The EU Commissioner for Economic and Financial Affairs, Taxation and Customs reiterated the resolve of the European Commission to revive the long-stalled plans for a Common Consolidated Corporate Tax Base (CCCTB) within the European Union. According to the Commissioner, CCCTB would largely resolve the issue of profit shifting and harmful tax competition, and ensure a level-playing field for all enterprises active in the EU.
The Commission will have a two-pronged approach to CCCTB. Firstly, it will put forward a proposal in the fall of 2016 regarding the determination of a Common Corporate Tax Base (CCTB) for businesses across the EU. The CCTB will act as a uniform rule for the determination of taxable income of companies across the EU and, in contrast to proposals made in 2011, will be mandatory at least for larger multinationals. The establishment of uniform rules for determining taxable income is intended to do away with national rules resulting in the minimization of taxable income and, thus, in harmful tax competition. Moreover, the uniform rules would introduce across the EU a number of the best practices recommended under the OECD BEPS initiative, including the updated PE rules and an improved CFC regime.
Once the CCTB is approved, the Commission will then submit proposals for a Common Consolidated Corporate Tax Base (CCCTB). Under the CCCTB, profits and losses of businesses active in the EU, as determined in accordance with the uniform CCTB rules, would be consolidated and allocated to the various Member States pursuant to a number of allocation keys such as sales, assets or personnel. In addition to eliminating most of the opportunities for profit shifting through TP arrangements, the CCCTB would effectively allow the compensation of losses suffered in one Member State against profits earned in other Member States.