14 October 2011

ECON Committee: First exchange of views on the Common Consolidated Corporate Tax Base (CCCTB)

Ms Thyssen said that companies opting in to this system would be subject to one single administration. She enumerated some other advantages such as the enhancement of the Internal Market, the consolidation of profits and losses, the reduction of administrative burden, the avoidance of double taxation, the reduction of mediation between different administrations, improved market transparency, the calculation of profits based in one system and its distribution to all Member States in which companies were active, based on the equal weighting of all factors (assets, employment and turnover).

She also noted that Member States would determine the tax rate whereas the European Union would establish the base. She raised the possibility of using the Common Consolidated Corporate Tax Base (CCCTB) as an initial step towards convergence of tax rates and as an own resource but reassured the Committee that both ideas were not part of the present proposal. She said that her opinion would be based on Article 115 (direct taxation) and called on the European Parliament to adopt a strong common stance in order to influence the decision-making process in the Council of Ministers which would require unanimity.

Ms Ferreira (S&D, PT), on behalf of Mr Hoang Ngoc (S&D, FR), welcomed CCCTB as a first step towards fiscal harmonisation but considered the Commission proposal insufficiently ambitious since it did not address tax evasion and fiscal dumping, the proper balance between corporate and labour taxation or the improvement of cross-border fiscal control guarantees.

She recognised the importance of financial reporting and favoured the test of materiality instead of exempting small and medium-sized enterprises from providing information for a certain period of time.

Finally, she defended a compulsory CCCTB, the introduction of a minimum taxation threshold and a European fiscal snake with the setting of a minimum rate in order to reduce the gap between European corporate tax rates and limit the distortions in the allocation of capital and profits between Member States. Ms Goulard (ALDE, FR) thought that the Commission proposal was a step in the right direction and that the Internal Market had to be preserved.

Mr Strejček (ECR, CZ) welcomed the optional character of CCCTB and warned against the creation of an additional system which would increase bureaucratic costs and have negative consequences for Member States regarding the redistribution of profits between mother and daughter companies.

Mr Giegold (Greens/EFA, DE), on behalf of Mr Lamberts (Greens/EFA, BE), noted that although the proposal was meant for the 27 Member States it was not likely to receive unanimous support, which could lead to a non-community approach, and he therefore proposed focusing on the institutional context. He noted that because of the existence of the common market there were no grounds for the primacy of national sovereignty as regards corporate taxation. He supported the harmonisation of the tax base and minimum harmonisation of the tax rate. He also favoured the compulsory application of the proposal, especially to large companies, to avoid complexity and additional administrative costs.

Finally he suggested that a move towards full deductibility of losses had to be accompanied by full harmonisation of rules and the effective supervision of the creation of losses to avoid harmful tax competition.

The Commission representative reasserted that the proposal was intended for all 27 Member States and said that the possibility of enhanced cooperation should be regarded as a method of last resort, adding that the advantages of the CCCTB depended on which Member States, and how many, decided to adopt it.

Consideration of amendments: 29 November 2011

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