50 Amendments of Claude GRUFFAT related to 2023/0321(CNS)
Amendment 90 #
Proposal for a directive
Recital 5
Recital 5
(5) The environment for doing business in the internal market should be made more attractive with the aim to stimulate growth and investment in the Union. For this purpose, the enactment of a common framework of corporate tax rules should be prioritised, in order to make it easier for businesses to comply with such rules when they operate across borders and also to encourage those who wish to further expand abroad to do so. A single set of corporate tax rules for international activity is expected to result in enhanced tax certainty and less tax disputes, as it would tackle distortions and decrease the number of cases of double and over-taxation. Furthermore, as tax revenue sustainability is key to(non) taxation. Harmonisation of rules also implies less opportunities to abuse some specific national tax provisions in a pan- European context. With an allocation of the taxable base, which is based on two factors the common framework of corporate tax rules will mitigate tax avoidance and aggressive tax planning. Due to the critical importance of sustainable tax revenue for Member States’' budgets, including to invest in infrastructure, research and development and to deliver public services, it would be critical to ensure for the futment in the digital, green and social transitions, in research and development and for the provision of public services, especially for the most vulnerable households, it is essential to ensure that the allocharmonisation of revenues is performed in accordance with a tool based on solid parameters that cannot be abusedprofit determination rules in the Union will not lead to lower effective tax rates and lower revenues for Member States.
Amendment 98 #
Proposal for a directive
Recital 7
Recital 7
(7) Although the threshold would be determined on the basis of the combined revenues of the group on a global basis, the remit of the provisions should be limited to members of the group operating on the internal market as Union law only applies within the Union and does not bind non- Member States. Only the Union sub-set of such a group should therefore be captured. This would include companies which are resident for tax purposes in a Member State and their permanent establishments, including a significant economic presence, operating in a Member State as well as the permanent establishments in the Union of third country companies of the same group. Considering that the concept of a permanent establishment is dealt with within bilateral tax treaties and national law and although the definition features some common principles, there is still a degree of divergence worldwide. Consequently, it would be a pragmatic approach to rely on the existing double taxation treaties and national rules of the Member States, rather than attempt full harmonisation through secondary Union law.
Amendment 103 #
Proposal for a directive
Recital 8 a (new)
Recital 8 a (new)
(8a) This Directive also lays down rules extending the concept of a permanent establishment, as to include a significant economic presence through which a business is wholly or partly carried on. The underlying objective is to improve the resilience of the internal market as a whole in order to address the challenges of taxation of the digitalised economy. The increased importance of services, accelerated by the digitalisation of the economy, has led to recent proposals, as embedded in the OECD/G20 Pillar One proposal, to define a ‘significant economic presence’ as a taxable nexus based on a purely quantitative threshold of sales in any given country in order to capture all sectors and ensure simplicity. This objective cannot be sufficiently achieved by the Member States acting individually because digital businesses are able to operate cross-border without having any physical presence in a jurisdiction and rules are therefore needed to ensure that they pay taxes in the jurisdictions where they make profits, by providing services or selling products (henceforth "sales")
Amendment 104 #
Proposal for a directive
Recital 8 b (new)
Recital 8 b (new)
(8b) In order to provide for a robust definition of a taxable nexus of a business in a Member State whether the business is digital or not, it is necessary that such a definition is based on the revenues from any sales, including from the supplied digitalised services. The definition included in this Directive is equal to definition agreed in the framework of the OECD/G20 Pillar One proposal. This is to ensure coherence between the Directive and the international framework. The Union should lead by example in international tax reform to provide certainty to tax payers.
Amendment 108 #
Proposal for a directive
Recital 10 a (new)
Recital 10 a (new)
(10a) A fair taxation of passive income such as interest is required. It is therefore appropriate to lay down an interest limitation rule applicable to BEFIT group members in such a way as to reduce the debt-equity bias that can occur via an over-reliance to intra-group debt financing and to reduce the scope for base erosion and profit shifting through excessive interest payments.
Amendment 111 #
Proposal for a directive
Recital 10 b (new)
Recital 10 b (new)
(10b) To guarantee a minimal level of taxation of royalties, a royalties limitation rule for BEFIT group members should be introduced in accordance with the Subject to Tax Rule as proposed by the OECD/G20 Inclusive Framework in Pillar II.
Amendment 112 #
Proposal for a directive
Recital 10 c (new)
Recital 10 c (new)
(10c) A fairer taxation of passive income also requires robust Controlled Foreign Company (CFC) rules for BEFIT group members in order to make them more resilient against profit shifting.
Amendment 114 #
Proposal for a directive
Recital 11
Recital 11
Amendment 118 #
Proposal for a directive
Recital 12
Recital 12
(12) To achieve the key objective of creating a simplified corporate tax framework, the preliminary tax results for each group member should be aggregated into one single common tax base, in order to subsequently allocate this base to eligible group members. The tax adjustments to the financial statements would produce preliminary tax results for each group member. These results would then be aggregated, which would allow for cross-border loss relief between BEFIT group members, limited to five years, and subsequently, the aggregated tax base would be allocated to group members based on a transition allocation rule; this would pave the way towards a permanent mechanism. That permanent mechanism could be based on a formulary apportionment and would render the need for intra-BEFIT group transactions to be consistent with the arm’s length principle redundant. It would have the advantage of using more recent country-by-country reporting (‘CbCR’) data and the information gathered during the transition period. This will also allow for a more thorough assessment of the impact that the implementation of the two-pillar approach is expected to have on national tax bases and the BEFIT group tax bases. In this way, it would still become possible to materialise the key objective of tax neutrality in the internal market,formulary apportionment. This will materialise the key objective of tax neutrality in the internal market, render the arm’s length principle redundant which would reduce instances of double and over-non taxation and enhance tax certainty with the aim of reducing the number of tax disputes.
Amendment 129 #
Proposal for a directive
Recital 14
Recital 14
(14) To provide space for growth and investment, Member States would also be allowed to individually apply additional post-allocation adjustments (e.g. tax treatment of pension contributions) in areas not covered by the common framework. Member States would also be free to further adjust their allocated share without a ceiling in order to ensure that Member States can make their national policy choices in this area. Most importantly, Directive (EU) 2022/2523 would effectively set a ceiling which would effectively ensure that the effective tax rate is at least 15%. The post-allocation adjustments should focus on input-based tax incentives. Member States should refrain from offering output-based tax incentives such as patent boxes and other intellectual property regimes. In addition, each Member State should publish detailed information on the impact of tax expenditures on revenues as obliged under Directive (EU) 2011/84, article 14. At a minimum, each tax expenditure should be associated with one or more policy objectives, state its targeted beneficiaries, and estimate how much revenue has been forgone. Furthermore, it is recommended for Member States, in the context of the green transition, to introduce a qualitative component to ensure minimal coherence with the Sustainable Development Goals. For instance, Member States could carry-on sustainability evaluations on adjustments that apply to their allocated share.
Amendment 131 #
Proposal for a directive
Recital 14 a (new)
Recital 14 a (new)
(14a) To spur investments to achieve the UN Sustainable Development Goals and to respond to the climate emergency, Member States are incentivised to adopt targeted accelerated depreciation rules at the national level. These rules are vital for a swift green transition, aligning economic incentives with environmental goals whilst addressing social inequalities and alleviating poverty. They stimulate economic growth, create jobs and foster innovation in sustainable technologies. By encouraging green investments, it accelerates progress towards clean energy, restoring biodiversity and water supplies, and resilient infrastructure. By encouraging such investments in low- income countries, green energy supply chains can be strengthened. The Member States should lead in sustainability which will ultimately increase the resilience and competitiveness of the internal market. At the same time, this Directive aims at disincentivising further investments in fixed assets in fossil-fuel related activities and those fixed assets with a high carbon content, both in their production and use. To operationalise these incentives and disincentives the Commission is tasked to adopt implementing acts.
Amendment 140 #
Proposal for a directive
Recital 18
Recital 18
(18) To ensure that the rules of the common framework are implemented and enforced correctly, Member States should lay down rules on penalties applicable to infringements of national provisions adopted pursuant to this Directive. Such penalties should be effective, proportionate and dissuasive. Those penalties should be set at a minimum rate of 0,1 % of the turnover of the BEFIT group in case of failure to file the BEFIT information return accordingly and in case of confirmed intentional misreporting of filing information return
Amendment 144 #
Proposal for a directive
Recital 19
Recital 19
(19) To optimise the benefits of having a common legal framework for computing the corporate tax base in the internal market, the application of the rules should be optional for groups, including SME groups, who earn annual combined revenues of less than EUR 750 000 000 as long as they prepare consolidated financial statements and have a taxable presence in the Union. By keeping the application of the rules open to groups of a smaller size, more groups with cross-border structures and activities may benefit from the simplification that the common framework offers. After three years this Directive starts to apply, the Commission should issue a legislative proposal to amend this Directive to make this system mandatory for companies with annual combined revenues of EUR 40 000 000 or more in at least two of the last four fiscal years.
Amendment 148 #
Proposal for a directive
Recital 21 a (new)
Recital 21 a (new)
(21a) Each BEFIT group should have a filing entity, which should determine the country of the filing authority and the competent tax authority which will lead the BEFIT team. As a matter of principle, the filing authority should be based in the Member State where the parent company of the BEFIT group is resident for tax purposes. When the BEFIT group is owned by a firm headquartered in a third country, the filing entity should be the European intermediate parent undertaking, where there is one.
Amendment 149 #
Proposal for a directive
Recital 21 b (new)
Recital 21 b (new)
(21b) By 31 December 2026, the Commission should, where appropriate, submit a legislative proposal for a harmonised, common European taxpayer identification number. This will in turn not only facilitate the communication between the representatives of Member States and the BEFIT team, but also increase the efficiency of tax information exchange within the Union.
Amendment 182 #
Proposal for a directive
Article 2 a (new)
Article 2 a (new)
Article 2a Significant economic presence 1. For the purposes of corporate tax, a permanent establishment shall be taken to exist if a significant economic presence exists through which a business is wholly or partly carried on. 2. Paragraph 1 shall be in addition to, and shall not affect or limit the application of, any other test under Union or national law for determining the existence of a permanent establishment in a Member State for the purposes of corporate tax, whether specifically in relation to the supply of digital services or otherwise. 3. A 'significant economic presence' shall be considered to exist in a Member State in a tax period if total revenues derived by a BEFIT group from that Member State are above EUR 1 000 000. 4. The Commission shall, by means of implementing act laying down the detailed methodology for the sourcing rules to define the revenues. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 73.
Amendment 183 #
Proposal for a directive
Article 3 – paragraph 1 – point 10 – point b
Article 3 – paragraph 1 – point 10 – point b
(b) if the ultimate parent entity is not located in a Member State, the intermediate parent entity located in a Member State, or, in absence of such, the entity located in a Member State and that has been appointed by the BEFIT group to fulfil the obligations in relation to the BEFIT group information return set out in Article 57 on behalf of the BEFIT group.
Amendment 188 #
Proposal for a directive
Article 5 – paragraph 1 – point a
Article 5 – paragraph 1 – point a
(a) the company is either the ultimate parent entity of the group, the intermediate parent company of the group located in a Member State or any other company of the group in which the ultimate parent entity holds, directly or indirectly, at least 750% of the ownership rights or of the rights giving entitlement to profit;
Amendment 189 #
Proposal for a directive
Article 5 – paragraph 1 – point b
Article 5 – paragraph 1 – point b
(b) the head office of the permanent establishment is either the ultimate parent entity of the group, the intermediate parent company of the group located in a Member State or any other member (company or entity) of the group in which the ultimate parent entity holds, directly or indirectly, at least 750% of the ownership rights or of the rights giving entitlement to profit.
Amendment 195 #
Proposal for a directive
Article 8 – paragraph 1
Article 8 – paragraph 1
With the exception of financial assets held for trading, as referred to in Article 11(1), and investments made for the benefit of life insurance policyholders bearing the investment risk in the context of a unit- linked/index-linked life insurance policy, as referred to in Article 14, the financial accounting net income or loss of a BEFIT group member shall be adjusted to exclude 95% of the amount of dividends or other distributions received or accrued during the fiscal year, provided that at the date of distribution, the ownership interest is held by the BEFIT group member for more than one year and this interest carries right to more than 10% of the profits, capital, reserves or voting rights, and the dividends or other distributions have been subject to an effective tax rate not below 9%.
Amendment 206 #
Proposal for a directive
Article 13 – paragraph 1
Article 13 – paragraph 1
1. A BEFIT group member shall adjust its financial accounting net income or loss to include the amount of exceeding borrowing costs, as referred to in Article 2 of Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market11 , which is not deductible for tax purposes in accordance with the interest limitation rules laid down in the national corporate tax law of the Member State where it is resident for tax purposes.paragraph 1a. _________________ 11 Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market (OJ L 193, 19.7.2016, p. 1)
Amendment 208 #
Proposal for a directive
Article 13 – paragraph 1 a (new)
Article 13 – paragraph 1 a (new)
1a. Exceeding borrowing costs shall be deductible up to 75 % in the tax period in which they are incurred. If such amount is higher than 10 % of the taxpayer's earnings before interest, tax, depreciation, and amortisation (EBITDA), the taxpayer is entitled to deduct only the lower of the two amounts in the tax period. Article 4 paragraphs 2, 3, 4, point (b), 5, 7, 8 of Article 4 of Council Directive (EU) 2016/11641 apply to a BEFIT group.
Amendment 211 #
Proposal for a directive
Article 13 a (new)
Article 13 a (new)
Article13a Royalty limitation rule A BEFIT group member shall adjust its financial accounting net income or loss to include the amount of royalty costs for which the corresponding income of the recipient of the royalty or licence fee payment by the BEFIT group is subject to an effective tax rate below 9 %.
Amendment 212 #
Proposal for a directive
Article 15 – paragraph 1
Article 15 – paragraph 1
Amendment 214 #
Proposal for a directive
Article 17 – paragraph 1
Article 17 – paragraph 1
The financial accounting net income or loss of a BEFIT group member shall be adjusted to include the amount of any corporate tax, similar taxes on profits and deferred taxes accrued for the fiscal year as well as any amount recorded as current taxes in the financial accounts in relation to the payment of top-up tax due in accordance with Directive (EU) 2022/2523 or in application of a Qualified Domestic Top-up Tax as referred to in Article 11 of that Directive, or any other alternative minimum taxes.
Amendment 219 #
Proposal for a directive
Article 21 a (new)
Article 21 a (new)
Article 21a Controlled Foreign Companies 1. The financial accounting net income or loss of a BEFIT group member shall be adjusted to include the non- distributed income of an entity or permanent establishment, which is treated as a controlled foreign company as referred to Article 7(1) of Directive (EU) 2016/1164, which is derived from the following categories: (i) interest or any other income generated by financial assets; (ii) royalties or any other income generated from intellectual property; (iii) dividends and income from the disposal of shares; (iv) income from financial leasing; (v) income from insurance, banking, and other financial activities; (vi) income from invoicing companies that earn sales and services income from goods and services purchased from and sold to associated enterprises, and add no or little economic value; The first subparagraph shall not apply where the controlled foreign company carries out a substantive economic activity supported by staff, equipment, assets, and premises, as evidenced by relevant facts and circumstances. Where the controlled foreign company is resident or situated in a third country that is not party to the EEA Agreement, Member States may decide to refrain from applying the first subparagraph. 2. The income to be included in the tax base shall be calculated according to Article 8 of Directive (EU) 2016/1164.
Amendment 226 #
Proposal for a directive
Article 22 – paragraph 2 – point a
Article 22 – paragraph 2 – point a
(a) all buildings as well as any other type of immovable property and structure in use for the business: 2830 years;
Amendment 228 #
Proposal for a directive
Article 22 – paragraph 2 – point b
Article 22 – paragraph 2 – point b
(b) all other fixed tangible assets: their useful life as assessed in accordance with the acceptable accounting standard in the Union referred to in Article 7;, but not less than 10 years.
Amendment 230 #
Proposal for a directive
Article 22 – paragraph 2 – point c
Article 22 – paragraph 2 – point c
(c) fixed intangible assets, including acquired goodwill: the period for which the asset enjoys legal protection or for which the right has been granted and, where that period cannot be determined, 520 years.
Amendment 233 #
Proposal for a directive
Article 22 – paragraph 2 a (new)
Article 22 – paragraph 2 a (new)
2a. By way of derogation from the second paragraph fixed assets with a large carbon footprint, both in their production and in their use, shall be depreciated up until half their market value. The Commission shall, by means of implementing act laying down the criteria to define the values constituting a large carbon footprint. The rules shall be updated every 3 years. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 73.
Amendment 235 #
Proposal for a directive
Article 22 – paragraph 5
Article 22 – paragraph 5
5. The value for tax purposes of a fixed asset that is disposed of, or damaged to an extent that it can no longer be used for the business, and the value for tax purposes of any improvement costs incurred in relation to that asset shall be deducted from the preliminary tax result in the month of the disposition or damage. Member States are not allowed to grant further entitlement to depreciate to a BEFIT group member other than those specified in this Section.
Amendment 238 #
Proposal for a directive
Article 22 a (new)
Article 22 a (new)
Article 22a Accelerated Green and Social depreciation rules 1. By way of derogation from Article 22, fixed assets acquired by BEFIT group members in the Union or in low-income countries that contribute significantly to the climate goals and the UN 2030 Sustainable Development Goals shall be subject to accelerated depreciation rules at Member State level. 2. The Commission shall, by means of implementing act laying down the necessary framework and criteria to operationalize paragraph 1. The rules shall be updated every 3 years. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 73. 3. Member States shall inform the Commission on their existing accelerated depreciation rules at national level, according to paragraph 1 and 2, three months after this Directive starts to apply and in accordance to the obligation in Article 48, paragraph 2. 4. When this Directive starts to apply, Member States shall inform the Commission on their new accelerated depreciation rules 6-months prior to their entry into force at national level and in accordance to the obligation in Article 48, paragraph 2.
Amendment 251 #
Proposal for a directive
Article 27 – paragraph 1 – point a a (new)
Article 27 – paragraph 1 – point a a (new)
(aa) fixed assets used in fossil fuel- related activities;
Amendment 256 #
Proposal for a directive
Article 38 – paragraph 1
Article 38 – paragraph 1
Where a company or a permanent establishment enters a BEFIT group, any unrelieved losses incurred up until five years before the entry date, in accordance with the corporate tax law of the Member State of its tax residence or location respectively, shall be deducted from its share of the BEFIT tax base as determined in accordance with Chapter III.
Amendment 264 #
Proposal for a directive
Article 42 – paragraph 2 – point b
Article 42 – paragraph 2 – point b
(b) a negative amount, the loss shall be carried forward for a maximum of five years and shall be set off against the next positive BEFIT tax base.
Amendment 270 #
Proposal for a directive
Article 45 – title
Article 45 – title
Amendment 274 #
Proposal for a directive
Article 45 – paragraph 1 – subparagraph 1
Article 45 – paragraph 1 – subparagraph 1
For each fiscal year between 1 July 2028 and 30 June 2035 at the latest (the ‘transition period’), the BEFIT tax base shall be allocated to the BEFIT group members ion accordance with the baseline allocation percentagethe basis of a formula that gives equal weight to two factors: number of employees and unrelated third party revenues.
Amendment 281 #
Proposal for a directive
Article 45 – paragraph 2 – subparagraph 2
Article 45 – paragraph 2 – subparagraph 2
Amendment 293 #
Proposal for a directive
Article 45 – paragraph 3
Article 45 – paragraph 3
Amendment 299 #
Proposal for a directive
Article 45 – paragraph 4
Article 45 – paragraph 4
Amendment 308 #
Proposal for a directive
Article 45 – paragraph 6
Article 45 – paragraph 6
Amendment 310 #
Proposal for a directive
Article 45 – paragraph 7
Article 45 – paragraph 7
Amendment 313 #
Proposal for a directive
Article 45 – paragraph 8
Article 45 – paragraph 8
Amendment 316 #
Proposal for a directive
Article 45 – paragraph 9
Article 45 – paragraph 9
9. The Commission shall carry out a comprehensive review of the transiallocation rule as part of which it shall prepare a study on the possible composition and weight of selected formula factorsthe formula and submit a report to the Council by the end of the third fiscal year during the transition period referred to in paragraph 1. If the Commission deems it appropriate, taking into account the conclusions of this report, it may adopt a legislative proposal during the transition period, to amend this Directive by introducing a different method for the allocation of the BEFIT tax base using formulary apportionment and based on factorand include where needed sector-specific allocation rules.
Amendment 318 #
Proposal for a directive
Article 45 – paragraph 10
Article 45 – paragraph 10
Amendment 334 #
Proposal for a directive
Article 48 – paragraph 2
Article 48 – paragraph 2
2. In addition to the adjustments listed in paragraph 1, a Member State may allow for increasing or decreasing, through additional items, subject to the provisions of Directive (EU) 2022/2523, the allocated part of BEFIT group members that are resident for tax purposes or situated in the form of a permanent establishment in that Member State. Adjustments that effectively result in revenue forgone must be made public annually as set forth in Directive 2011/85 in the form of a tax expenditure report.
Amendment 367 #
Proposal for a directive
Article 72 – paragraph 1
Article 72 – paragraph 1
Member States shall lay down rules on penalties applicable to infringements of national provisions adopted pursuant to this Directive and shall take all necessary measures to ensure that they are implemented and enforced. Penalties and compliance measures provided for shall be effective, proportionate and dissuasive. Penalties shall be set at a minimum of 0,1 % of the turnover of the BEFIT group in case of failure to file the BEFIT information return in accordance with Article 59 and in case of confirmed intentional misreporting when filing the information return.
Amendment 372 #
Proposal for a directive
Article 77 – paragraph -1 (new)
Article 77 – paragraph -1 (new)
-1 Three years after this Directive starts to apply, the Commission shall issue a legislative proposal to amend this Directive to make this system mandatory for companies with annual combined revenues of EUR 40 000 000 or more in at least two of the last four fiscal years, in line with the definition of large groups within the meaning of Directive 2013/34/EU of the European Parliament and of the Council.
Amendment 375 #
Proposal for a directive
Article 77 – paragraph 1 a (new)
Article 77 – paragraph 1 a (new)
1a. Eight years after this Directive starts to apply, the Commission shall assess the impact of making this system mandatory for all companies with cross- border activities and, if appropriate, issue a legislative proposal to amend this Directive accordingly.
Amendment 379 #
Proposal for a directive
Article 77 – paragraph 2
Article 77 – paragraph 2
2. Member States shall communicate to the Commission relevant information for the evaluation of the Directive in accordance with paragraph 3, including aggregated data on BEFIT group members which are resident for tax purposes in their jurisdiction and permanent establishments thereof operating in their jurisdiction, in order to properly assess the impact of the transition allocation rule and of Directive (EU) 2022/2523 as well as assessing the situation regarding Pillar One of the Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy agreed by the OECD/G20 Inclusive Framework on BEPS on 8 October 2021.