[ParlTrack]

Proposal for a directive
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The European Parliament rejects the Commission proposal.

2017/09/29
Committee: ECON

Proposal for a directive
Recital 2

(2) To support the proper functioning of the internal market, the corporate tax environment in the Union should be shaped in accordance with the principle that companies pay their fair share of tax in the jurisdiction(s) where their profits are generated. It is therefore necessary to provide for mechanisms that discourage companies from taking advantage of mismatches amongst national tax systems in order to lower their tax liability. It is equally important to also stimulate growth and economic development in the internal market by facilitating cross-border trade and corporate investment. To this end, it is necessary to eliminate ~~both~~ double taxation ~~and double non-taxation~~ risks in the Union through ~~eradicat~~tackling disparities in the interaction of national corporate tax systems. At the same time, companies need an easily workable tax and legal framework for developing their commercial activity and expanding it across borders in the Union. In that context, remaining cases of discrimination should also be removed.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 3

(3) As pointed out in the proposal of 16 March 2011 for a Council Directive on a Common Consolidated Corporate Tax Base (CCCTB)7, a corporate tax system which treats the Union as a single market for the purpose of computing the corporate tax base of companies would facilitate cross-border activity for companies resident in the Union and promote the objective of making it a more competitive location for investment internationally. The proposal of 2011 for a CCCTB focussed on the objective of facilitating the expansion of commercial activity for businesses which are subject to corporate tax within the Union. In addition to that objective, it should also be taken into account that a CCCTB can be ~~highly~~ effective in improving the functioning of the internal market through countering tax avoidance schemes. In this light, the initiative for a CCCTB should be re- launched in order to address~~, on an equal footing, both the aspect of business facilitation and~~ the initiative's function in countering tax avoidance. Such an approach would best serve the aim of eradicating distortions in the functioning of the internal market. __________________ 7 Proposal for a Council Directive COM (2011) 121 final/2 of 3.10.2011 on a Common Consolidated Corporate Tax Base.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 4

(4) ~~Considering the need to act swiftly in order to ensure a proper functioning of the internal market by making it~~In order to make the tax system, on the one hand, friendlier to trade and investment and, on the other hand, more resilient to tax avoidance schemes, it is necessary to divide the ambitious CCCTB initiative into two separate proposals. At a first stage, rules on a common corporate tax base should be agreed, before addressing, at a second stage, the issue of consolidationfor both of the present proposals for directives to be negotiated in parallel and enter into force at the same time.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 5

(5) Many aggressive tax planning structures tend to feature in a cross- border context, which implies that the participating groups of companies possess a minimum of resources. On this premise, for reasons of proportionality, the rules on a CCCTB should be mandatory only for groups of companies of a substantial size. For that purpose, a size-related threshold should be fixed on the basis of the total consolidated revenue of a group which files consolidated financial statements. In addition, in order to better serve the aim of facilitating trade and investment in the internal market, the rules on a CCCTB should also be available, as an option, to those groups that fall short of the size-related threshold.deleted

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 6

(6) Eligibility for the consolidated tax group should be determined in accordance with a two-part test based on (i) control (more than 50 percent of voting rights) and (ii) ownership (more than 75 percent of equity) or rights to profits (more than 750 percent of rights giving entitlement to profit). Such a test would ensure a high level of economic integration between group members. To guarantee the integrity of the system, the two thresholds for control and ownership or profit rights should be met throughout the tax year; otherwise, the failing company should leave the group immediately. To prevent a manipulation of the tax results through companies entering and leaving the group within a short-term, there should also be a minimum requirement of nine consecutive months for establishing group membership.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 9

(9) In order to prevent circumventing the tax exemption of the gains from the disposals of shares, this tax-free treatment should be disallowed where it is illegitimately extended to sales of assets other than shares. This situation would occur if assets are moved by way of intra- group transactions, without tax implications, to a group member with the plan to subsequently, sell the shares in that group member and include the assets in that sale. In such case, the assets would effectively benefit, under the cover of a sale of shares, from the tax exemption that applies to disposals of shares. Accordingly, it would also be necessary to cater for intra-group transfers of assets which are then sold out of the group within a period of up to two years. Namely, an adjustment should be made in order to treat an asset as having left the group from the Member State where it was located initially, i.e. prior to the intra- group transfer, and in this way, discourage the artificial intra-group transfer of assets (other than shares) towards Member States with beneficial tax regimes for capital gains from disposals of assets.deleted

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 10

(10) The formula apportionment for the consolidated tax base should comprise three equally weighted factors, namely labour, assets and sales by destination. Those equally weighted factors should reflect a balanced approach to distributing taxable profits amongst the relevant Member States and should ensure that profits are taxed where they are actually earned. Labour and assets should therefore be allocated to the Member State where the labour is performed or the assets are located, and would thereby give appropriate weight to the interests of the Member State of origin, whilst sales should be allocated to the Member State of destination of the goods or services. To account for differences in the levels of wages across the Union and thus allow for a fair distribution of the consolidated tax base, the labour factor should comprise both payroll and the number of employees (i.e. each item counting for half). The asset factor, on the other hand, should comprise all fixed tangible assets, but not intangible and financial assets because of their mobile nature and the resulting risk that the rules of this Directive could be circumvented. Where, due to exceptional circumstances, the outcome of the apportionment does not fairly represent the extent of business activity, a safeguard clause should provide for an alternative method of income allocation.deleted

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 11

(11) Due to their specificities, certain sectors, such as the financial and insurance sector, the oil and gas sector as well as shipping and air transport, need an adjusted formula for the apportionment of the consolidated tax base.deleted

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 16

(16) In order to supplement or amend certain non-essential elements of this Directive, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission with respect of (i) taking into account changes to the laws of Member States concerning the company forms and corporate taxes and amend Annexes I and II accordingly; (ii) laying down additional definitions; and (iii) supplementing the rule on the limitation of interest deductibility with anti-fragmentation rules, to better address the tax avoidance risks which may emerge within a group. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level. The Commission, when preparing and drawing up delegated acts, should ensure a simultaneous, timely and appropriate transmission of relevant documents to the European Parliament and the Council.deleted

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Recital 17

(17) In order to ensure uniform conditions for the implementation of this Directive, implementing powers should be conferred on the Commission (i) to adopt annually a list of third country company forms that are similar to the company forms listed in Annex I; (ii) to lay down detailed rules on the calculation of the labour, asset and sales factors, the allocation of employees and payroll, assets and sales to the respective factor and the valuation of assets; (iii) to adopt an act establishing a standard form of the notice to create a group; and (iv) to lay down rules on the electronic filing of the consolidated tax return, the form of the consolidated tax return, the form of the single taxpayer's tax return and the supporting documentation required. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council12 . __________________ 12 Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission’s exercise of implementing powers (OJ L 55, 28.2.2011, p. 13).deleted

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Article 1 – paragraph 2

~~2. A company that applies the rules of this Directive shall cease to be subject to the national corporate tax law in respect of all matters regulated by this Directive, unless otherwise sta~~deleted.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Article 5 – paragraph 1 – point b

(b) it has an ownership right amounting to more than 75 % of the subsidiary’s capital or it owns more than 75 50% of the rights giving entitlement to profit.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Article 5 – paragraph 2 – point b

(b) entitlement to profit and ownership of capital shall be calculated by multiplying the interests held, directly and indirectly, in subsidiaries at each tier. Ownership rights amounting to 750% or less held directly or indirectly by the parent company, including rights in companies resident in a third country, shall also be taken into account in the calculation.

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Article 28

1. shared between the group members in each tax year on the basis of a formula for apportionment. In determining the apportioned share of a group member A, the formula shall take the following form, giving equal weight to the factors of sales, labour and assets: Formula 2. group shall be shared only where it is positive. 3. consolidated tax base shall be done at the end of the tax year of the group. 4. calendar month shall be considered as a whole month. 5. share of a group member, equal weight shall be given to the factors of sales, labour and assets.Article 28 deleted General rules The consolidated tax base shall be The consolidated tax base of a The calculations for sharing the A period of 15 days or more in a When determining the apportioned

2017/09/29
Committee: ECON

Barbara KAPPEL

Proposal for a directive
Article 29 – paragraph 1

As an exception to the rule set out in Article 28, if the principal taxpayer or a competent authority considers that the outcome of the apportionment of the consolidated tax base to a group member does not fairly represent the extent of the business activity of that group member, the principal taxpayer or competent authority may request the use of an alternative method for calculating the tax share of each group member. An alternative method can be used only if, following consultations among the competent authorities and, where applicable, discussions held in accordance with Articles 77 and 78, all these authorities agree to that alternative method. The Member State of the principal tax authority shall inform the Commission about the alternative method used.deleted

2017/09/29
Committee: ECON

Activities of Barbara KAPPEL related to 2016/0336(CNS)

Shadow reports (1)

Amendments (16)

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