Germany, France have issued a common position paper on the European Commission’s proposal for a directive establishing a CCTB
The Common Consolidated Corporate Tax Base (Accis), a 2011 project relaunched by the Commission in 2015, aims, among other things, to introduce uniform rules for calculating profits for big multinational groups.
If adopted, this new regime will be mandatory for companies with a turnover of over € 750 million, which “will be taxed where they make profits,” according to the Commission.
The proposal also aims to combat aggressive tax optimization by removing asymmetries between national tax systems.
Both countries further suggest several technical amendments to the proposed definition of the tax base, including on the deductibility of certain expenses
- Provisions on cross-border relief should be discussed at a larger stage, as part of the negotiation on the CCCTB Directive;
- It should be expressly stated in the CCTB Directive that national group taxation systems will remain in force until the CCCTB Directive will be implemented;
- There should be a transitional period of at least four years ahead of full implementation of the CCTB;
- Special purpose levies (such as bank levies) should not be deductible under the CCTB;
- Germany and France propose EU Tax harmonization by setting a base level below witch corporation taxes cannot be set. They have issued a common position paper on the EU commission’s proposal for a directive establishing a CCTB.
The primary purpose is to harmonize the corporate tax base rules is to end aggressive tax optimization practices.
For the long term, it is a question of consolidating this base to distribute the tax base among European states according to a key of economic distribution.
The common Consolidated company Tax Base, a 2011 project relaunched by the commission in 2015, targets to introduce uniform guidelines for calculating profits for large multinational companies.
If followed, this new regime can be obligatory for organizations with a turnover of over € 750 million, which “will be taxed where they make earnings,” according to the commission.
The proposal additionally targets to combat competitive tax optimization by means of disposing of asymmetries among national tax systems.
Both countries further suggest several technical amendments to the proposed definition of the tax base, including on the deductibility of certain expenses.
The governments have suggested the following:
CCTB Directive have to be extended, making it obligatory for all organizations subject to corporate tax, regardless of their legal form or size;
The overall principles for profit and loss recognition ought to be supplemented, i.e., the tax base has to be computed by accounting principles and the commercial enterprise asset comparison method.
Provisions on cross-border relief ought to be mentioned at a bigger stage, as part of the negotiation on the CCCTB Directive;
It must be expressly said in the CCTB Directive that countrywide group taxation structures will remain in force until the CCCTB Directive is implemented;
There should be a transitional period of at least four years in advance of the complete implementation of the CCTB;
special purpose levies (which includes bank levies) ought to not be deductible beneath the CCTB;