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European Commission Adopts Key Package of Measures on Tax Rules to Simplify Corporate Taxation

Strategic Insights

— 1 min read

The European Commission has recently adopted a package of measures on tax rules aimed at simplifying corporate taxation and reducing tax compliance costs for businesses operating across borders in the European Union. The package includes three separate proposals for directives: a proposal for a European framework for corporate income taxation, a proposal for a domicile-based taxation system for SMEs, and a proposal on transfer pricing. These measures aim to create uniform rules for calculating the corporate tax base of groups operating in the internal market, improving the competitiveness of companies operating in the internal market.

Key Takeaways:

  • The BEFIT framework would primarily concern large operators with a total regulatory turnover of at least €750 million, and would be mandatory for these groups.
  • For smaller groups, the BEFIT framework would be voluntary.
  • The tax base of groups operating in the Union would be calculated according to uniform calculation rules, with profits of group members established in the EU pooled into a single tax base allocated to Member States according to a specific formula.
  • SMEs operating cross-border through permanent establishments would be able to deal only with the tax authorities of their home country in relation to taxation.
  • The proposal on transfer pricing aims to eliminate the risk of legal disputes and double taxation for companies by incorporating the arm's length principle into Union law and harmonising key transfer pricing rules.
  • The OECD Transfer Pricing Guidelines would be clarified, and common binding transfer pricing rules for certain types of transactions would be created within the framework of these guidelines.
  • The consultation period for the draft directives ends on 29 September, and feedback is being solicited from stakeholders.

Statistics:

  • €750 million: the minimum total regulatory turnover required for a group to be subject to the mandatory BEFIT framework.
  • 29 September: the deadline for stakeholder feedback on the draft directives.
  • 3: the number of separate proposals for directives adopted by the European Commission as part of the key package of measures.

Sources:

  • "European Commission adopts key package of measures on tax rules" by Al Bawaba (Albawaba.com)
  • "SyndiGate Media Inc. ( Syndigate.info )"

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