ORAL QUESTION H-0976/07
for Question Time at the part-session in January 2008
pursuant to Rule 109 of the Rules of Procedure
by Avril Doyle
to the Commission
Subject: Importance of tax competition for the internal market
On 10 November 2005 at a speech to the European Business Initiative on Taxation, Commissioner McCreevy said: 'I didn't come to the Berlaymont to tiptoe about in my slippers.' He added that 'taxation harmonisation is not on the agenda, nor will it be'. Moreover, this May the Commissioner said that a common consolidated corporate tax base (CCCTB) proposal: 'would undermine competition, undermine small and emerging markets, undermine inward investment and undermine the long term growth and employment prospects of the Union.'
In the light of the importance of ratifying the Lisbon Treaty in Ireland, can the Commission confirm that the present CCCTB proposal will be taken off the agenda? That the Commission will not 'tiptoe about' but will robustly defend Member State competence in matters of taxation and tax competition in the corporate taxation area?
Here is what the WSJ was publishing some years ago:
"a law firm's office on a quiet downtown street [in Dublin, Ireland ] houses an obscure subsidiary of Microsoft Corp. that helps the computer giant shave at least $500 million from its annual tax bill. The four-year-old subsidiary, Round Island One Ltd., has a thin roster of employees but controls more than $16 billion in Microsoft assets. Virtually unknown in Ireland, on paper it has quickly become one of the country's biggest companies, with gross profits of nearly $9 billion in 2004."
You can also read this article by FinFacts:
In addition, an Irish tax exemption on patent income, has promoted the parking of US multinational company overseas profits in Ireland, through transfer pricing and other accounting measures. Ireland is the most profitable location of US multinationals and in the period 1998-2002, the profits of US companies with Irish facilities doubled. […] Ireland's tax exemption in respect of certain patent royalties, has been one of the driving factors behind investment by pharmaceutical multinationals, principally from the US, in the Irish economy.
From another article of Finfacts of 2005 about Dell and Dell Research Ltd:
In his analysis Sullivan termed Ireland a 'semi-tax haven' for US firms, because firms are involved in real productivity in contrast with locations such as Bermuda.
The dividends paid by Dell were paid through a patent royalty company called Dell Research Ltd. Recently filed accounts show that it had accumulated $91.7m in retained profits, none of which is subject to tax under current Irish legislation.
You can also read this European directive of 2003 which defines what is a royalty:
Definition of interest and royalties
For the purposes of this Directive :
(a) the term "interest" means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures; penalty charges for late payment shall not be regarded as interest;
(b) the term "royalties" means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work, including cinematograph films and software, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience; payments for the use of, or the right to use, industrial, commercial or scientific equipment shall be regarded as royalties.
And this article about the new belgian imposition for 2008 from 33% to 6% on patent royalties.