CCCTB
On 17 June 2015, the Commission published an Action Plan for “A Fair and Efficient Corporate Tax System in the European Union: 5 Key Areas for Action” to fundamentally reform corporate taxation in the EU. The Action Plan sets out a series of initiatives to tackle tax avoidance, secure sustainable revenues and strengthen the Single Market for businesses.
At the heart of the action plan lies the relaunch of the Common Consolidated Corporate Tax Base (CCCTB). The CCCTB was first published by the Commission back in 2011, with the aim of significantly reducing the administrative burden, compliance costs and legal uncertainties of businesses in the EU. At the time, the Institute took part in an extensive programme of engagement on CCCTB. Ultimately, consensus could not be reached by Member States.
The Commission held a public consultation at the end of 2015 to help identify the key measures for inclusion in the re-launched CCCTB. The Commission invited feedback on the extent to which a CCCTB could function as an effective tool against aggressive tax planning and on the criteria that could determine which companies should be subject to a mandatory CCCTB.
The Commission relaunched CCCTB in October 2016
Proposing that if introduced, it would be done through a two-step process:
- Member States would agree a Common Corporate Tax Base, or CCTB, and (if that was agreed)
- Member States would move ahead to agree a method of consolidation, CCCTB.
The CCCTB would be mandatory for multinationals, with annual consolidated turnover above €750m and have taxable operations in any of the EU Member States. Smaller companies could opt in to the regime.
In December 2016, the Joint Committee on Finance, Public Expenditure and Reform and Taoiseach issued a Reasoned Opinion that the proposals for a CCTB/CCCTB breach the principle of subsidiarity – that the EU shall act “only if and insofar as the objectives of the proposed action cannot be sufficiently achieved by the Member States.”
Despite extensive discussions, the views of Member States’ delegations regarding key components of the proposals continue to diverge.
In May 2021, the European Commission published a new Communication on Business Taxation for the 21st century. The Communication sets out five actions for corporate tax reform. The fifth action states that by 2023, the Commission will present a new framework for business taxation in the EU, named the Business in Europe: Framework for Income Taxation (BEFIT). It is intended that this new proposal would replace the existing proposal for a CCCTB. The BEFIT proposal would provide for a single corporate tax rulebook for the EU. If implemented, it would consolidate the profits of EU members of a multinational group into a single tax base which would be allocated to Member States using a formula, to be taxed at national corporate tax rates.
Irish Tax Institute Analysis
European Commission and Parliament Documents and Links
European Commission’s dedicated webpage on CCCTB
May 2021 – Communication on Business Taxation for the 21st century
June 2019 – ECOFIN Report to the European Council on tax issues
March 2018 – European Parliament legislative resolution on the proposal for a Council directive on CCCTB
March 2018 – Report on the proposal for a Council directive on a CCCTB by Mr Alain Lamassoure, MEP
2011 – Questions and Answers on the CCCTB
2011 Research
The Department of Finance Commissioned ‘Study on the Economic and Budgetary Impact on the introduction of a Common Consolidated Corporate Tax Base in the European Union‘