EESC calls for collaboration for effective implementation of the Head Office Tax system in Europe

To bolster small business growth in the EU, the European Economic and Social Committee (EESC) backs the Commission's Head Office Tax (HOT) proposal. In its advisory opinion, the EESC advocates additional measures and emphasises the need for stronger collaboration among the Commission, Member States and representatives of micro, small and medium-sized enterprises (MSMEs) for effective implementation and awareness.

SMEs, constituting a staggering 99.8% of non-financial enterprises in the EU, significantly contribute to employment (66.6%) and added value (56.8%). The Commission's Head Office Tax (HOT) proposal, part of the broader SME Relief Package, aims to ease regulatory burdens and simplify tax procedures for these companies. The EESC emphasises the urgency of adopting the HOT proposal to catalyse MSME growth, targeting standalone SMEs engaged in cross-border operations. The proposed reduction aligns with the EESC's goal of fostering an environment for long-term GDP and employment growth.

While supporting the focus on standalone MSMEs initially, the EESC suggests evaluating the possibility of extending HOT to include subsidiaries in an ex-post assessment after five years, enhancing inclusivity. The EESC acknowledges HOT's complementarity with the BEFIT proposal but stresses the need for vigilance to avoid discrepancies in the legal framework. Cooperation between tax authorities in Member States is crucial for HOT's success, and the EESC calls for collaboration to ensure that it is properly implemented, urging Member States to adapt IT systems with all speed and to raise awareness among MSMEs. (tk)