The European Commission has adopted a package of initiatives Business in Europe: Framework for Income Taxation which it says will ‘reduce tax compliance costs for large, cross-border businesses in the EU’. The proposals will replace the Commission’s common consolidated corporate tax base and will be mandatory for groups operating in the EU with annual combined revenue of at least €750m, and where the ultimate parent holds at least 75% of the ownership rights (the rules will be optional for SMEs).
The Commission sets out the key points as follows:
Companies that are members of the same group will calculate their tax base in accordance with a common set of rules.
The tax bases of all members of the group will be aggregated into one single tax base.
Each member of the BEFIT group will have a percentage of the aggregated tax base calculated on the basis of the average of the taxable results in the previous three fiscal years.
The broad aim is to encourage cross-border investment across EU member states, by adopting a single set of rules for filing company tax returns rather than MNEs having to deal with 27 different national tax systems, thereby reducing compliance costs for business.
Paolo Gentiloni, Commissioner for Economy, said: ‘Today’s proposals aim to make it easier for businesses large and small to operate in the EU, reducing tax compliance costs and freeing up resources for them to invest and create jobs. Our proposals will also facilitate tax authorities’ efforts to ensure that companies pay what is rightly due. After the adoption of the EU Directive ensuring a minimum effective tax rate for large multinational groups, today we take another key step towards simpler, clearer and more cost-effective tax systems in the EU.’
The European Commission has adopted a package of initiatives Business in Europe: Framework for Income Taxation which it says will ‘reduce tax compliance costs for large, cross-border businesses in the EU’. The proposals will replace the Commission’s common consolidated corporate tax base and will be mandatory for groups operating in the EU with annual combined revenue of at least €750m, and where the ultimate parent holds at least 75% of the ownership rights (the rules will be optional for SMEs).
The Commission sets out the key points as follows:
Companies that are members of the same group will calculate their tax base in accordance with a common set of rules.
The tax bases of all members of the group will be aggregated into one single tax base.
Each member of the BEFIT group will have a percentage of the aggregated tax base calculated on the basis of the average of the taxable results in the previous three fiscal years.
The broad aim is to encourage cross-border investment across EU member states, by adopting a single set of rules for filing company tax returns rather than MNEs having to deal with 27 different national tax systems, thereby reducing compliance costs for business.
Paolo Gentiloni, Commissioner for Economy, said: ‘Today’s proposals aim to make it easier for businesses large and small to operate in the EU, reducing tax compliance costs and freeing up resources for them to invest and create jobs. Our proposals will also facilitate tax authorities’ efforts to ensure that companies pay what is rightly due. After the adoption of the EU Directive ensuring a minimum effective tax rate for large multinational groups, today we take another key step towards simpler, clearer and more cost-effective tax systems in the EU.’
