EC Rules in Favour of Preventing Companies From Changing Tax Residency Status

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The European Commission has recommended implementing a new Directive that will stop and reduce the number of international companies and businesses switching their tax residency from one Member State to another for reasons the EC deems to be artificial or false to ultimately reduce their tax burden.

Such reasons have been specifically named as minimising corporation tax or avoiding liability to any of its employees or creditors. The Commission states that giving Member States the right to prevent such departures is in line with EU freedom of establishment principles and the European Court of Justice’s ruling from the Polbud – Wykonawstwo sp. z o.o case in October 2017.