the foreign owner of the investment company. If the foreign owner would hold the Volvo Trucks shares directly, then the dividend would be exempted instead under the PSD (since Volvo Trucks is not allowed to deduct dividends).
Malta has a point of principle and has a problem with the Greek presidency's last-minute compromise proposal to add to the Commission's originally proposed wording of Article 4(1)(a) which reads: "(a) refrain from taxing such profits to the extent that such profits are not deductible by the subsidiary". The Greek presidency proposes to add: ", and tax such profits to the extent that such profits are deductible by the subsidiary". However, according to Malta, EU Directives are not taxing instruments and the EC's original text was more appropriate in reflecting the taxing competences of the member states. Malta believes the same objective could be attained using different wording than the Presidency is proposing.
All member states showed a strong commitment in ECOFIN on May 6 to reaching agreement as soon as possible on the hybrid loan mismatches. Ministers decided that further technical discussions including bilateral discussions by Sweden and Malta with the Commission led by the Greek presidency should be conducted to try to reach political agreement at the ECOFIN Council of June 20 2014. If the proposed deadline of December 31 2015 for implementation of the amended PSD is to be kept within reach, however, a vote in ECOFIN on June 20, or ultimately in July under the incoming Italian EU Presidency, will be required. By May 20 this seemed a quite ambitious approach, given that the Greek presidency had still not held any of the agreed necessary talks with Sweden, Malta and the Commission, whereas the Coreper meeting (EU ambassadors' level) to prepare for the ECOFIN Council of June 20 was scheduled to meet on May 27/28. It therefore remains to be seen if common ground on PPLs can be found before the summer break.
Part 2 of the PSD proposal on anti-abuse/GAAR will in any case be dealt with under the Italian EU Presidency.
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