Sharing the Benefits of the EU's Common Consolidated Corporate Tax Base Within Corporate Groups PDF Download

Author: Matthias Petutschnig
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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Book Description
One of the main features of the common consolidated corporate tax base (CCCTB) Draft Directive, the formulary apportionment of the consolidated group income, leads to a significant change in corporate income taxation paradigms. Currently, corporations are taxed on a separate entity basis using the arm's length principle to evaluate intra-group transactions. Similarly company law uses a separate entity approach with regard to transactions between related parties. The CCCTB Draft Directive will regularly lead to allocation results that are explicitly not at arm's length as the arm's length principle will not be necessary anymore for tax purposes. However, without a corresponding change in company law paradigms - which is not foreseeable - the current lockstep between corporate income tax law and company law will cease to exist. Yet, not only the proposed CCCTB regime but also existing group taxation systems produce taxable outcomes that are not in accordance with the domestic company laws' single entity approaches. This article therefore analyses group taxation systems currently employed by EU Member States and shows that the vast majority of group taxation systems employ instruments to (re-)unite the results from the joint taxation with company law's separate entity approach. These accompanying mechanisms ensure a fair distribution of the advantages and disadvantages of the respective intra-group loss-offset system to all group members. However, due to various reasons, one being the fact that every group member of the CCCTB will be responsible for a share of the group's overall tax liability, another being the fact that different tax rates will apply within one CCCTB group, these currently employed mechanisms and techniques are not suitable for the CCCTB concept. Therefore this article develops a distinct mechanism to share the benefits of the CCCTB concept within the whole group. The current international debate on the suitability of the arm's length to continue as a standard for the allocation of taxing powers in intra-group transactions and the new impetus for the common tax base in some EU Member States may suggest that there is a new potential momentum to make progress in the introduction of formulary apportionment within the European Union.Full-text Paper.

Author: Michael Lang
Publisher: Edward Elgar Publishing
ISBN: 1782545425
Category : Law
Languages : en
Pages : 384

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Book Description
The book considers the impact of the CCCTB from the perspective of non-EU-based enterprises that are carrying on business in the EU through the operation of branches or subsidiaries in member states. It incorporates the perspectives of leading scholars

Author: M. Petutschnig
Publisher:
ISBN:
Category :
Languages : en
Pages :

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Book Description
Based on a thorough analysis of the formulary apportionment procedure proposed by the Common Consolidated Corporate Tax Base (CCCTB) draft directive, this article evaluates the interaction between the proposed CCCTB concept and existing/future anti-treaty shopping measures, especially Limitation on Benefits (LoB) clauses. Corporate groups that are taxed according to the CCCTB concept would regularly fail the ownership and base erosion tests of standard LoB clauses. Therefore, the treaty benefits would be denied. This interplay is especially critical for the future of tax relations between the EU Member States and the US since their bilateral treaties predominately use LoBs. The findings, however, are not limited to these relations but are of worldwide interest since OECD Base Erosion and Profit Shifting (BEPS) Action 6 proposes the introduction of a LoB Clause to the OECD Model Convention. Irrespective of the substantial legal uncertainty relating to the compatibility of LoB clauses with EU law, this article shows that both the existing LoB clause as well as that proposed by BEPS Action 6 are incompatible with the CCCTB concept. The most feasible way of bringing these two layers of corporate income tax rules into accordance with each other seems to be by way of a harmonised EU-wide approach to negotiating new and renegotiating existing tax treaties with third countries conducted by the EU Commission.

Author: Shu-Chien Chen
Publisher: Kluwer Law International B.V.
ISBN: 9403532963
Category : Law
Languages : en
Pages : 471

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Book Description
International tax regimes and practices are heavily criticized for failing to fairly levy corporate tax on giant multinational taxpayers in the current globalized and digitalized world. This important and far-seeing book demonstrates how formulary apportionment (FA) – an approach by which a multinational corporation pays each jurisdiction’s corporate tax based on the share of its worldwide income allocated to that jurisdiction – can achieve the much-sought goal of aligning value creation and taxation. The author, through an intensive analysis of the European Union’s (EU’s) Common Consolidated Corporate Tax Base (CCCTB) Directive Proposal(s) and comparison to the United States (US’s) formulary apportionment experience, shows how the perceived problems with an FA system can be overcome and lays out the necessary elements for its feasibility. With detailed attention to the debates around formulary apportionment and its theoretical foundations, the book provides a blueprint for rebuilding the normative framework for the EU’s tax reform by clearly analysing the implications of the following and more: theorising public benefits to be represented by taxation; reorganising different economic theories about tax neutrality and tax justice; advancing the comparative legal research methodology to analyse law reform by combining the functional approach and the problem-solving approach; designing the logical formulary apportionment system for digital economy; ensuring the removal of the incentive for multinationals to shift reported income to low-tax locations; reducing the tax system’s complexity and the administrative burden it imposes on firms; eliminating transfer pricing complexity for intra-firm transactions; achieving equal weighting of the sales factor, the labour factor, and the asset factor in the formula; application of ‘destination-based’ rule for attributing the sales factor; and replacing the traditional permanent establishment nexus with a ‘factor presence nexus’. The presentation incorporates extensive comparison between the EU’s formulary apportionment tax reform option and FA systems existing in the United States (US) at state level, including reference to relevant US case law and legislation. As a possible option to address the problem of base erosion and profit shifting (BEPS), formulary apportionment is gaining increasing acceptance and attention. This book will prove invaluable to taxation authorities, tax practitioners, and scholars in its deeply informed and systematic guidance on good practices and prevention of problematic experiences in establishing and implementing an effective and market-neutral FA system.

Author: Dennis Weber
Publisher: Kluwer Law International
ISBN: 9789041192332
Category : Business tax
Languages : en
Pages : 0

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Book Description
Some introductory remarks on the relaunched CCTB/CCCTB proposals from a policy perspective / Jan van de Streek -- Principles and characteristics of CCTB after the relaunch / Ronald Russo -- Depreciation rules and roll-over relief under the proposed CCTB directive / Hein Vermeulen -- Allowance for growth and investment / Stefano Grilli -- The R&D tax incentives / Paolo Arginelli -- The participation exemption / Marjaana Helminen -- Cross-border loss relief under the proposed CCTB directive / Bruno da Silva -- The arm's length standard : a blind spot in the CC(C)TB proposals / Daniel S. Smit -- Exit tax / Rita Szudoczky -- Tax avoidance and the return of CC(C)TB / Frans Vanistendael -- Interest limiation rule / Ruben Martini -- The switch-over clause / Daniel Gutmann -- The controlled foreign company regime / Werner Haslehner -- The GAAR / Markus Seiler -- Consolidation within the CCCTB / Fabian Munsterman -- Tax competition within the European Union revisited : is the relaunched CCCTB a solution? / Maarten F. de Wilde -- Procedural and administrative aspects of the CCCTB / Sjoerd Douma.

Author:
Publisher:
ISBN:
Category :
Languages : en
Pages :

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Book Description
The European Commission is currently working on a legislative draft to harmonise the corporate income tax provisions for multinational groups of companies throughout the European Union. For that purpose the European Commission has installed a working group with the mission to draft a Common Consolidated Corporate Tax Base (CCCTB) applicable for multinational companies. As the EU member states are not willing to surrender their taxing power to the supranational level of the EU each group entity2s tax base would be determined by apportionment of the group2s overall taxable income according to a predefined micro-economic factor based formula whereas the group income will be calculated by consolidating earnings beforehand separately determined by each group entity (preconsolidation income). The situs state of the particular group entity would then apply its statutory corporate tax rate on the apportioned tax base. This paper evaluates the effects of this prospective apportionment procedure on any given corporate group entity and finds that the share of the group2s income allocated to a particular entity using the apportionment formula does regularly not equal the pre-consolidation income of the respective group entity. The reasons for this regular observable deviation can be found on the one hand in the concept of the apportionment formula and on the other hand in the specifics of the definitions of the apportionment factors. (author's abstract).

Author: Christiana HJI Panayi
Publisher: Cambridge University Press
ISBN: 1107354986
Category : Law
Languages : en
Pages : 413

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Book Description
How does EU law affect Member State corporate tax systems and the cross-border activities of companies? This unique study traces the historical development of EU corporate tax law and provides an in-depth analysis of a number of issues affecting companies, groups of companies and permanent establishments. Existing legislation, soft-law and the case-law of the Court of Justice are examined. The proposed CCCTB Directive and its potential application through enhanced co-operation are also considered. In addition to the tax issues pertaining to direct investment, the author examines the taxation of passive investment income, corporate reorganisations, exit taxes and the restrictive effect of domestic anti-abuse regimes. By doing so, the convergences and divergences arising from the interplay of EU corporate tax law and international tax law, especially the OECD model, are uncovered and highlighted.

Author: Dennis Weber
Publisher: Kluwer Law International B.V.
ISBN: 9041192689
Category : Law
Languages : en
Pages : 272

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Book Description
In October 2016, the European Commission relaunched its plan to harmonize national income tax systems via the Common Consolidated Corporate Tax Base (CCCTB), perhaps the most ambitious reform of EU tax law ever attempted. This timely book offers an early analysis of this important proposal and its implications, covering issues such as the project’s scope and main elements, international considerations, the relationship with OECD’s base erosion and profit shifting (BEPS) initiative, consolidation, and anti-abuse rules. With carefully selected papers first presented at a January 2017 conference hosted by the Amsterdam Centre for Tax Law, this volume focuses on such topics and issues as the following: – ways in which the proposed CCCTB is designed to preserve the competence of Member States to set their own tax rates; – reduction of the administrative burden for multinational companies; – incentives for research and development; – automatic cross-border relief within the EU; – detailed analysis of the proposal’s formula apportionment regime; – proposed new controlled foreign company (CFC) rules; and – interest limitation rule. Because of the commitment of many Member States to keep their corporate income tax systems competitive on a stand-alone basis, the proposed CCCTB is enormously controversial. This book provides authoritative insights into problems likely to arise and discusses the prospects of how the proposal is likely to be implemented. Thus, this book proves to be of immeasurable value to taxation policymakers, practitioners, and academics.

Author: Christoph Marchgraber
Publisher: Kluwer Law International B.V.
ISBN: 9041194118
Category : Law
Languages : en
Pages : 472

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Book Description
Everywhere,new tax rules are under development to engage with the ever-increasing complexity and sophistication of aggressive tax planning and to reverse the tax base erosion it leads to. The most prominent initiative in this context is the Base Erosion and Profit Shifting (BEPS) project of the OECD. Although double non-taxation is among the main issues the BEPS project intends to address, this book shows that this phenomenon has not yet been fully understood. Focusing on the fundamental freedoms and the State aid rules of the EU, this book thoroughly explains the nature of double non-taxation from an EU law perspective, its relation to double taxation, and the impact of EU law on these phenomena. Among the issues dealt with in the course of the analysis are the following: – locating the gaps and inconsistencies among domestic tax systems exploited by taxpayers; – hybrid mismatch arrangements as a prime example of double non-taxation; – political efforts undertaken within the EU in order to address double taxation and double non-taxation; – double non-taxation in the European VAT system; – the convergence of the fundamental freedoms and the State aid rules; – the ECJ’s dilemma with regard to juridical double taxation; – the deviating approach with regard to economic double taxation; – the potential impact of the ECJ’s case law on the EU law compatibility of double non-taxation. The tax jurisprudence of the ECJ is referred to and comprehensively analysed throughout this whole book. A final chapter provides an outlook on possible developments in the future. By providing the first in-depth analysis of EU law’s impact on double non-taxation – and the double taxation relief standards with which it is intimately related – this book takes a giant step towards greater legal certainty in this challenging area of tax law. It will quickly take its place as a major practical analysis which benefits tax authorities, scholars, and tax practitioners across Europe and even beyond.

Author: OECD
Publisher: OECD Publishing
ISBN: 9264162941
Category :
Languages : en
Pages : 82

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Book Description
Tax competition in the form of harmful tax practices can distort trade and investment patterns, erode national tax bases and shift part of the tax burden onto less mobile tax bases. The Report emphasises that governments must intensify their cooperative actions to curb harmful tax practices.