A new corporate entity - the European Company - authorised to operate throughout the 15 EU countries under a single set of management, reporting and accounting rules, has formally come into existence today, thirty years after the idea was first proposed.
EU ministers adopted a regulation creating the new legal body along with a more controversial directive providing for comprehensive worker consultation rights in the new corporate organisations.
The European Company will benefit organisations operating in more than one EU country by allowing them to incorporate under a single legal umbrella, thus doing away with the time-consuming and expensive requirement of adhering to 15 different national systems.
The Commission said this would lead to ‘significant reductions in administrative and legal costs.’ Potential savings have been estimated at up to euros 30bn (Pounds 18bn) a year by a group of industrialists convened in 1995 by European heads of government.
Anna Diamantopoulou, European commissioner for employment, said thestatute was not perfect and ‘much work remains to be done on taxationmatters.’
But in the commission’s view, adoption of the measure would help make the EU ‘the world’s most competitive and cohesive place to live and dobusiness’.
Commission officials said a European Company could gain fiscal advantagesif it was created by merging a company registered in one country but operating through branches in others. In such cases it would be possible to offset losses from some permanent establishments against profits from other ones, a practice that was not often possible under existing rules.