[ParlTrack]

Proposal for a directive
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The European Parliament rejects the Commission proposal.

2017/09/29
Committee: ECON

Proposal for a directive
Recital 1

(1) Companies which seek to do business across frontiers within the Union encounter serious obstacles and market distortions owing to the existence and interaction of 28 disparate corporate tax systems. Furthermore, tTax planning structures have become ever-more sophisticated over time, as they develop across various jurisdictions and effectively take advantage of the technicalities of a tax system or of mismatches between two or more tax systems for the purpose of reducing the tax ~~liability~~burden ofn companies. Although those situations highlight shortcomings that are completely different in nature, they both create obstacles which impede the proper functioning of the internal market. Action to rectify those problems should therefore address both types of market deficiencies.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 2

(2) To support the proper functioning of the internal market, the corporate tax environment in the Union should be shaped in accordance with the principle that companies pay their fair share of tax in the jurisdiction(s) where their profits are generated. It is therefore necessary to provide for mechanisms that discourage companies from taking advantage of mismatches amongst national tax systems in order to lower their tax liability. It is equally important to also stimulate growth and economic development in the internal market by facilitating cross-border trade and corporate investment. To this end, it is necessary to eliminate ~~both~~ double taxation ~~and double non-taxation~~ risks in the Union through ~~eradicat~~solving disparities in the interaction of national corporate tax systems. At the same time, companies need an easily workable tax and legal framework for developing their commercial activity and expanding it across borders in the Union. In that context, remaining cases of discrimination should also be removed.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 3

(3) As pointed out in the proposal of 16 March 2011 for a Council Directive on a Common Consolidated Corporate Tax Base (CCCTB)7 , a corporate tax system which treats the Union as a single market for the purpose of computing the corporate tax base of companies would facilitate cross-border activity for companies resident in the Union and promote the objective of making it a more competitive location for investment internationally. The proposal of 2011 for a CCCTB focussed on the objective of facilitating the expansion of commercial activity for businesses within the Union. In addition to that objective, it should also be taken into account that a CCCTB can be highly effective in improving the functioning of the internal market through countering tax avoidance schemes. In this light, the initiative for a CCCTB should be re- launched in order to address, on an equal footing, both the aspect of business facilitation and the initiative's function in countering tax avoidance. Such an approach would best serve the aim of eradicating distortions in the functioning of the internal market. __________________ 7 Proposal for a Council Directive COM (2011) 121 final/2 of 3.10.2011 on a Common Consolidated Corporate Tax Base.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 3

(3) As pointed out in the proposal of 16 March 2011 for a Council Directive on a Common Consolidated Corporate Tax Base (CCCTB)7, a corporate tax system which treats the Union as a single market for the purpose of computing the corporate tax base of companies would facilitate cross-border activity for companies resident in the Union and promote the objective of making it a more competitive location for investment internationally. The proposal of 2011 for a CCCTB focussed on the objective of facilitating the expansion of commercial activity for businesses which are subject to corporate tax within the Union. In addition to that objective, it should also be taken into account that a CCCTB can be ~~highly~~ effective in improving the functioning of the internal market through countering tax avoidance schemes. In this light, the initiative for a CCCTB should be re- launched in order to address~~, on an equal footing, both the aspect of business facilitation and~~ the initiative's function in countering tax avoidance. Such an approach would best serve the aim of eradicating distortions in the functioning of the internal market. __________________ 7 Proposal for a Council Directive COM (2011) 121 final/2 of 3.10.2011 on a Common Consolidated Corporate Tax Base.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 4

(4) ~~Considering the need to act swiftly in order to ensure a proper functioning of~~In order to make the internal market ~~by making it~~, on the one hand, friendlier to trade and investment and, on the other hand, more resilient to tax avoidance schemes, it is necessary to divide the ambitious CCCTB initiative into two separate proposals. At a first stage, rules on a common corporate tax base should be enacted, before addressing, at a second stage, the issue of consolidationfor both of the present proposals for directives to be negotiated in parallel and to enter into force at the same time.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 5

(5) Many aggressive tax planning structures tend to feature in a cross- border context, which implies that the participating groups of companies possess a minimum of resources. On this premise, for reasons of proportionality, the rules on a common base should be mandatory only for companies which belong to a group of a substantial size. For that purpose, a size-related threshold should be fixed on the basis of the total consolidated revenue of a group which files consolidated financial statements. In addition, to ensure coherence between the two steps of the CCCTB initiative, the rules on a common base should be mandatory for companies which would be considered as a group should the full initiative materialise. In order to better serve the aim of facilitating trade and investment in the internal market, the rules on a common corporate tax base should also be available, as an option, to companies which do not meet those criteria.deleted

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 6

(6) It is necessary to define the concept of a permanent establishment situated in the Union and belonging to a taxpayer who is resident for tax purposes within the Union. The aim would be to ensure that all concerned taxpayers share a common understanding and to exclude the possibility of a mismatch due to divergent definitions. On the contrary, it should not be seen as essential to have a common definition of permanent establishments situated in a third country, or in the Union but belonging to a taxpayer who is resident for tax purposes in a third country. This dimension should better be left to bilateral tax treaties and national law due to its complicated interaction with international agreements.deleted

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 7

(7) To mitigate tax avoidance risks, which distort the functioning of the internal market, a common corporate tax base should be designed broadly. Based on this premise, all revenues should be taxable unless expressly exempted. As regards participations of at least 10 %, income consisting in dividends or proceeds from the disposal of shares held in a company outside the group should be exempt, in order to prevent double taxation in foreign direct investment. In the same vein, the profits of permanent establishments should also be exempt from tax in the state of the head office. It is also considered that the exemption of income earned abroad meets the need for simplicity for businesses. Indeed, in giving relief for double taxation, most Member States currently exempt dividends and proceeds from the disposal of shares, thereby avoiding computing the taxpayer's entitlement to a credit for the tax paid abroad, in particular where such entitlement must take account of the corporation tax paid by the company distributing the dividends.deleted

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 8

(8) Taxable revenues should be reduced by business expenses and certain other items. Deductible business expenses should normally include all costs relating to sales and expenses linked to the production, maintenance and securing of income. To support innovation in the economy and modernise the internal market, deductions should be provided for research and development costs, including super-deductions, and those should be fully expensed in the year incurred (with the exception of immovable property). Small starting companies without associated enterprises which are particularly innovative (a category which will in particular cover start-ups) should also be supported through enhanced super-deductions for research and development costs. In order to ensure legal certainty, there should also be a list of non-deductible expenses.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 9

(9) Recent developments in international taxation have highlighted that, in an effort to reduce their global tax liability, multinational groups of companies have increasingly engaged in tax avoidance arrangements leading to base erosion and profit shifting, through excessive interest payments. It is therefore necessary to limit the deductibility of interest (and other financial) costs, in order to discourage such practices. In that context, the deductibility of interest (and other financial) costs should only be allowed without restrictions to the extent that those costs can be offset against taxable interest (and other financial) revenues. Any surplus of interest costs should however be subject to deductibility restrictions, to be determined by reference to a taxpayer’s taxable earnings before interest, tax, depreciation and amortisation (‘EBITDA’).deleted

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 10

(10) The fact that interest paid out on loans is deductible from the tax base of a taxpayer whilst this is not the case for profit distributions creates a definitive advantage in favour of financing through debt as opposed to equity. Given the risks that this entails for the indebtedness of companies, it is critical to provide for measures which neutralise the current bias against equity financing. In this light, it is envisaged to give taxpayers an allowance for growth and investment according to which increases in a taxpayer's equity should be deductible from its taxable base subject to certain conditions. Thus, it would be essential to ensure that the system does not suffer cascading effects and to this end, it would be necessary to exclude the tax value of a taxpayer's participations in associated enterprises. Finally, to make the scheme of the allowance sufficiently robust, it would also be required to lay down anti-tax avoidance rules.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 12

(12) In order to discourage the shifting of passive (mainly, financial) income out of highly-taxed companies, any losses that such companies may incur at the end of a tax year should be presumed to mostly correspond to the results of trading activity. Based on that premise, taxpayers should be allowed to carry losses forward indefinitely without restrictions on the deductible amount per year. Since the carry-forward of losses is intended to ensure that a taxpayer pays tax on its real income, there is no reason to place a time limit on carry forward. Regarding the prospect for a loss carry-back, no such a rule would need to be introduced because that this is relatively rare in the practice of Member States, and tends to lead to excessive complexity. ~~Furthermore, an anti-abuse provision should be laid down in order to prevent, thwart or counter attempts to circumvent the rules on loss deductibility through purchasing loss-making companies.~~

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 13

(13) In order to facilitate the cash-flow capacity of businesses ~~– for instance, by compensating start-up losses in a Member State with profits in another Member State – and encourage the cross-border expansion within the Union,~~ taxpayers should be entitled to temporarily take into account the losses incurred by their immediate subsidiaries and permanent establishments situated in other Member States. For that purpose, a parent company or head office located in a Member State should be able to deduct from its tax base, in a given tax year, the losses incurred in the same tax year by its immediate subsidiaries or permanent establishments situated in other Member States in proportion to its holding. The parent company should then be required to add back to its tax base, considering the amount of losses previously deducted, any subsequent profits made by those immediate subsidiaries or permanent establishments. As it is vital to safeguard national tax revenues, the deducted losses should also be reincorporated automatically if this has not already occurred after a certain number of years or if the requisites to qualify as an immediate subsidiary or permanent establishment are no longer met.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 14

(14) To avoid the base erosion of higher tax jurisdictions through shifting profits via inflated transfer prices towards lower tax countries, transactions between a taxpayer and its associated enterprise(s) should be subject to pricing adjustments in line with the 'arm's length' principle, which is a generally applied criterion.deleted

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 16

(16) As far as specific anti-tax avoidance measures are concerned, it is often necessary to ascertain the level of taxation on the other side of the border, in order to determine whether the taxpayer is liable to pay tax on foreign generated income. This would create a level-playing field regarding the level of tax and competition within the internal market and also protect the market from base erosion vis-à-vis third countries. In this context, it is necessary to provide for a switch-over clause targeting some types of income earned in a third country, such as profit distributions and proceeds from the disposal of shares, in order to ensure that income be taxable in the Union if it has been taxed below a certain level in a third country. Controlled foreign company (‘CFC’) legislation is also an indispensable element of a corporate tax system and has the effect of re-attributing the income of a low-taxed controlled subsidiary to its parent company in an effort to discourage profit shifting. In that regard, it is necessary that CFC rules extend to the profits of permanent establishments where those profits are not subject to tax or are tax exempt in the Member State of the taxpayer.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 17

(17) Taking into account that the effect of hybrid mismatches is usually a double deduction (i.e. deduction in both states) or a deduction of the income in one state without inclusion in the tax base of another, such situations clearly affect the internal market by distorting its mechanisms and creating loopholes for tax avoidance practices to flourish. Given that mismatches generate from national differences in the legal qualification of certain types of entities or financial payments, they normally do not occur amongst companies which apply the common rules for calculating their tax base. Mismatches would however persist in the interaction between the framework of the common base and national or third- country corporate tax systems. To neutralise the effects of hybrid mismatch arrangements, it is necessary to lay down rules whereby one of the two jurisdictions in a mismatch deny the deduction of a payment or ensures that the corresponding income is included in the corporate tax base.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 19

(19) In order to supplement or amend certain non-essential elements of this Directive, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission with respect of (i) taking into account changes to the laws of Member States concerning the company forms and corporate taxes and amend Annexes I and II accordingly; (ii) laying down additional definitions; (iii) enacting detailed rules against tax avoidance in a number of specified fields relevant to the allowance for growth and investment ; (iv) defining the concepts of legal and economic ownership of leased assets in more detail; (v) calculating the capital and interest elements of lease payments and the depreciation base of leased assets; and (vi) defining more precisely the categories of fixed assets subject to depreciation. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level. The Commission, when preparing and drawing up delegated acts, should ensure a simultaneous, timely and appropriate transmission of relevant documents to the European Parliament and the Council.deleted

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 20

(20) In order to ensure uniform conditions for the implementation of this Directive, implementing powers should be conferred on the Commission to adopt annually a list of third country company forms that are similar to the company forms listed in Annex I. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council12 . __________________ 12 Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission’s exercise of implementing powers (OJ L 55, 28.2.2011, p. 13).deleted

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Article 1 – paragraph 2

~~2. A company that applies the rules of this Directive shall cease to be subject to the national corporate tax law in respect of all matters regulated by this Directive, unless otherwise sta~~deleted.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Article 8 – paragraph 1 – point d

(d) received profit distributions, provided that the taxpayer has maintained a minimum holding of 10 % in the capital or 10 % of the voting rights of the distributing company for 12 consecutive months, with the exception of profit distributions from shares held for trading as referred to in Article 21(4) and profit distributions received by life insurance undertakings in accordance with point (c) of Article 28, as well as national profit distributions;

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Article 9

1. to the extent that they are incurred in the direct business interest of the taxpayer. 2. paragraph 1 shall include all costs of sales and all expenses, net of deductible value added tax, that the taxpayer incurred with a view to obtaining or securing income, including costs for research and development and costs incurred in raising equity or debt for the purposes of the business. 3. are deductible as costs for research and development in accordance with paragraph 2, the taxpayer may also deduct, per tax year, an extra 50% of such costs, with the exception of the cost related to movable tangible fixed assets, that it incurred during that year. To the extent that costs for research and development reach beyond EUR 20 000 000, the taxpayer may deduct 25% of the exceeding amount. By way of derogaArticle 9 deleted Deductible expenses Expenses shall be deductible only The expenses referred to in In addition ~~from~~to the first subparagraph, the taxpayer may deduct an extra 100% of its costs for research and development up to EUR 20 000 000 where that taxpayer meets all of the following conditions: (a) fewer than 50 employees and an annual turnover and/or annual balance sheet total that does not exceed EUR 10 000 000; (b) longer than five years. If the taxpayer is not subject to registration, the period of five years may be taken to start at the moment that theamounts which it is an unlisted enterprise ewither starts, or is liable to tax for, its economic activity; (c) it has not been formed through a merger; (d) it does not have any associated enterprises. 4. Member States may provide for the deduction of gifts and donations to charitable bodies. it has not been registered for

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Article 11 – paragraph 1

1. For the purposes of this Article, 'AGI equity base' means~~, in a given tax year, the difference between the equity of a taxpayer and the tax value of its participation in the capital of associated enterprises as referred to in Article 56~~ the equity difference.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Article 13

~~[...]~~deleted

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Article 19 – paragraph 2

2. The costs of stocks and work-in- progress shall be measured consistently ~~by using the first-in first-out method, last-in first-out method or the weighted-average cost method~~in accordance with the respective national rules.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Article 19 – paragraph 3

3. The cost of stocks and work-in- progress involving items that ordinarily are not interchangeable and goods or services which are produced or supplied respectively and segregated for specific projects shall be measured in~~dividually~~ accordance with the respective national rules.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Article 20 – paragraph 1 – point b

~~(b) the market value, where the consideration for the transaction is wholly or partly non-monetary;~~deleted

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Article 23 – paragraph 3

~~3. Provisions shall not be deducted for the following: (a) (b)~~deleted contingent losses; future cost increases.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Article 25 – paragraph 2

2. In determining whether all reasonable steps to pursue payment have been made, the elements listed in points (a) to (e) shall be taken into account, provided that they are based on objective evidence: (a) whether the costs of collection are disproportionate to the debt; (b) whether there is any prospect of successful collection; (c) whether it is reasonable, in the circumstances, to expect the taxpayer to pursue collection; (d) the time that has elapsed following the date of maturity of the obligation; (e) whether the debtor has been declared insolvent or legal action has been initiated or a debt collector has been engaged.deleted

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Article 29

1. value of transferred assets, at the time of exit of the assets, less their value for tax purposes, shall be treated as accrued revenues in any of the following circumstances: (a) from its head office to its permanent establishment in another Member State or in a third country; (b) from its permanent establishment in a Member State to its head office or another permanent establishment in another Member State or in a third country, to the extent that, due to the transfer, the Member State of the permanent establishment no longer has the right to tax theArticle 29 deleted Exit taxation An amount equal to the market where a taxpayer transfer~~red~~s assets; (c) residence to another Member State or to a third country, except for those assets which remain effectively connected with a permanent establishment in the first Member State; (d) business carried on by its permanent establishment from a Member State to another Member State or to a third country, to the extent that, due to the transfer, the Member State of the permanent establishment no longer has the right to where a taxpayer transfers assets where a taxpayer transfers its tax twhe transferred assets. 2. assets, tax residence or the business carried on by a permanent establishment are transferred shall accept the value established by the Member State of the taxpayer or of the permanent establishment as the starting value of the assets for tax purposes. 3. transfers related to the financing of securities, assets posted as collateral or where the asset transfer takes place in order to meet prudential capital requirements or for the purpose of liquidity management where those assets are set to revert to the Member State of the transferor within a period of 12 months.re a taxpayer transfers the The Member State to where the This Article shall not apply to asset

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Article 33

~~Individually depreciable assets 1. and~~ Articles 37 and 38, fixed assets shall be depreciated individually over their useful lives on a straight-line basis. The useful life of a fixed asset shall be determined as follows: (a) commercial, office and other buildings, as well as any other type of immovable property in use for the business, with the exception of industrial buildings and structures: 40 years; (b) industrial buildings and structures: 25 years; (c) other than the assets referred to in points (a) and (b): 15 years; (d) medium-life fixed tangible assets: 8 years; (e) for which the asset enjoys legal protection or for which the right has been granted or, where that period cannot be determined, 15 years. 2. types of immovable property, second-hand long-life fixed tangible assets, second- hand medium-life fixed tangible assets and second-hand fixed intangible assets shall be depreciated in accordance with the following rules: (a) second-hand commercial, office or other buildings, as well a3 deleted Without prejudice to paragraph 2 long-life fixed tangible assets, fixed intangible assets: the period Second-hand buildings anyd other type of immovable property in use for the business, with the exception of industrial buildings and structures: 40 years, unless the taxpayer demonstrates that the estimated remaining useful life of the asset is shorter than 40 years, in which case it shall be depreciated over that shorter period; (b) and structures: 25 years, unless the taxpayer demonstrates that the estimated remaining useful life of the asset is shorter than 25 years, in which case it shall be depreciated over that shorter period; (c) tangible assets, other than the assets referred to in points (a) and (b): 15 years, unless the taxpayer demonstrates that the estimated remaining useful life of the asset is shorter than 15 years, in which case it shall be depreciated over that shorter period; (d) tangible assets: 8 years, unless the taxpayer demonstrates that the estimated remaining useful life of the asset is shorter than 8 years, in which case it shall be depreciated over that shorter period; (e) assets: 15 years, unless the remaining period for which the asset enjoys legal protection or for which the right has been granted can be determined, in which case it shall be depreciated over that period.second-hand industrial buildings second-hand long-life fixed second-hand medium-life fixed second-hand fixed intangible

2017/09/29
Committee: ECON

Activities of Barbara KAPPEL related to 2016/0337(CNS)

Plenary speeches (1)

Shadow reports (1)

Amendments (31)

ParlTrack - 2011-2024