Subsidiarity test of the Commission's proposal for a directive on the establishment of a headquarters-based tax system for micro-enterprises and small and medium-sized enterprises and on the amendment of Directive 2011/16/EU
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
The debate concerned a subsidiarity test of an EU proposal on a headquarters-based tax system for small and medium-sized enterprises. S argued that the work against tax evasion is important and should take place at the EU level to maintain trust, but expressed concern that the proposal could lead to unhealthy tax competition. S supported the committee's proposal and criticized the government's current line. M argued that the proposal violates the subsidiarity principle because the tax base for income tax is a national competence. M emphasized that companies in Sweden should be taxed according to Swedish rules and warned that the proposal could lead to tax planning and distorted competition. M supported the committee's proposal for a reasoned opinion.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Mathias Tegnér (S)
Madam Speaker! The Committee on Taxation's report 10, which we are now going to debate, concerns a subsidiarity test of the Council's amendment of Directive 2011/16/EU.
Right now, a lot of work is taking place in the tax area at the EU level. One could almost call it some kind of acronym bingo, with proposals from the Commission such as Beps, Befit, Atad, Faster, DAC and Vida - and now, today, Hots.
Parts of this work are extremely important. This week, the Swedish Riksdag, for example, passed the law on supplementary tax, a part of – and now we are back to the acronym bingo – BEPS, the international work to create a global minimum tax for companies. It is an important work that can hardly be done by a single nation-state alone.
Here in the chamber, we have also handled DAC. Fundamentally, this proposal comes from the international cooperation against tax evasion, based on international information exchange.
In both of these cases, neither the majority here in the Swedish Riksdag nor we Social Democrats had any objections to the issues being handled at the EU level – even though in one of the cases we had a minor objection regarding sanctions, which can, of course, preferably be decided at the national level.
The work against tax evasion and advanced tax planning is important and cannot be done nationally. It is a task to ensure that what is right is right and that all citizens and companies do the right thing. This is extremely important for the cohesion in our country, for the cohesion in Europe, and actually also for global cohesion. It is simply a task to maintain trust between one another. Therefore, it is also relevant that the decisions in those cases are made at the EU level.
The legislative product we are discussing today, on the other hand, mainly concerns small and medium-sized companies with headquarters in one country but operations in several others. There, the Commission wants to open up an opportunity to choose tax rules. The idea is that small and medium-sized companies that establish themselves in other member states should be able to do so but still only have contact with one tax authority, namely the one in the home state.
The purpose of the Commission's proposal – and that ambition is shared by us Social Democrats – is to simplify and reduce the administrative burden for small and medium-sized enterprises. However, it is not obvious that the EU Commission's proposal leads to exactly this. The risk is that we instead get unhealthy tax competition within the EU and on the internal market.
With that said, you know here in the Swedish Riksdag that it is not the substantive issue we are to deal with, but the subsidiarity test itself: Is this an EU matter? Is this something that the EU should make decisions on?
According to the subsidiarity principle, in areas where the Union does not have exclusive competence, it shall act only if, and only if, the objectives of the proposed action cannot be sufficiently achieved by the Member States themselves.
Part of the assessment is also to weigh the proposal against the principle of proportionality, that is, that the Union's measures must not, in either content or form, exceed what is necessary to achieve the objectives.
The Swedish government has correctly noted that the starting point for cooperation within the EU is that the tax base for income tax is determined nationally. Every difference between the tax systems of different member states does not therefore mean that there are obstacles to the internal market.
We Social Democrats share that view. We therefore believe that it is good that a unanimous Riksdag stands behind the reasoned opinion that the committee has proposed to the Chamber.
Why then this debate? Well, because it is important to highlight that a shift has occurred, or is occurring, precisely when it comes to tax issues and the EU. The shift has occurred in how the current government views the anchoring of tax issues in the EU. Throughout the entire 2000s, governments from left to right have secured a broad cross-bloc majority on tax issues in the EU area. It has served Sweden well. Unfortunately, the Tidö Agreement seems to put a spoke in the wheel of this work, and we Social Democrats regret that.
For obvious reasons, Moderater and Socialdemokrater differ when it comes to Swedish tax policy. Historically, however, we have had the same view on what constitutes EU issues and what is national competence specifically regarding tax. It is not good for Sweden, Madam Speaker, if this consensus is broken.
In conclusion, I note that the government, in its statement, means that taxes accrued in Sweden shall also be paid here. That is, of course, right and proper, but I hope that the government will return after Christmas with, to use the Prime Minister's own words, drive in the step also regarding Swedish tax policy. If the SD-government, in an EU context, means that taxes accrued in Sweden shall also be paid in our country, then one must change direction on the national tax policy.
We Social Democrats believe that the work against tax evasion and tax fraud is an extremely high priority. Already in 2016, the then government made a decision on a ten-point program against tax evasion.
The S-led government worked effectively and intensively with these issues. Unfortunately, the new right-conservative SD-led government has not shown the same will to combat tax evasion. I am thinking of the discontinuation of the exit tax investigation, I am thinking of the handling of the new coupon tax, and I am thinking of the Skatteverket's reduced framework and reduced audits in the work against tax evasion specifically.
Madam Speaker! It is important, it is true and it is necessary with powerful and just tax policy if we are to have a country that holds together.
Madam Speaker! I therefore move for approval of the Committee on Taxation's proposal in the report.
I also want to wish the Speaker and my colleagues in the Riksdag a Merry Christmas. The homework, dear friends and colleagues, is that when you have eaten your fill of what your Christmas now has to offer, you reflect on how Sweden's and Europe's tax systems can become a bit fairer so that more Swedes can eat their fill and be content next Christmas.
Crister Carlsson (M)
Madam Speaker! I begin by moving to approve the committee's proposal.
The subsidiarity principle is an important basic rule within the EU and in Swedish politics. It aims to guarantee that decisions are made as close to the citizens as possible. The subsidiarity principle is a fundamental principle in the EU Treaty. It is also established in Swedish legislation.
The subsidiarity principle means that decisions should be made at the lowest possible level that is suitable for solving a particular problem. It is based on the idea that it is best for decisions to be made by those who are closest to the problem and who have the best knowledge of it. By making decisions at lower levels, one can avoid unnecessary bureaucracy and make the decision-making process more efficient.
Madam Speaker! The Commission considers in this case that the proposal is compatible with the subsidiarity principle and justifies this by stating that the cross-border nature of the problem requires a common initiative covering the entire internal market and that a diversity of rules leads to fragmentation and constitutes a serious obstacle to business activities.
The purpose of the Commission's proposal in this case is to simplify the taxation of micro-enterprises as well as small and medium-sized enterprises and thereby reduce the administrative burden for both taxpayers and tax authorities, including in Sweden. The tax authorities will also, according to the Commission, benefit from the expected reduction in workload, as the submission of tax returns, assessment, and tax collection will be centralized to the Member State where the headquarters is located.
Madam Speaker! Allow me to doubt this!
The Commission's intention is also that small and medium-sized enterprises establishing themselves in other Member States should be able to do so while continuing to have contact with only one tax authority, the one in the home state. The Government is negative towards that proposal on a principled level. The Government considers that companies conducting business in Sweden should be taxed according to Swedish tax rules, regardless of where the companies have their tax residence.
The proposal means that activities carried out in a Member State through a permanent establishment will no longer be taxed in the same way as the same type of activity carried out by a company established in that Member State. The proposal represents a departure from an accepted principle in international taxation, which is based on the idea that a permanent establishment should be taxed as a standalone company in the country where the activity is carried out.
Madam Speaker! The Committee wants to emphasize that the basic principle of the Member States' competence in the tax area must be protected when it comes to direct taxes. It falls within each Member State's national competence to secure welfare by collecting and using tax revenues in an appropriate manner. Otherwise, there is a risk that our tax funds will go to another country and that we will lose tax revenues, which we so much need for school, healthcare, elderly care, infrastructure, and so on.
The proposal also lacks an analysis of how this affects the member states' tax bases.
The Committee is positive on an overall level towards the Commission's ambition to facilitate and simplify for small and medium-sized enterprises conducting cross-border activities in other Member States. The Committee considers, however, that the Commission's proposal contravenes the subsidiarity principle and proposes that the Riksdag, in accordance with Chapter 10, Section 3 of the Instrument of Government, submits a reasoned opinion to the Presidents of the European Parliament, the Council, and the Commission.
The proposal further implies, according to the committee, that there is a risk that companies will choose to establish themselves where the most favorable corporate tax systems are located, and that this in turn could lead to increased opportunities for tax planning and distorted competition.
In light of the arguments presented, the committee considers that the Commission's proposal cannot be deemed compatible with the subsidiarity principle. The committee therefore proposes that the Riksdag submit a reasoned opinion to the Presidents of the European Parliament, the Council, and the Commission.
Madam Speaker! I wish everyone a Merry Christmas - no one mentioned, no one forgotten.
In this speech, Alexandra Anstrell, Lars Beckman, Jan Ericson, Mats Green, Gustaf Göthberg, Marie-Louise Hänel Sandström, Malin Höglund, Marie Nicholson, Thomas Ragnarsson, Jesper Skalberg Karlsson and Boriana Åberg (all M) agreed.
The deliberation was hereby concluded.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.