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Commission wants major corporate tax reform for the EU

The Commission unveiled a revised version of its proposals to change the tax regime for companies operating in Europe (known as CCCTB) this week. The latest proposals follow previous efforts in 2011 but have important revisions and the Commission feels the political time is right for its Action Plan for a Fair and Efficient Corporate Tax System. This time, the Commission has separated the proposal for a common tax base, (i.e. what expenses are tax deductible, a common set of forms to fill in and so on) from the proposal for the consolidation measures (i.e. common rules on where the tax is payable, based on where the company's staff, property are located and where its sales take place). Commissioner Moscovici said that he will ask the Member States to agree on the common base before proceeding with discussions on the consolidated base proposals.

date:  26/10/2016

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It's estimated that the current proposal would save European businesses some €850 million/annum .The proposal will not affect tax sovereignty and Member States are of course free to set their own tax rates. Commissioner Muscovici stressed that the proposal would however stop "sweetheart deals" and the shifting of profits outside of the EU.

Key features of the proposals:

  • The CCCTB will be mandatory for all groups with global consolidated revenues of more than €750 million.
  • There are major R&D incentives which allow companies to have a “super-deduction” of between 25% - 50% for their R&D expenditure. Start-ups could get as much as a 100% super-deduction.
  • A methodology to resolve double taxation disputes and address the mis-matches of tax rules with countries outside the EU (mismatches within the EU were dealt with in the Anti-Tax Avoidance Directive).

The Commission’s proposals will now move into Council working groups for discussion with officials from all Member States. Any decision needs unanimous agreement from all 28 Member States in order to become law.

It's estimated that the current proposal would save European businesses some €850 million/annum .The proposal will not affect tax sovereignty and Member States are of course free to set their own tax rates. Commissioner Muscovici stressed that the proposal would however stop "sweetheart deals" and the shifting of profits outside of the EU. Key features of the proposals: • The CCCTB will be mandatory for all groups with global consolidated revenues of more than €750 million. • There are major R&D incentives which allow companies to have a “super-deduction” of between 25% - 50% for their R&D expenditure. Start-ups could get as much as a 100% super-deduction. • A methodology to resolve double taxation disputes and address the mis-matches of tax rules with countries outside the EU (mismatches within the EU were dealt with in the Anti-Tax Avoidance Directive). The Commission’s proposals will now move into Council working groups for discussion with officials from all Member States. Any decision needs unanimous agreement from all 28 Member States in order to become law.