PUBLIC COUCIL OF Brussels, 19 May 2005 THE EUROPEA UIO

9092/05 Interinstitutional File: 2003/0331 (CS) LIMITE

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OUTCOME OF PROCEEDIGS From : Council Secretariat of : Working Party on Tax Questions - Direct Taxation on : 3 May 2005 Subject : Proposal for a Council Directive amending Directive 2003/49/EC on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States

The Working Party on Tax Questions – Direct Taxation examined a compromise proposal from the Luxembourg Presidency at its meetings of 27 January, 25 February and 3 May. At the last meeting all delegations but one could agree with the revised Presidency compromise (doc. 8579/1/05 REV 1 FISC 46). It was moreover agreed to change the date by which Member States must bring into force the laws, regulations and administrative provisions necessary to comply with the Directive, from 31 December 2005 to 31 December 2006 (and to delete the words "at the latest" - see Annex). The Commission invited delegations to apply the annex as soon as possible, in what concerns the SE (European company) and SCE (European Cooperative Society).

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9092/05 CS/ovl 1

Conseil UE DG G I E AEX

2003/0331 (CNS)

Proposal for a

COUCIL DIRECTIVE

amending Directive 2003/49/EC on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States

THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, and in particular Article 94 thereof, Having regard to the proposal from the Commission 1, Having regard to the opinion of the European Parliament 2, Having regard to the opinion of the European Economic and Social Committee 3, Whereas:

(1) Directive 2003/49/EC does not contain any explicit requirement that the beneficial owner of an interest or royalty payment is not exempt from tax in relation to that payment. To ensure that the objectives of that Directive are met, it is necessary to introduce such a requirement in order to exclude from the benefits of Directive 2003/49/EC any case where the interest or royalty payment received is exempt from tax.

(2) Certain forms of companies are not included in the list in the Annex to Directive 2003/49/EC, even though they are resident for tax purposes in a Member State and are subject to corporation tax there.

1 OJ C , , p. . 2 OJ C , , p. . 3 OJ C , , p. .

9092/05 CS/ovl 2 ANNEX DG G I E (3) The European company or Societas Europaea (SE), as established in Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European company (SE) 4 and Council Directive 2001/86/EC of 8 October 2001 supplementing the Statute for a European company with regard to the involvement of employees, 5 is a public limited-liability company of similar nature to other legal types of companies already covered by Directive 2003/49/EC. For clarification purposes, the SE should be added to the list in the Annex to Directive 2003/49/EC.

(4) The European Cooperative Society (SCE), as established in Council Regulation (EC) No 1435/2003 of 22 July 2003 on the European Cooperative Society (SCE) 6 and Council Directive 2003/72/EC of 22 July 2003 supplementing the Statute for a European Cooperative Society with regard to the involvement of employees, 7 is a cooperative society similar in nature to other legal types of cooperatives proposed to be included in the scope of Directive 2003/49/EC. Accordingly, the SCE should be added to the list in the Annex to Directive 2003/49/EC. In the interest of clarity that Annex should be replaced.

(5) Directive 2003/49/EC should therefore be amended accordingly,

HAS ADOPTED THIS DIRECTIVE :

Article 1

Directive 2003/49/EC is amended as follows:

(1) In Article 1 paragraph 1 is replaced by the following:

“1. An interest or royalty payment arising in a Member State shall be exempt from any taxes imposed on that payment in that State, whether by deduction at source or by assessment, provided that the beneficial owner of the interest or royalties is a company of another Member State or a permanent establishment situated in another Member State of a company of a Member State and is not exempt from tax on the interest or royalty payment in that other Member State.”

4 OJ L 294 of 10.11.2001, p.1. 5 OJ L 294 of 10.11.2001, p. 22. 6 OJ L 207 of 18.8.2003, p. 1. 7 OJ L 207 of 18.8.2003, p. 25.

9092/05 CS/ovl 3 ANNEX DG G I E (2) In Article 1 paragraph 13 is added:

"f) proof that, in accordance with paragraph 1, the beneficial owner of the interest or royalties is not exempt from tax on the interest or royalty payment."

(3) The Annex is replaced by the text in the Annex to this Directive.

Article 2

1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by 31 December 2006. They shall forthwith communicate to the Commission the text of those provisions and a correlation table between those provisions and this Directive.

When Member States adopt such provisions, they shall contain a reference to this Directive or be accompanied by such a reference on the occasion of their official publication. Member States shall determine how such reference is to be made.

2. Member States shall communicate to the Commission the text of the main provisions of national law which they adopt in the field covered by this Directive.

Article 3

This Directive shall enter into force on the twentieth day following the day of its publication in the Official Journal of the European Union .

Article 4

This Directive is addressed to the Member States.

Done at Brussels,

For the Council The President

9092/05 CS/ovl 4 ANNEX DG G I E AEX TO THE AEX

“ANNEX

List of companies referred to in Article 3 (a)

(a) companies incorporated under Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European company (SE) and Council Directive 2001/86/EC of 8 October 2001 supplementing the Statute for a European company with regard to the involvement of employees, and cooperative societies incorporated under Council Regulation (EC) No 1435/2003 of 22 July 2003 on the Statute for a European Cooperative Society (SCE) and Council Directive 2003/72/EC of 22 July 2003 supplementing the Statute for a European Cooperative Society with regard to the involvement of employees;

(b) companies under Belgian law known as “société anonyme”/“naamloze vennootschap”, “société en commandite par actions”/“commanditaire vennootschap op aandelen”, “société privée à responsabilité limitée”/“besloten vennootschap met beperkte aansprakelijkheid” “société coopérative à responsabilité limitée”/“coöperatieve vennootschap met beperkte aansprakelijkheid”, “société coopérative à responsabilité illimitée”/“coöperatieve vennootschap met onbeperkte aansprakelijkheid”, “société en nom collectif”/“vennootschap onder firma”, “société en commandite simple”/ “gewone commanditaire vennootschap”, public undertakings which have adopted one of the abovementioned legal forms, and other companies constituted under Belgian law subject to the Belgian Corporate Tax;

(c) companies under Czech law known as: “akciová společnost”, “společnost s ručením omezeným”, “veřejná obchodní společnost”, “komanditní společnost”, “družstvo”;

(d) companies under Danish law known as “aktieselskab” and “anpartsselskab”. Other companies subject to tax under the Corporation Tax Act, in so far as their taxable income is calculated and taxed in accordance with the general tax legislation rules applicable to “aktieselskaber”;

9092/05 CS/ovl 5 ANNEX TO THE ANNEX DG G I E (e) companies under German law known as “Aktiengesellschaft”, “Kommanditgesellschaft auf Aktien”, “Gesellschaft mit beschränkter Haftung”, “Versicherungsverein auf Gegenseitigkeit”, “Erwerbs- und Wirtschaftsgenossenschaft”, “Betriebe gewerblicher Art von juristischen Personen des öffentlichen Rechts”, and other companies constituted under German law subject to German corporate tax;

(f) companies under Estonian law known as: “täisühing”, “usaldusühing”, “osaühing”, “aktsiaselts”, “tulundusühistu”;

(g) companies under Greek law known as “αvώvυµη εταιρεία”, “εταιρεία περιoρισµέvης ευθύvης (Ε.Π.Ε.)”;

(h) companies under Spanish law known as “sociedad anónima”, “sociedad comanditaria por acciones”, “sociedad de responsabilidad limitada”, and those public law bodies which operate under private law;

(i) companies under French law known as “société anonyme”, “société en commandite par actions”, “société à responsabilité limitée”, “sociétés par actions simplifiées”, “sociétés d’assurances mutuelles”, “caisses d’épargne et de prévoyance”, “sociétés civiles” which are automatically subject to corporation tax, “coopératives”, “unions de coopératives”, industrial and commercial public establishments and undertakings, and other companies constituted under French law subject to the French Corporate Tax;

(j) companies incorporated or existing under Irish laws, bodies registered under the Industrial and Provident Societies Act, building societies incorporated under the Building Societies Acts and trustee savings banks within the meaning of the Trustee Savings Banks Act, 1989;

(k) companies under Italian law known as “società per azioni”, “società in accomandita per azioni”, “società a responsabilità limitata”, “società cooperative”, “società di mutua assicurazione”, and private and public entities whose activity is wholly or principally commercial;

(l) under Cypriot law: “εταιρείες” as defined in the Income Tax laws;

9092/05 CS/ovl 6 ANNEX TO THE ANNEX DG G I E (m) companies under Latvian law known as: “akciju sabiedrība”, “sabiedrība ar ierobežotu atbildību”;

(n) companies incorporated under the law of Lithuania;

(o) companies under Luxembourg law known as “société anonyme”, “société en commandite par actions”, “société à responsabilité limitée”, “société coopérative”, “société coopérative organisée comme une société anonyme”, “association d’assurances mutuelles”, “association d’épargne-pension”, “entreprise de nature commerciale, industrielle ou minière de l’État, des communes, des syndicats de communes, des établissements publics et des autres personnes morales de droit public”, and other companies constituted under Luxembourg law subject to the Luxembourg Corporate Tax;

(p) companies under Hungarian law known as: “közkereseti társaság”, “betéti társaság”, “közös vállalat”, “korlátolt felelősségű társaság”, “részvénytársaság”, “egyesülés”, “közhasznú társaság”, “szövetkezet”;

(q) companies under Maltese law known as: “Kumpaniji ta’ Responsabilita Limitata”, “Soċjetajiet en commandite li l-kapital tagħhom maqsum f’azzjonijiet”;

(r) companies under Dutch law known as “naamloze vennootschap”, “besloten vennootschap met beperkte aansprakelijkheid”, “Open commanditaire vennootschap”, “Coöperatie”, “onderlinge waarborgmaatschappij”, “Fonds voor gemene rekening”, “vereniging op coöperatieve grondslag” and “vereniging welke op onderlinge grondslag als verzekeraar of kredietinstelling optreedt”, and other companies constituted under Dutch law subject to the Dutch Corporate Tax;

(s) companies under Austrian law known as "Aktiengesellschaft", "Gesellschaft mit beschränkter Haftung", "Versicherungsvereine auf Gegenseitigkeit", "Erwerbs und Wirtschaftsgenossenschaften", "Betriebe gewerblicher Art von Körperschaften des öffentlichen Rechts", "Sparkassen", and other companies constituted under Austrian law subject to Austrian corporate tax;

9092/05 CS/ovl 7 ANNEX TO THE ANNEX DG G I E (t) companies under Polish law known as: “spółka akcyjna”, “spółka z ograniczoną odpowiedzialnością”, “spółdzielnia“, “przedsiębiorstwo państwowe“;

(u) commercial companies or civil law companies having a commercial form as well as other legal persons carrying on commercial or industrial activities, which are incorporated under Portuguese law;

(v) companies under Slovenian law known as: “delniška družba”, “komanditna družba”, “družba z omejeno odgovornostjo”;

(w) companies under Slovak law known as: “akciová spoločnosť ”, “spoločnosť s ručením obmedzeným”, “komanditná spoločnosť ”.

(x) companies under Finnish law known as “osakeyhtiö”/“aktiebolag”, “osuuskunta”/“andelslag”, “säästöpankki”/“sparbank” and “vakuutusyhtiö”/“försäkringsbolag”;

(y) companies under Swedish law known as “aktiebolag”, “försäkringsaktiebolag”, “ekonomiska föreningar”, “sparbanker”, “ömsesidiga försäkringsbolag”;

(z) companies incorporated under the law of the United Kingdom.”

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9092/05 CS/ovl 8 ANNEX TO THE ANNEX DG G I E