Awaiting committee decision
Next event: Vote scheduled in committee, 1st reading/single reading 2018/02/21 more...
- Indicative plenary sitting date, 1st reading/single reading 2018/01/16
Role | Committee | Rapporteur | Shadows |
---|---|---|---|
Lead | ECON | LAMASSOURE Alain (EPP) | BAYET Hugues (S&D), LOONES Sander (ECR), WIERINCK Lieve (ALDE), CARTHY Matt (GUE/NGL), DE MASI Fabio (GUE/NGL), JOLY Eva (Verts/ALE), VALLI Marco (EFD), KAPPEL Barbara (ENF) |
Opinion | IMCO | ||
Opinion | JURI | REGNER Evelyn (S&D) |
Legal Basis TFEU 115
Activites
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2018/02/21
Vote scheduled in committee, 1st reading/single reading
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2018/01/16
Indicative plenary sitting date, 1st reading/single reading
- #3506
- 2016/12/06 Council Meeting
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2016/11/24
Committee referral announced in Parliament, 1st reading/single reading
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2016/10/25
Legislative proposal published
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COM(2016)0683
summary
PURPOSE: to present a proposal for a re-launched Common Consolidated Corporate Tax Base (CCCTB) to ensure a corporate tax system that encourages growth and fairness in the internal market. PROPOSED ACT: Council Directive. ROLE OF THE EUROPEAN PARLIAMENT: the Council adopts the act after consulting Parliament but without being obliged to follow the latter’s opinion. BACKGROUND: currently, businesses with cross-border activity have to comply with up to 28 divergent corporate tax systems. Generally, corporate income is taxed at national level, but the economic environment has become more globalised, mobile and digital. Business models and corporate structures are more complex, making it easier to shift profits. In March 2011, the Commission proposed a directive for a Common Consolidated Corporate Tax Base (CCCTB). The proposal, which is still pending in Council, aims to provide companies with a single set of corporate tax rules for doing business across the internal market, thereby facilitating their cross-border activity. The discussions in Council since 2011 have shown that the CCCTB proposal is unlikely to get adopted, in its entirety, without a staged approach. The Commission, in its action plan of June 2015, advocated a step-by-step approach to the CCCTB. 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, the Commission considers it necessary to divide the ambitious CCCTB initiative into two separate proposals. It proposes, at a first stage, rules on a common corporate tax base, before addressing, at a second stage, the issue of consolidation. This proposal for a Directive focuses on the so-called 'second step' of the staged approach (consolidation), i.e. after the elements of the common base have politically been agreed. Until this is achieved, the 2011 proposal for a CCCTB will remain pending for examination in Council. The Commission will submit the two proposals, i.e. for a common corporate tax base and a CCCTB, simultaneously and as part of a single initiative. The proposal of 2011 will be withdrawn at the same time as the Commission adopts the new proposals. This initiative on re-launching the CCCTB features prominently in the Commission’s larger project in the field of fairer taxation. It will be presented at the same time as the proposal for a directive on hybrid mismatches involving third countries (which will amend the Directive tax avoidance) and a directive on dispute settlement. IMPACT ASSESSMENT: the main policy option that has been considered is a proposal for a common consolidated corporate tax base. A key choice to be made relates to the scope of such a tax base, i.e. to whom it would apply. Assessing the different options has led to a preferred option: a CCCTB mandatory for large companies, equipped with an 'Allowance for Growth and Investment' and with an allowance for research and development expenses. The anticipated economic benefits of the proposal are positive, leading to an increase in investment and employment of up to 3.4% and 0.6%, respectively. Overall, growth would increase by up to 1.2%. CONTENT: the proposal is the 'second step' in a staged approach towards an EU-wide corporate tax system with cross-border consolidation of the tax results amongst members of the same group. Scope: in contrast to the proposal of 2011, which laid down an optional system for all, this proposal will be mandatory for groups of companies beyond a certain size (whose consolidated turnover is above EUR 750 million). The threshold is in line with the approach taken in other EU initiatives to counter tax avoidance. At the same time, the common rules will be available, as an option, to a wide scope of groups that fall short of the size threshold. This allows SMEs and micro-enterprises the opportunity to benefit from the advantages of a CCCTB without making it compulsory for this set of companies. Definition of group: (unchanged compared to the proposal of 2011): eligibility for the consolidated tax group will be determined in accordance with a two-part test based on (i) control (more than 50% of voting rights) and (ii) ownership (more than 75 % of equity) or rights to profits (more than 75 % of rights giving entitlement to profit). These thresholds must be met throughout the tax year; otherwise, the failing company will have to leave the group immediately. Business reorganisations and taxation of losses and unrealised capital gains: the proposed framework chiefly involves the treatment of losses and unrealised capital gains on entering and leaving the group. There are rules to deal with unrealised capital gains which have accrued to fixed assets where the assets are disposed of within a short period after their entry into, or exit from, a group. A Member State (in the case of an entry into a group) or the group (in the case of an exit from a group) are given the right to tax underlying capital gains to the extent those were created in their tax jurisdiction. Moreover, the tax treatment of capital gains engrained in self-generated intangible assets calls for a customised approach, which will involve assessing them on the basis of a suitable proxy, that is to say, research and development, and marketing and advertising costs over a specified period. Withholding taxes (unchanged compared to the proposal of 2011): the proceeds of withholding taxes charged on interest and royalty payments made by taxpayers will be shared according to the formula of that tax year. Withholding taxes charged on dividends will not be shared. Preventing circumvention of tax exemptions (unchanged compared to the proposal of 2011): the tax exemption in favour of disposals of shares will be disallowed if this is illegitimately extended to sales of assets other than shares. Formula for apportionment: one of the principal elements of the proposal is the formulary apportionment, comprised of three equally weighted factors (i.e. labour, assets and sales by destination). This combination reflects a balanced approach to distributing taxable profits amongst eligible Member States. Administrative procedures: in contrast to the proposal of 2011, the common administrative rules are limited to the consolidated group. Groups will deal with a single tax administration in the EU ('principal tax authority' or 'one-stop-shop'.) This will be based in the Member State where the parent company of the group ('principal taxpayer') is resident for tax purposes. Audits will be initiated and coordinated by the principal tax authority. DELEGATED ACTS: the proposal contains provisions empowering the Commission to adopt delegated acts in accordance with Article 290 of the Treaty of the Functioning of the European Union.
- DG {'url': 'http://ec.europa.eu/info/departments/taxation-and-customs-union_en', 'title': 'Taxation and Customs Union'}, MOSCOVICI Pierre
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COM(2016)0683
summary
Documents
- Legislative proposal published: COM(2016)0683
- Debate in Council: 3506
Amendments | Dossier |
30 |
2016/0336(CNS)
2017/05/15
JURI
30 amendments...
Amendment 16 #
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.
Amendment 17 #
Proposal for a directive Recital 1 (1)
Amendment 18 #
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
Amendment 19 #
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 aggressive and 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 these problems should therefore address both these types of market deficiencies.
Amendment 20 #
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. A corporate tax system which treats the Union as a single market for the purpose of computing the corporate tax base of companies would increase transparency of activities of multinational enterprises and enable the public to assess their impact on the economy. It is therefore necessary to provide for mechanisms that
Amendment 21 #
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
Amendment 22 #
Proposal for a directive Recital 4 a (new) (4a) In this way, the CCCTB is in line with Commission efforts to achieve fairer and more efficient taxation, being largely complementary to EU company law; it is also is broadly in line with projects such as the Capital Markets Union and various initiatives intended to ensure tax transparency, promote the exchange of information and combat money laundering.
Amendment 23 #
Proposal for a directive Recital 5 (5)
Amendment 24 #
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, while exempting micro- enterprises and SMEs. For that purpose, a size-
Amendment 25 #
Proposal for a directive Recital 5 a (new) (5a) In a context where the emergence of the digital economy is tending to call into question the relevance of traditional tax rules, it is desirable to take into account, for purposes of consolidating the base of a taxpayer, its turnover installed in a fixed manner in the Member State or Member States within which the taxpayer has no physical structure, extending the concept of ‘permanent establishment’ to include virtual establishments.
Amendment 26 #
Proposal for a directive Recital 5 a (new) (5a) Given the digital change in the business environment, it is necessary to define and implement the concept of a ‘digital business establishment’. Companies that generate profits in a Member State without having a physical establishment there should be treated in the same way as companies that do have a physical establishment in that Member State. Therefore, the CCCTB should also apply to digital corporations.
Amendment 27 #
Proposal for a directive Recital 8 (8) The revenue from withholding taxes on interest and royalty payments should be shared in accordance with the formula for the apportionment of the consolidated tax base of the tax year in which the withholding tax is due, in order to compensate for the fact that interest and royalty payments would have previously led to a deduction and the benefit would have been shared by the group. The revenue from withholding taxes on dividends, however, should not be shared. Contrary to interest and royalty payments, dividends are distributed from profits which have already been subjected to corporate taxation and therefore, a dividend distribution does not involve, for group members, any benefit consisting in a deduction of business expenses. Any payments due should be paid to the Member State and not the EU;
Amendment 28 #
Proposal for a directive Recital 10 (10) The formula apportionment for the consolidated tax base should comprise three equally weighted factors, namely labour, assets and sales by destination. Those equally weighted factors should reflect a balanced approach to distributing taxable profits amongst the relevant Member States and should ensure that profits are taxed where they are actually earned. Labour and assets should therefore be allocated to the Member State where the labour is performed or the assets are located, and would thereby give appropriate weight to the interests of the Member State of origin, whilst sales should be allocated to the Member State of destination of the goods or services. To account for differences in the levels of wages across the Union and thus allow for a fair distribution of the consolidated tax base, the labour factor should comprise both payroll and the number of employees (i.e. each item counting for half). The asset factor, on the other hand, should comprise all fixed tangible assets, but not intangible and financial assets because of their mobile nature and the resulting risk that the rules of this Directive could be circumvented. Where, due to exceptional circumstances, the outcome of the apportionment does not fairly represent the extent of business activity, a safeguard clause should provide for an alternative method of income allocation. On the other hand, these equally weighted factors are more resilient to aggressive tax planning practices than the widespread transfer pricing methods for allocating profit. In this way, loopholes between national tax systems, in particular transfer pricing, which accounts for around 70% of all profit shifting in the EU, could be eliminated and a major step taken towards a fair, efficient and transparent tax system.
Amendment 29 #
Proposal for a directive Recital 10 (10) The formula apportionment for the consolidated tax base should comprise three equally weighted factors, namely labour, assets and sales by destination. Those equally weighted factors should reflect a balanced approach to distributing taxable profits amongst the relevant Member States and should ensure that profits are taxed where they are actually earned, including in the case of activities in the digital economy sector which do not necessarily require a fixed place in a Member State in order to carry on an activity there. Labour and assets should therefore be allocated to the Member State where the labour is performed or the assets are located, and would thereby give appropriate weight to the interests of the Member State of origin, whilst sales should be allocated to the Member State of destination of the goods or services. To account for differences in the levels of wages across the Union and thus allow for a fair distribution of the consolidated tax base, the labour factor should comprise both payroll and the number of employees (i.e. each item counting for half). The asset factor, on the other hand, should comprise all fixed tangible assets, but not intangible and financial assets because of their mobile nature and the resulting risk that the rules of this Directive could be circumvented. Where, due to exceptional circumstances, the outcome of the apportionment does not fairly represent the extent of business activity, a safeguard clause should provide for an alternative method of income allocation.
Amendment 30 #
Proposal for a directive Recital 10 (10) The formula apportionment for the consolidated tax base should comprise three equally weighted factors, namely labour, assets and sales by destination. Those equally weighted factors should reflect a balanced approach to distributing taxable profits amongst the relevant Member States and not the EU and should ensure that profits are taxed where they are actually earned. Labour and assets should therefore be allocated to the Member State and not the EU where the labour is performed or the assets are located, and would thereby give appropriate weight to the interests of the Member State of origin, whilst sales should be allocated to the Member State of destination of the goods or services.
Amendment 31 #
Proposal for a directive Recital 18 (18) 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. In fact, the envisaged measures do not go further than harmonising the corporate tax base, which is a prerequisite for curbing identified obstacles that distort the internal market. Furthermore, this stage- by-stage approach entitles Member States to determine their desired amount of tax revenues in order to meet their budgetary policy targets. At the same time, it does not affect Member States' right to set their own profits tax rate.
Amendment 32 #
Proposal for a directive Article 1 – paragraph 2 2. A company that applies the rules of this Directive
Amendment 33 #
Proposal for a directive Article 2 – paragraph 1 – introductory part 1. The rules of this Directive shall apply to a company that is established under the laws of a Member State, including its permanent and digital business establishments in other Member States, where the company meets all of the following conditions:
Amendment 34 #
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 (or equivalent in domestic currency) during the financial year preceding the relevant financial year;
Amendment 35 #
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
Amendment 36 #
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
Amendment 37 #
Proposal for a directive Article 2 – paragraph 2 – subparagraph 1 This Directive shall also apply to a company that is established under the laws of a third country in respect of its permanent establishments situated in one or more Member States, and in relation to turnover installed in a fixed manner in one or more Member States, where the company meets the conditions laid down in points (b) to (d) of paragraph 1.
Amendment 38 #
Proposal for a directive Article 2 – paragraph 2 – subparagraph 1 This Directive shall also apply to a company that is established under the laws of a third country in respect of its permanent establishments situated in one or more Member States, and in relation to revenues otherwise accrued in a Member State, where the company meets the conditions laid down in points (b) to (d) of paragraph 1.
Amendment 39 #
Proposal for a directive Article 2 – paragraph 2 a (new) 2a. This Directive shall also apply to businesses established under the laws of a third country in respect of their digital business establishments that are specifically directed towards consumers or businesses in a Member State or that principally receive their revenue from activity in a Member State, where the business meets the conditions laid down in points (b) to (d) of paragraph 1. For the purpose of ascertaining whether a digital establishment is specifically directed towards consumers or businesses in a Member State, the physical locations of the consumers or users and suppliers of the goods and services provided shall be taken into account, in accordance with the OECD’s BEPS Action 1. If these cannot be ascertained, regard shall be had to whether the establishment is conducting its business under the top level domain of the Member State or of the Union or, in relation to mobile- application-based businesses, is distributing its application via the Member State-specific part of a mobile application distribution centre or whether the business is conducted under a domain which – for example as a result of the use of names of Member States, regions or towns – makes it clear that the establishment is directed towards consumers or businesses in a Member State, or the business activity is subject to General Terms and Conditions applicable specifically for the European Union or a Member State, or the web presence of the business provides advertising space specifically aimed at consumers and businesses in a Member State.
Amendment 40 #
Proposal for a directive Article 3 – paragraph 1 – point 28 a (new) (28a) ‘digital establishment’ means - as defined by the OECD’s BEPS Action 1 - an establishment which is specifically directed towards consumers or businesses in a Member State, with due regard for the physical locations of the consumers or users and of suppliers of the goods and services provided. If these cannot be ascertained, regard shall be had to whether the establishment is conducting its business under the top level domain of the Member State or of the Union or, in relation to mobile-application-based businesses, is distributing its application via the Member State-specific part of a mobile application distribution centre or whether the business is conducted under a domain which – for example as a result of the use of names of Member States, regions or towns – makes it clear that the establishment is directed towards consumers or businesses in a Member State, or the business activity is subject to General Terms and Conditions applicable specifically for the European Union or a Member State, or the web presence of the business offers advertising space specifically aimed at consumers and businesses in a Member State.
Amendment 41 #
Proposal for a directive Article 3 – paragraph 1 – point 28 a (new) (28a) ‘Digital business establishment’ means an establishment specifically directed towards consumers and businesses in a Member State and, to that end, account shall be taken of whether the activity is being carried out in the top- level domain of the Member State or of the Union and whether mobile applications are being distributed through part of a distribution centre specifically intended for that purpose in the Member State concerned.
Amendment 42 #
Proposal for a directive Article 6 – paragraph 1 – point d a (new) (da) a digital business establishment.
Amendment 43 #
Proposal for a directive Article 39 – paragraph 1 The Commission may adopt acts laying down detailed rules on the calculation of the labour, asset and sales factors,
Amendment 44 #
Proposal for a directive Article 79 – paragraph 1 The Commission shall, five years after the entry into force of this Directive, review its application and report to the Council and the European Parliament on the operation of this Directive. The report shall in particular include an analysis of the impact of the mechanism set up in Chapter VIII of this Directive on the apportionment of the tax bases between the Member States.
Amendment 45 #
Proposal for a directive Article 80 – paragraph 1 – subparagraph 1 Member States
source: 604.719
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