Establishing a Head Office Tax system for SMEs (HOT)

Background

The EESC's Economic and Monetary Union and Economic and Social Cohesion section (ECO) has issued an opinion on the Commission's proposal for a Council Directive, aiming to establish a Head Office Tax (HOT) system for micro, small and medium-sized companies (MSMEs). The proposal is part of the SME Relief Package, which includes various measures to simplify tax regulations for SMEs. The HOT system specifically addresses standalone SMEs operating cross-border through permanent establishments. ECO section urges close collaboration between the Commission, Member States, and MSME representatives to raise awareness, provide training, and ensure the effective implementation of the HOT system across the EU. This opinion is scheduled for discussion and adoption by the EESC during its January 2024 plenary.

Key points

In the opinion, the EESC's ECO section

  • backs the Commission's proposal for a HOT system for MSMEs. It aligns with enhancing their competitiveness, simplifying cross-border activities, and cutting administrative hurdles;
  • recognises that adopting the HOT system will add value to businesses, employees, and Member States. The EESC stresses the urgency in adopting it promptly to reduce administrative burdens and promote competitiveness for small business;
  • believes HOT will improve cooperation between tax authorities in Member States. After adoption, the Commission should quickly start working closely with Member States and MSME organisations to raise awareness and achieve goals like reducing regulations and boosting cross-border activity;

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Additional information

- EESC section: Economic and Monetary Union and Economic and Social Cohesion (ECO)

- opinion type: Mandatory Opinion

- rapporteur: Katrīna ZARIŅA (Employers - GR I / Latvia)

- reference: ECO/632-EESC-2023-04262

- referral: COM(2023) 528 final 2023/0320 CNS, COM(2023) 528 final 2023/0320 CNS

- date of adoption by section: 18/12/2023

- date of adoption in plenary: 17-18/01/2024

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