UK and International Tax news

EC Relaunches CCCTB

Friday 28th October 2016

The EC has recently announced a relaunch of a common system for calculating the tax base of businesses operating in the EU which was first tabled in 2011.

The proposed Common Consolidated Corporate Tax Base (CCCTB) would allow companies to benefit from a “one-stop-shop” system for filing their tax returns and groups would be able to consolidate all their profits and losses across the EU.  Member states would retain their full sovereign right to set their own corporate tax rate.

The CCCTB was designed to strengthen the single market for businesses and whilst member states had made some progress on the core elements, they were unable to reach a final agreement. Having sought the views of member states, businesses, civil society and the European Parliament, the EC now proposes to bolster the pro-business elements of the previous proposal to help cross-border companies cut costs, red tape and to support innovation.

The EC expects the re launched CCCTB will create a level playing field for multinationals in Europe by closing off avenues used for tax avoidance with two further proposals which aim at improving the current system for dispute resolution on double taxation in the EU and to bolster existing anti-abuse rules.

Compared to the previous proposal in 2011, the new corporate taxation system will:

– be mandatory for large multinational groups, which have the greatest capacity for aggressive tax planning, making certain that companies with global revenues exceeding EUR 750m a year will be taxed where they really make their profits.

– tackle loopholes currently associated with profit-shifting for tax purposes.

– encourage companies to finance their activities through equity and by tapping into markets rather than turning to debt.

– support innovation through tax incentives for R&D activities, which are linked to real economic activity.

Corporate tax rates are not covered by the CCCTB, which will remain an area of national sovereignty. However, the EC considers that the CCCTB will create a more transparent, efficient and fair system for calculating the tax base of cross-border companies, which will allow for the reform of corporate taxation throughout the EU.

If you would like to further details on the proposed CCCTB, please contact Keith Rushen on +44 (0)20 7486 2378.

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