[ParlTrack]

Esther DE LANGE, Brian HAYES, Gunnar HÖKMARK

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

2017/09/29
Committee: ECON

Esther DE LANGE, Brian HAYES, Gunnar HÖKMARK

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, tax 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 of 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 without foregoing the fact that taxation is a national competence and without leading to de facto automatic transfers of tax revenues between Member States.

2017/09/29
Committee: ECON

Esther DE LANGE, Brian HAYES, Gunnar HÖKMARK

Proposal for a directive
Recital 1 a (new)

(1a) Companies, both big and small, which seek to do business irrespective of their location in the Union need first and foremost long-term legal clarity and certainty in order to stimulate (long-term) investments. Member States who are able to provide sound, long-term legal clarity and certainty will always be an attractive location for companies to operate from.

2017/09/29
Committee: ECON

Brian HAYES, Esther DE LANGE, Gunnar HÖKMARK, Frank ENGEL

Proposal for a directive
Recital 1 a (new)

(1a) Tax policy and the ability to set corporate tax rates remains a national competence. While administrative simplification of corporate taxation systems may lead to greater efficiencies, the likely impact of a common consolidated tax base is an intrusion into Member States' tax policy and their ability to set corporate tax rates into the future.

2017/09/29
Committee: ECON

Gunnar HÖKMARK

Proposal for a directive
Recital 1 a (new)

(1a) Taxation is a national competence, dependent on the political view and actions of governments and parliaments, based upon fiscal policies and political aspirations regarding public spending.

2017/09/29
Committee: ECON

Esther DE LANGE, Brian HAYES, Gunnar HÖKMARK

Proposal for a directive
Recital 1 b (new)

(1b) Corporate tax rates within the Union paint a very diffuse picture of the different levels of tax burdens on companies. Effective tax rates, however, show different and in same cases even opposite results.

2017/09/29
Committee: ECON

Gunnar HÖKMARK

Proposal for a directive
Recital 1 b (new)

(1b) It is the responsibility of the tax authority in every nation in cooperation with each other to secure that taxes are paid and to define where taxes shall be paid dependent on the character of the business.

2017/09/29
Committee: ECON

Brian HAYES, Esther DE LANGE, Gunnar HÖKMARK, Frank ENGEL

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. At the same time, a corporate tax environment in the Union must be competitive and allow Member States to define their own national corporate tax system in order to attract and keep investment in the Union. To this end, it is necessary to eliminate both double taxation and double non- taxation risks in the Union through eradicating 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

Esther DE LANGE, Gunnar HÖKMARK

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, albeit only if and when the formula for consolidation is able to encompass all forms of tangible and intangible economic activity. 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

Esther DE LANGE, Gunnar HÖKMARK

Proposal for a directive
Recital 4

(4) Considering the need to act swiftly in order to ensure a proper functioning of 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 consolidation. Whereas (partial) harmonisation of the corporate tax base across the Union could be beneficial to businesses and also help in the fight against tax avoidance by dealing with (hybrid) mismatches between two or more corporate tax regimes, it also has the potential to put more emphasis on competition between Member States based solely on the corporate tax rate, leading to an intensified 'race to the bottom'.

2017/09/29
Committee: ECON

Brian HAYES, Esther DE LANGE, Gunnar HÖKMARK, Frank ENGEL

Proposal for a directive
Recital 4

(4) Considering the need to ~~act swiftly in order to ensure~~support a proper functioning of 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 consolidation.

2017/09/29
Committee: ECON

Brian HAYES, Esther DE LANGE, Gunnar HÖKMARK, Frank ENGEL

Proposal for a directive
Recital 4 a (new)

(4a) It should be considered that no sufficiently detailed impact assessment has been conducted on either the CCTB or CCCTB proposals. To understand the true impact of the proposals, particularly in terms of the impact on Member State's corporate tax revenue, it is necessary for a detailed impact assessment to be conducted on a country-by-country basis, which considers all different national systems of corporate tax collection.

2017/09/29
Committee: ECON

Brian HAYES, Gunnar HÖKMARK, Frank ENGEL

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 criteriaoptional for all companies.

2017/09/29
Committee: ECON

Esther DE LANGE, Gunnar HÖKMARK

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. It is important, however, to realise that giving the ability to companies to choose between the harmonised rules or the rules of national tax laws can create new possibilities for tax avoidance.

2017/09/29
Committee: ECON

Brian HAYES, Esther DE LANGE, Gunnar HÖKMARK, Frank ENGEL

Proposal for a directive
Recital 5 a (new)

(5a) Aggressive tax planning by multinational companies is a global problem that requires a global solution. The ideal way to tackle this problem is on an internationally agreed basis through the OECD Base Erosion and Profit Shifting (BEPS) initiative.

2017/09/29
Committee: ECON

Brian HAYES, Esther DE LANGE, Gunnar HÖKMARK, Frank ENGEL

Proposal for a directive
Recital 6 a (new)

(6a) Taxing the digital economy at a global level has been a number one priority in the OECD BEPS Action Plan. Therefore, any attempt made to impose a new tax on the digital economy at EU level could put Europe at a mismatch to the rest of the world given that the digital economy is global in nature. As part of the OECD BEPS Action Plan, a report with recommendations on taxing the digital economy at a global level will be published in Spring 2018; any decision to plan for a tax on the digital economy at an EU level in advance of this report would be unnecessary and premature.

2017/09/29
Committee: ECON

Esther DE LANGE, Gunnar HÖKMARK

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

Brian HAYES, Esther DE LANGE, Gunnar HÖKMARK, Frank ENGEL

Proposal for a directive
Recital 21

(21) Since the objectives of this Directive, namely to improve the functioning of the internal market through countering practices of international tax avoidance and to facilitate businesses in expanding across borders within the Union, cannot be sufficiently achieved by the Member States acting individually and in a disparate fashion because coordinated action is necessary to obtain these objectives, but can rather, by reason of the fact that the Directive targets inefficiencies of the internal market that originate in the interaction between disparate national tax rules which impact on the internal market and discourage cross-border activity, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives, especially considering that its mandatory scope is limited to groups beyond a certain size.deleted

2017/09/29
Committee: ECON

Brian HAYES, Esther DE LANGE, Gunnar HÖKMARK, Frank ENGEL

Proposal for a directive
Recital 22 a (new)

(22a) It should be acknowledged that seven Member State national parliaments have issued reasoned opinions to state that this legislative act does not comply with the principle of subsidiarity as defined in Article 5(3) TEU.

2017/09/29
Committee: ECON

Brian HAYES, Gunnar HÖKMARK, Frank ENGEL

Proposal for a directive
Article 1 – paragraph 1

1. This Directive establishes an optional system of a common base for the taxation of c~~ertain c~~ompanies in the Union and lays down rules for the calculation of that base.

2017/09/29
Committee: ECON

Brian HAYES, Gunnar HÖKMARK, Frank ENGEL

Proposal for a directive
Article 2 – paragraph 1 – introductory part

1. The rules of this Directive ~~shall apply to~~may be applied by a company that is established under the laws of a Member State, including its permanent establishments in other Member States, where the company meets all of the following conditions:

2017/09/29
Committee: ECON

Brian HAYES, Gunnar HÖKMARK, Frank ENGEL

Proposal for a directive
Article 2 – paragraph 1 – point c

(c) it belongs to a consolidated group for financial accounting purposes with a total consolidated group revenue that exceeded EUR 750 000 000 during the financial year preceding the relevant financial year;deleted

2017/09/29
Committee: ECON

Brian HAYES, Gunnar HÖKMARK, Frank ENGEL

Proposal for a directive
Article 2 – paragraph 2 – subparagraph 1

This Directive ~~shall~~may also be appl~~y to~~ied by a company that is established under the laws of a third country in respect of its permanent establishments situated in one or more Member State where the company meets the conditions laid down in points (b) toand (d) of paragraph 1.

2017/09/29
Committee: ECON

Brian HAYES, Gunnar HÖKMARK, Frank ENGEL

Proposal for a directive
Article 2 – paragraph 3

3. A company that meets the conditions of points (a) and (b) of paragraph 1, but does not meet the conditions of points (c) or (d) of that paragraph, may opt, including for its permanent establishments situated in other Member States, to apply the rules of this Directive for a period of five tax years. That period shall automatically be extended for successive terms of five tax years, unless there is a notice of termination as referred to in Article 65(3). The conditions under points (a) and (b) of paragraph 1 shall be met each time the extension takes place.deleted

2017/09/29
Committee: ECON

Esther DE LANGE, Gunnar HÖKMARK

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

(c) proceeds from a disposal of shares, provided that the taxpayer has maintained a minimum holding of 10 % in the capital or 10 % of the voting rights of the company ~~during the 12 months preceding the disposal~~, with the exception of proceeds resulting from a disposal of shares held for trading as referred to in Article 21(3) and of shares held by life insurance undertakings in accordance with point (b) of Article 28;

2017/09/29
Committee: ECON

Esther DE LANGE, Brian HAYES, Gunnar HÖKMARK

Proposal for a directive
Article 9 – paragraph 2

2. The expenses referred to in 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 - in accordance with the OECD's Modified Nexus Approach for IP regimes - and costs incurred in raising equity or debt for the purposes of the business.

2017/09/29
Committee: ECON

Esther DE LANGE, Brian HAYES, Gunnar HÖKMARK

Proposal for a directive
Article 9 – paragraph 3

~~3. In addition to the amounts which are deductible as costs for research and developmen~~deleted it ins 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 derogation from 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 the enterprise either starts, or is liable to tax for, its economic activity; (c) merger; (d) enterprises.n unlisted enterprise with it has not been registered for it has not been formed through a it does not have any associated

2017/09/29
Committee: ECON

Esther DE LANGE, Brian HAYES, Gunnar HÖKMARK

Proposal for a directive
Article 11

~~[...]~~deleted

2017/09/29
Committee: ECON

Esther DE LANGE, Gunnar HÖKMARK

Proposal for a directive
Article 42

1. profitable after having deducted its own losses pursuant to Article 41 may additionally deduct losses incurred, in the same tax year, by its immediate qualifying subsidiaries, as referred to in Article 3(1), or by permanent establishment(s) situated in other Member States. This loss relief shall be given for a limited period of time in accordance with paragraphs 3 and 4 of this Article. 2. proportion to the holding of the resident taxpayer in its qualifying subsidiaries as referred to in Article 3(1) and full for permanent establishments. In no case shall the reduction of the tax base of the resident taxpayer result in a negative amount. 3. back to its tax base, up to the amount previously deducted as a loss, any subsequent profits made by its qualifying subsidiaries as referred to in Article 3(1) or by its permanent establishments. 4. paragraphs 1 and 2 shall automatically be reincorporated into the tax base of the resident taxpayer in any of the following circumstances: (a) year after the losses became deductible, no profit has been reincorporated or tArticle 42 deleted Loss relief and recapture A resident taxpayer that is still The deduction shall be in The resident taxpayer shall add Losses deducted pursuant to where, at the end of the fifth tax whe reincorporated profits do not correspond to the full amount of losses deducted; (b) referred to in Article 3(1) is sold, wound up or transformed into a permanent establishment; (c) establishment is sold, wound up or transformed into a the qualifying subsidiary~~; (d)~~ as where the p~~arent company no longer fulfils the requirements of Article 3(1).~~ermanent

2017/09/29
Committee: ECON

Esther DE LANGE, Gunnar HÖKMARK

Proposal for a directive
Article 53

1. (c) and (d) of Article 8, a taxpayer shall not be exempt from tax on foreign income that the taxpayer received as a profit distribution from an entity in a third country or as proceeds from the disposal of shares held in an entity in a third country where that entity in its country of tax residence is subject to a statutory corporate tax rate lower than half of the statutory tax rate that the taxpayer would have been subject to, in connection with such foreign income, in the Member State of its residence for tax purposes. The first subparagraph shall not apply where a convention for the avoidance of double taxation between the Member State in which the taxpayer is resident for tax purposes and the third country where that entity is resident for tax purposes does not allow switching over from a tax exemption to taxing the designated categories of foreign income. 2. taxpayer shall be subject to tax on the foreign income with a deduction of the tax paid in the third country from its tax liability in the Member State where it is resident for tax purposes. The deduction shall not exceed the amount of tax, as computed before the deduction, which is attributable to the income that may be taxed. 3. from the scope of this Article in the event of a disposal of shares in an entity that has its residence for tax purposes in a third country.Article 53 deleted Switch-over By way of derogation from points Where paragraph 1 applies, the Member States shall exclude losses

2017/09/29
Committee: ECON

Brian HAYES, Gunnar HÖKMARK, Frank ENGEL

Proposal for a directive
Article 70 – paragraph 1 – subparagraph 1

Member States shall adopt and publish, by 31st December 201823 at the latest, the laws, regulations and administrative provisions necessary to comply with this Directive. They shall forthwith communicate to the Commission the text of those provisions.

2017/09/29
Committee: ECON

Brian HAYES, Gunnar HÖKMARK, Frank ENGEL

Proposal for a directive
Article 70 – paragraph 1 – subparagraph 2

They shall apply those provisions from 1st January 201924.

2017/09/29
Committee: ECON

32 Amendments of Gunnar HÖKMARK related to 2016/0337(CNS)

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