What provisions would be established to prevent abuse?
The pilot scheme has to include rules for dealing with exceptional cases and anti-avoidance provisions. The Commission suggests a variety of possible arrangements to ensure this, including that only existing enterprises that have been tax resident in the ‘Home State’ for at least two years should be allowed to participate in the scheme and that a participating SME that moves its lead company’s tax residence from one Home State to another during the pilot scheme would have to terminate its participation in the scheme. The Commission also proposes that the general anti-abuse rules of the State of residence apply for every group unit in relation to non-participating Member States and third countries, in order to forestall “rule shopping”. A final point to note is that, generally speaking smaller companies are seldom audited at present so there should be no dramatic change for tax administrations as regards resources needed to combat tax fraud or evasion if some SMEs participate in the pil
