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The new Commission proposals keep the same aim as the initial 2011 CCCTB proposal: subjecting companies groups with a taxable presence in at least one Member State to a single set of rules for calculating their tax base across the EU, and ultimately making them accountable to a single tax administration, the so called 'one-stop-shop'. What has changed however is the two-staged approach, leaving consolidation for once the elements of the first stage 'CCTB' will be politically agreed. The CCTB lays down the rules for computing the tax base of companies and permanent establishments in the EU, as well as rules against debt versus equity bias and deduction for research and development (R&D).
In addition, the chosen approach –for political reasons- leaves the consolidation element to the second stage approach, described in a separate directive.ACCA would warn however, that without consolidation, and against a backdrop of inconsistent loss relief rules across the union, the early introduction of the common base will do little more than disrupt businesses’ efforts to comply with local tax rules.
Regarding the tax base, all revenues will be taxable unless expressly exempted, namely to prevent the double taxation of foreign direct investment. To support innovation in the economy, a super-deduction for R&D costs is also added to the already generous R&D regime of the 2011proposal. On the issue of permanent establishment, the revised definition covers only permanent establishments within the EU and belonging to a taxpayer who is resident for tax purposes within the EU, to ensure common understanding from all concerned taxpayers and to exclude mismatch possibilities due to divergent definitions.
The new CCTB proposal also retains the 2011 provision that the companies may carry over their losses indefinitely from one year to the next, meaning that only real income is taxed. ACCA welcomes the clarification that losses can be carried forward in perpetuity, which will simplify the position for groups within the CCTB.
The stage-two proposal, for its part, deals with the cross-border consolidation of the tax results amongst members of the same group. It proposes that there would be just one taxable result within a single group. This taxable result would then be divided between the countries in which the company operates on the basis of a mathematical formula giving equal weight to factors such as turnover, labour force and assets held in the country where the group operates.