As part of its five-tier Action Plan on fair and efficient corporate taxation within the European Union (EU) the European Commission (EC) announced on 17 June 2015 that they will continue its work on the Common Consolidated Corporate Tax Base (CCCTB) by developing a completely new CCCTB proposal. The primary focus of the EC in its work is to secure a common tax base within the EU.
Contrary to the initially proposed CCCTB directive, the EC intends to make the new CCCTB proposal compulsory for multinational enterprises. As the consolidation aspect has been the most difficult in negotiations between Member States, this aspect is postponed until a common corporate tax base has been agreed and implemented.
Until full consolidation under the CCCTB is introduced, the EC will propose measures enabling cross border loss relief within the EU. To ensure that Member States do not definitely carry the burden of losses incurred in another Member State, a recapture mechanism will be developed for when the group entity is profit-making again.
The CCCTB Proposal will include certain anti-avoidance measures, which are also discussed as part of the OECD’s initiative on BEPS. These measures will include updated rules on permanent establishments and improved Controlled Foreign Corporation Rules. These aspects are contemplated to help protect the Single Market from base erosion and profit shifting toward non-EU countries.
Consensus on the anti-avoidance measures is intended to be achieved within 12 months, and should be made legally binding before an agreement is reached on the revised CCCTB. The EC intends to present their new CCCTB proposal in 2016.