The free provision of services by foreign entities resulted in their exemption from host country social security legislation, questionable practices in the field of income and corporate tax, and the watering down of national labour standards, mandatory pay and working conditions. Bypassing EU member state social provisionsīy the late 1980s the first indications of the practice of bypassing rules through the use of foreign labour-only subcontractors had emerged, leading to questions about the possible relationship between cross-border labour recruitment and artificial company arrangements in the EU. A comparable definition across member states is also lacking, as is a definition in identical terms in the different policy areas at the national and EU levels. However such a definition is missing in the EU regulatory framework. A unified and horizontal definition of a genuine company would help to distinguish between companies that are artificial arrangements (like letterbox companies) and companies with real activities. The core problem for the EU was captured well in a study commissioned by the European Trade Union Confederation (ETUC), which states a letterbox company is: “a business that establishes its domicile in a given Member State while conducting its (substantial) activities in other Member States for purposes of circumventing or evading applicable legal obligations (lower taxes, wages, labour standards and social security contributions)”. In other words, such companies do not actually perform any real economic activity in their country of establishment, although claiming to do so. Interestingly, in 2013 the European Commission also referred to legislative loopholes in its description of letterbox companies, stating that they are “set up with the purpose of benefitting from legislative loopholes while not themselves providing any service to clients”. As early as the debates on the EU Services Directive in 2004, critics of such uncontrolled mobility of national service providers referred to the creation of letterbox companies offering services at low prices. The association of letterbox companies with the free provision of services in the EU (where companies based in one member state are able to provide services in another) led to a definition that goes beyond taxation. Letterbox companies in the European Union This phenomenon can be seen as an unintended side-effect of the deregulation of company law. As defined by the Organisation for Economic Co-operation and Development (OECD), it is a business that establishes itself in a tax-friendly country with just the bare essentials required for organization (usually a mailing address), while conducting its commercial activities in other countries to minimize tax liabilities. The notion of a letterbox company is quite simple. The dubious and unlawful practices of these companies, which may seem perfectly legal on the surface, should be reviewed to protect workers, customers and genuine economic actors. Today the phenomenon is spread over several sectors and is associated with a ‘cheap labour business model’: letterbox companies operating across borders pick and choose the most profitable social security and labour standards regime. In the late 1990s, the term also started to be used in the international transport sector to describe companies that had an address in the country of establishment, but conducted all of their activities in a different jurisdiction. for full access to this site & discounts, you can become a member of Letterbox Library for just £5 a year Click here.Mainly known for their association with corporate and income tax evasion, letterbox companies have also been linked to dubious workers’ rights practices and social dumping in the EU.we are committed to providing you with high quality and honestly priced products.We are a not-for-profit social enterprise. we are also known for our books promoting social justice.we are passionate about resisting commercial trends we want to offer children real choices in what they read.inclusive content is not enough our reviewers only select books which also show excellence in storyline/artwork.we use an expert team of volunteers, including teachers & children, to review and choose all of our books. ![]() we specialise in books in which all children can see themselves and which reflect our world community in all of its diversity.We are famous for our book selection process: About Letterbox Library For over 30 years, Letterbox Library has been a leading children's bookseller and education supplier, bringing teachers, librarians and parents the best in inclusive children's books.
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