European Commission Produces New Proposals for a Common Consolidated Corporate Tax Base


The European Commission has recently produced fresh proposals for a Common Consolidated Corporate Tax Base (CCCTB) for the European Union. In its proposals for two new Council Directives1, submitted to the European Parliament and the Council of the European Union on October 25, the European Commission is “re-launching” an ambitious initiative to harmonize the rules by which companies calculate their taxable profits across the 28 Member States of the European Union.

Broadly speaking, the CCCTB contains two key elements, namely the creation of a standard set of rules so that each company in the EU calculates its taxable profits in the same way, a “common tax base”, and the introduction of a new formulary apportionment approach to allocating taxable profits amongst Member States based on a weighting of labor, assets and sales, or “consolidation”.

A previous proposal for CCCTB was launched in 2011, but failed to gain the support necessary for adoption by Member States. Accordingly, in its Action Plan on Corporate Taxation2, published June 17, 2015, the European Commission announced it is to follow a two-step approach to agreeing the initiative, firstly focusing on securing agreement on a common tax base, to be followed by work on consolidation. The European Commission is also proposing that CCCTB be mandatory for multi-national companies with taxable profits of more than EUR750 million. 

The new proposals for CCCTB will now go to the Council of the European Union and the European Parliament for consideration, with negotiations at the Council expected to commence in 2017.

By Hew Donald, Editor, Bloomberg BNA

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[1] COM (2016) 685: Proposal for a Council Directive on a Common Corporate Tax Base, http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=CELEX:52016PC0685; COM (2016) 683: Proposal for a Council Directive on a Common Consolidated Corporate Tax Base (CCCTB), http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2016:683:FIN

[2] COM (2015) 302 final: A Fair and Efficient Corporate Tax System in the European Union: 5 Key Areas for Action, http://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/taxation/company_tax/fairer_corporate_taxation/com_2015_302_en.pdf