December 31st, 2010 | Published in German Tax News
Companies operating in more than one Member State in the European Union still have to face various tax obstacles.
The European Commission believes that these obstacles can only be overcome in a systematic way by providing companies with a consolidated corporate tax base for their EU-wide activities.
Amongst others, the Commission´s Directorate-General responsible for Taxation and the Customs Union is currently working on the common consolidated tax base (CCCTB) to remove the tax obstacles which companies face in the European Union’s internal market.
This strategy was concluded in 2001. Its practical implementation is accomplished, together with other European Institutions, by the work of the Common Consolidated Corporate Tax Base Working Group (CCCTB WG).
The working group’s main functions are:
• to examine from a technical perspective the definition of a common consolidated tax base for companies operating in the EU.
• to discuss the basic tax principles,
• to discuss the fundamental structural elements of a common consolidated tax base and
• to discuss other necessary technical details such as a mechanism for ‘sharing’ a consolidated tax base between Member States.
One part of the working group‘s function is regularly holding meetings to discuss work results and developments with regard to the CCCTB.
The most recent meeting, being part of the consultation process with European member states and key stakeholders on the CCCTB, was held as a workshop in Brussels on 20 October 2010.
The workshop focused on four papers, which were presented and discussed in terms of the workshop:
1. Eligibility Tests for Companies and Definition of a CCCTB Group
2. Business Reorganisation with regard to CCCTB
3. Transactions and dealings between the Group and entities outside the Group
4. Anti-Abuse Rules in the CCCTB
Meanwhile, several business organizations, which participated in the workshop, provided written statements on the working papers, which pointed out the following objections:
1. Concerning the definition of the group members and the coverage, some speakers were looking for a wide and others for a narrow scope. In addition, there is probably a need for simplification.
2. Concerning the business reorganizations, speakers expressed concerns about the use of a proxy for the valuing of intangibles.
3. The CCCTB intercompany transaction rules should be recognized for VAT purposes. Under no circumstances should transfer pricing issues in the VAT area be allowed to undermine the benefits achieved regarding income taxation within the CCCTB group.
4. Concerning the entities outside of the group, there is an interaction with double tax conventions. Additionally, there is a need for clarification as to whether the reference to third country companies is understood either as companies outside of the CCCTB area or as outside the EU. A clear and consistent definition is required.
Further written statements by business organizations are expected.
The Commission Services will consider the outcome of the workshop and any written statements submitted by the participating in terms of composition of a draft proposal for the CCCTB. It is planned to submit such draft proposal to the European College of Commissioner’s for acceptance in the first quarter of 2011.
Details on the workshop can be found under http://ec.europa.eu/taxation_customs/resources/documents/taxation/company_tax/common_tax_base/summ-record-ccctb-workshop_20-10-2010.pdf