"We can't support legislation that helps tax cheats, undermines labour laws and exploits stakeholders", say S&D MEPs

Digital Internet Trade

S&D MEPs in the Parliament's internal market committee today voted against Commission proposals on single-member private limited liability companies, also known as the SUP Directive. 

MEPs had serious concerns that the directive could be misused by large companies to circumvent national laws and undermine genuine small businesses. 

Marlene Mizzi, S&D Rapporteur for the report said:

"Small businesses form the backbone of the European economy and we are in favour of measures that make it easier for them to trade across national borders. Unfortunately, that is not what this legislation would do. There is nothing in this text to prevent large enterprises using the mechanism to create 'letter-box' companies to avoid taxation, circumvent national labour market rules and works against the interest of all stakeholders. This would deepen unfair competition in the internal market and would undermine genuine small companies who play by the rules."

"The proposed idea of allowing people to create companies online is interesting; however there is no explanation in the text of how the owner's identity would be verified. This combined with the requirement of only 1 Euro minimum capital, lack of obligation to build up reserves and the possibility to split the company seat could lead to the legislation's misuse.  We must avoid rules that make the creation of shell companies easier - this would benefit only tax-avoiders, money launders and those involved in organised crime."

"We call on the Commission to put forward new legislation that helps hardworking small businesses to trade across Europe, not a text that benefits only large multinationals, tax cheats and encourages abuse."

Note to editors

This legislation has already been voted on in the Parliament Employment Committee where it was rejected by a large majority. It will now be voted on in the Legal Affairs Committee.