BETA

77 Amendments of Eva JOLY related to 2016/0337(CNS)

Proposal for a directive
Recital 1

(1) Companies which seek to do business across frontiers within the Union encounter serious obstacles and market distortions owing to the existence and interaction of 28 disparate corporate tax systems. Furthermore, tax planning structures have become ever-more sophisticated over time, as they develop across various jurisdictions and effectively take advantage of the technicalities of a tax system or of mismatches between two or more tax systems for the purpose of reducing the tax liability of companies. Although those situations highlight shortcomings that are completely different in nature, they both create obstacles which impede the proper functioning of the internal market and create distortion between large companies and small and medium-sized enterprises. Action to rectify those problems should therefore address both types of market deficiencies. If this proposal does not result in an agreement eliminating the distortion in question, the Commission should issue a new proposal based on Article 116 of the Treaty on the Functioning of the European Union, whereby the European Parliament and the Council, act in accordance with the ordinary legislative procedure to issue the necessary directives.

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 and where they have economic substance. It is therefore necessary to provide for mechanisms that ~~discourage~~prohibit 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 eradicating 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

Proposal for a directive
Recital 3 a (new)

(3a) In addition, improving the internal market is the key factor for encouraging growth and job creation. The introduction of a CCCTB should improve growth and lead to more jobs in the Union by reducing the administrative costs for companies, particularly for small businesses operating in several Member States.

2017/09/29
Committee: ECON

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, on the one hand, friendlier to trade and investment and, on the other hand, more resilient to tax avoidance schemes, it is necessary to d~~ivide the ambitious CCCTB initiative into two separate proposals. At a first stage, rules on a common corporate tax base should be enacted, before addressing, at a second stage, the issue of~~eal with the CCTB and CCCTB proposals in parallel. Rules on a common corporate tax base should enter into application at the same time as the consolidation.

2017/09/29
Committee: ECON

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 common base should be mandatory only for companies which belong to a group 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, to ensure coherence between the two steps of the CCCTB initiative, the rules on a common base should be mandatory for companies which would be considered as a group should the full initiative materialise. In order to better serve the aim of facilitating trade and investment in the internal market, the rules on a common corporate tax base should also be available, as an option, to companies which do not meet those criteria. Five years after the entry into force of this Directive, the Commission shall, in its review, assess the impact of making this system mandatory for all companies and, if appropriate, present a legislative proposal to amend this Directive accordingly.

2017/09/29
Committee: ECON

Proposal for a directive
Recital 5 a (new)

(5a) One of the main problems encountered by the tax authorities is the impossibility of gaining access in due time to comprehensive and relevant information about MNEs' tax planning strategies. Such information should be made publicly available, in order for tax authorities to react quickly to tax risks, by assessing those risks more effectively, targeting checks and alerting about changes required to the legislation in force.

2017/09/29
Committee: ECON

Proposal for a directive
Recital 5 b (new)

(5b) In order to create a level playing field and to eliminate tax competition and the resulting race to the bottom as regards corporate taxation levels, minimum effective corporate tax rate should be introduced in parallel of the common consolidated corporate tax base so as to avoid transferring unfair competition on the tax base to unfair competition on the tax rates. This Directive therefore sets a minimum corporate tax rate at 20% in each Member State, applicable two years after the date of implementation of the present Directive, with a possibility for Member States to extend this deadline up to five years subject to a prior authorisation by the Commission.

2017/09/29
Committee: ECON

Proposal for a directive
Recital 5 c (new)

(5c) A severe lack in investments has been one of the root causes of the Union economic troubles but the Union budget is still insufficiently geared towards future- oriented investments. Creating additional Union budget related resources is possible according to the existing flexibilities of the Treaty. This proposal, together with the proposal for a CCCTB, should therefore aim at having a part of the EU fiscal revenues financed from the common consolidated corporate tax base.

2017/09/29
Committee: ECON

Proposal for a directive
Recital 6

(6) Too often, multinational companies make arrangements to transfer their profits to tax havens without paying any or very low rates of tax. The concept of permanent establishment will provide a precise, binding definition of the criteria which must be met if a multinational company is to prove that it is situated in a given country. This will force multinational companies to pay their taxes fairly. It is necessary to define the concept of a permanent establishment situated in the Union and belonging to a taxpayer who is resident for tax purposes within the Union. The aim would be to ensure that all concerned taxpayers, including those operating in the digital sector, share a common understanding and to exclude the possibility of a mismatch due to divergent definitions. OnAt th~~e contrary~~is stage, it should not be seen as essential to have a common definition of permanent establishments situated in a third country, or in the Union but belonging to a taxpayer who is resident for tax purposes in a third country. This dimension should better be left to bilateral tax treaties and national law due to its complicated interaction with international agreements. However, the Commission should make a proposal to set up a European model of tax treaty which could ultimately replace the thousands bilateral treaties concluded by each Member States.

2017/09/29
Committee: ECON

Proposal for a directive
Recital 6 a (new)

(6a) Taking into account the digital change in the business environment as well as the current gap in taxation between digitally operating companies and physically operating businesses, as well as between digital MNEs and SMEs, it is necessary to define the concept of a virtual permanent establishment. A level- playing field is needed for similar business models which only differ from one another in this aspect that one of them uses a digital solution instead of a physical one and therefore is not considered to have a physical presence in the country. Companies that generate a significant amount of revenues in a Member State without having a physical establishment in that Member State should be treated in the same way as companies having a physical establishment. Therefore, this proposal should also apply to digital corporations.

2017/09/29
Committee: ECON

Proposal for a directive
Recital 8

(8) Taxable revenues should be reduced by business expenses and certain other items. Deductible business expenses should normally include all costs relating to sales and expenses linked to the production, maintenance and securing of income. To support innovation in the economy and modernisze the internal market, deductions should be provided for research and development ~~costs, including super-deductions, and those should be fully~~genuine expenseds, in the year incurred (with the exception of immovable property). ~~Small starting companies without associated enterprises which are particularly innovative (a category which will in particular cover start-ups) should also~~However, such R&D allowance shall not be regarded as a substitute for national policies aiming at stimulating innovation in Europe. Moreover, Member States are encouraged to apply their R&D tax benefits on social contributions and/or wages rather than on corporate income taxes. Small and medium companies without associated enterprises which are particularly innovative could be supported through ~~enhanced~~ super- deductions for research and development costs in certain circumstances. In order to ensure legal certainty, there should also be a list of non- deductible expenses. In order to avoid financing research and development of new potentially toxic financial instruments and to limit R&D allowance to key strategic and future-related investments, such costs should be non- deductible insofar as they concern financial undertakings.

2017/09/29
Committee: ECON

Proposal for a directive
Recital 9

(9) Recent developments in international taxation have highlighted that, in an effort to reduce their global tax liability, multinational groups of companies have increasingly engaged in tax avoidance arrangements leading to base erosion and profit shifting, through excessive interest payments. It is therefore necessary to limit the deductibility of interest (and other financial) costs, in order to discourage such practices. In that context, the deductibility of interest (and other financial) costs should only be allowed without restrictions to the extent that those costs can be offset against taxable interest (and other financial) revenues. Any surplus of interest costs should ~~however~~ be subject to deductibility restrictions, to be determined by reference to a taxpayer’s taxable earnings before interest, tax, depreciation and amortisation (‘EBITDA’).

2017/09/29
Committee: ECON

Proposal for a directive
Recital 10

(10) The fact that interest paid out on loans is deductible from the tax base of a taxpayer whilst this is not the case for profit distributions creates a definitive advantage in favour of financing through debt as opposed to equity. Given the risks that this entails for the indebtedness of companies, it is critical to ~~provide for measures which~~ neutralise the ~~current~~ bias against equity financing. In this light, it is envisaged to give taxpayers an allowance for growth and investment according to which increases in a taxpayer's equity should be deductible from its taxable base subject to certain conditions. Thus, it would be essential to ensure that the system does not suffer cascading effects and to this end, it would be necessary to exclude the tax value of a taxpayer's participations in associated enterprises. Finally, to make the scheme of the allowance sufficiently robust, it would also be required to lay down anti-tax avoidance rules, by gradually removing the possibility to deduct interest paid out on loans from the tax base of a tax payer.

2017/09/29
Committee: ECON

Proposal for a directive
Recital 12

(12) In order to discourage the shifting of passive (mainly, financial) income out of highly-taxed companies, any losses that such companies may incur at the end of a tax year should be presumed to mostly correspond to the results of trading activity. Based on that premise, taxpayers should be allowed to carry losses forward ~~indefinitely without restrictions on the deductible amount per year. Since the carry-forward of losses is intended to ensure that~~on the deductible amount per year during a tmax~~payer pays tax on its real income, there is no reason to place a time limit on carry forw~~imum of five yeards. Regarding the prospect for a loss carry-back, no such a rule would need to be introduced because that this is relatively rare in the practice of Member States, and tends to lead to excessive complexity. There should be no carry forward of losses incurred prior to the entry into force of this directive. Furthermore, an anti-abuse provision should be laid down in order to prevent, thwart or counter attempts to circumvent the rules on loss deductibility through purchasing loss-making companies.

2017/09/29
Committee: ECON

Proposal for a directive
Recital 13

(13) In order to facilitate the cash-flow capacity of businesses – for instance, by compensating start-up losses in a Member State with profits in another Member State – and encourage the cross-border expansion within the Union, taxpayers should be entitled to temporarily take into account the losses incurred by their immediate subsidiaries and permanent establishments situated in other Member States. For that purpose, a parent company or head office located in a Member State should be able to deduct from its tax base, in a given tax year, the losses incurred in the same tax year by its immediate subsidiaries or permanent establishments situated in other Member States in proportion to its holding. The parent company should then be required to add back to its tax base, considering the amount of losses previously deducted, any subsequent profits made by those immediate subsidiaries or permanent establishments. As it is vital to safeguard national tax revenues, the deducted losses should also be reincorporated automatically if this has not already occurred after a certain number of years or if the requisites to qualify as an immediate subsidiary or permanent establishment are no longer met.deleted

2017/09/29
Committee: ECON

Proposal for a directive
Recital 15

(15) It is crucial to provide for appropriate anti-tax avoidance measures in order to reinforce the resilience of the rules on a common base against aggressive tax planning practices. Specifically, the system should include an effective general anti- abuse rule (‘GAAR’), supplemented by measures designed to curb specific types of avoidance. Given that GAARs have the function of tackling abusive tax practices that have not yet been dealt with through specifically targeted provisions, they fill in gaps, which should not affect the applicability of specific anti-avoidance rules. Within the Union, GAARs should be applied to arrangements that are not genuine. It is furthermore important to ensure that the GAAR apply in a uniform manner to domestic situations, cross-border situations within the Union and cross- border situations involving companies established in third countries, so that their scope and results of application do not differ.

2017/09/29
Committee: ECON

Proposal for a directive
Recital 17

(17) Taking into account that the effect of hybrid mismatches is usually a double deduction (i.e. deduction in both states) or a deduction of the income in one state without inclusion in the tax base of another, such situations clearly affect the internal market by distorting its mechanisms and creating loopholes for tax avoidance practices to flourish. Given that mismatches generate from national differences in the legal qualification of certain types of entities or financial payments, they normally do not occur amongst companies which apply the common rules for calculating their tax base. Mismatches would however persist in the interaction between the framework of the common base and national or third- country corporate tax systems. To neutralise the effects of hybrid mismatches or related arrangements, it is necessary to lay down rules whereby one of the two jurisdictions in a mismatch deny the deduction of a payment or ensures that the corresponding income is included in the corporate tax base.

2017/09/29
Committee: ECON

Proposal for a directive
Recital 17 a (new)

(17a) Member States should not be prevented from introducing additional anti-tax avoidance measures in order to reduce the negative effects of shifting profits to low-tax countries outside the Union, which do not necessarily automatically exchange tax information according to Union standards.

2017/09/29
Committee: ECON

Proposal for a directive
Recital 23

(23) The Commission should be required to review the application of the Directive five years after its entry into force and report to the Council and the European Parliament on its operation. Member States should be required to communicate to the Commission the text of the provisions of national law which they adopt in the field covered by this Directive,

2017/09/29
Committee: ECON

Proposal for a directive
Article 2 – paragraph 1 – introductory part

1. The rules of this Directive shall apply to a company that is established under the laws of a Member State, including its permanent and virtual permanent establishments in other Member States, where the company meets all of the following conditions:

2017/09/29
Committee: ECON

Proposal for a directive
Article 2 – paragraph 1 – point c

(c) it belongs to a consolidated group for financial accounting purposes with a total consolidated group revenue that exceeded EUR 7540 000 000 during the financial year preceding the relevant financial year;

2017/09/29
Committee: ECON

Proposal for a directive
Article 2 – paragraph 2 a (new)

2a. This Directive shall also apply to a company that is established under the laws of a third country in respect of its virtual permanent establishments that are specifically directed towards consumers or businesses in a Member State or that principally receive their revenue from activity in a Member State, where the company meets the conditions laid down in points (b) to (d) of paragraph 1.

2017/09/29
Committee: ECON

Proposal for a directive
Article 2 – paragraph 4

4. The rules of this Directive shall not apply to a shipping company under a special tax regime. A shipping company under a special tax regime shall be taken into account for the purpose of determining the companies which are members of the same group as referred to in Article 3.deleted

2017/09/29
Committee: ECON

Proposal for a directive
Article 3 – paragraph 1 – point a

(a) it has a right to exercise more than 50 % of the voting rights; ~~and~~or

2017/09/29
Committee: ECON

Proposal for a directive
Article 3 – paragraph 2 a (new)

2a. The use of letterbox companies by taxpayers operating in the Union should be prohibited. Taxpayers should communicate to tax authorities evidence demonstrating the economic substance of each of the entities in their group, as part of their annual country-by-country reporting obligations.

2017/09/29
Committee: ECON

Proposal for a directive
Article 4 – paragraph 1 – subparagraph 1 – point 11

(11) 'research and development' means experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application or use in view (basic research); original investigation undertaken in order to acquire new knowledge but directed primarily towards a specific, practical aim or objective (applied research); systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing new products or processes or to improving existing products or processes (experimental development). R&;D investments generally include the costs of labour and to a lesser extend costs of machinery and equipment, costs of buildings and other current expenses related to the research activities;

2017/09/29
Committee: ECON

Proposal for a directive
Article 4 – paragraph 1 – subparagraph 1 – point 30 a (new)

(30a) 'economic substance' means factual criteria, including in the context of the digital economy, which can be used to define the taxable presence of an undertaking, such as the existence of human and physical resources specific to the entity, its management autonomy, its legal reality, the revenues it generates and, where appropriate, the nature of its assets;

2017/09/29
Committee: ECON

Proposal for a directive
Article 4 – paragraph 1 – subparagraph 1 – point 30 b (new)

(30b) 'letterbox company' means any type of legal entity which has no economic substance and which is setup purely for tax purposes;

2017/09/29
Committee: ECON

Proposal for a directive
Article 4 – paragraph 1 – subparagraph 1 – point 31 – paragraph 1 – introductory part

(31) 'hybrid mismatch' means a situation between a taxpayer and an ~~associated enterprise or a structured arrangement between parties in different tax jurisdictions~~other entity where any of the following outcomes is attributable to differences in the legal characteriszation of a payment, a financial instrument or an entity, or in the treatment of a commercial presence as a permanent establishment:

2017/09/29
Committee: ECON

Proposal for a directive
Article 4 – paragraph 1 – subparagraph 1 – point 31 – paragraph 1 – point b

(b) a deduction of a payment from the taxable base in the jurisdiction in which the payment has its source without a corresponding inclusion for tax purposes of the same payment in the ~~other~~ jurisdiction where the payment is received ('deduction without inclusion');

2017/09/29
Committee: ECON

Proposal for a directive
Article 4 – paragraph 1 – subparagraph 1 – point 31 – paragraph 1 – point c

(c) in case of differences in the treatment of a commercial presence as a permanent establishment, non-taxation of income which has its source in a jurisdiction without a corresponding inclusion for tax purposes of the same income in ~~the~~ another jurisdiction ('non- taxation without inclusion').

2017/09/29
Committee: ECON

Proposal for a directive
Article 4 – paragraph 1 – subparagraph 1 – point 33 a (new)

(33a) ‘tax haven’ means a jurisdiction characterized by one or several of the following criteria: (a) no or only nominal taxation for non-residents; (b) laws or administrative practices preventing the effective exchange of tax information with other jurisdictions; (c) legal or administrative provisions preventing tax transparency or the absence of requirement of a substantial economic activity to be carried out; (d) Financial systems with external assets and liabilities out of proportion to domestic financial intermediation; (e) the existence of very specific and restricted tax advantages or certain administrative practices that provide selective advantages for tax planners;

2017/09/29
Committee: ECON

Proposal for a directive
Article 4 – paragraph 1 – subparagraph 1 – point 33 b (new)

(33b) 'permanent establishment' means a fixed place of business situated in a Member State through which the business of a company of another Member State is wholly or partly carried on; in the case of companies engaging in fully or partly dematerialized digital activities, a virtual permanent establishment means a taxpayer having a significant economic presence in the jurisdiction directed towards consumers or businesses in this country and based on criteria including number of digital contracts concluded with costumers in the jurisdiction, profits coming from those digital activities, volume of digital content and data collected and number of registered users and views or downloads. Attention shall also be put to whether the virtual establishment is conducting its business under the top level domain of the Member State or of the Union or, in relation to mobile application based businesses, is distributing its application via the Member State specific part of a mobile application distribution centre.

2017/09/29
Committee: ECON

Proposal for a directive
Article 4 – paragraph 1 – subparagraph 2

The Commission may adopt delegated acts in accordance with Article 66 in order to update current definitions or lay down definitions of more concepts.

2017/09/29
Committee: ECON

Proposal for a directive
Article 5 – paragraph 1 – introductory part

1. A taxpayer shall be considered to have a permanent establishment or a virtual permanent establishment in a Member State other than the Member State in which it is resident for tax purposes when it has a fixed place or a digital presence in that other Member State through which it carries on its business, wholly or partly, including in particular:

2017/09/29
Committee: ECON

Proposal for a directive
Article 5 – paragraph 1 – point f a (new)

(fa) a digital platform or any other digital form remotely accessible to users.

2017/09/29
Committee: ECON

Proposal for a directive
Article 6 – paragraph 4

4. The tax base shall be calculated for each tax year ~~unless otherwise provided~~. A tax year shall be any twelve-month period~~, unless otherwise provided~~.

2017/09/29
Committee: ECON

Proposal for a directive
Article 9 – paragraph 2

2. The expenses referred to in paragraph 1 shall include all costs of sales and all expenses, net of deductible value added tax, that the taxpayer incurred with a view to obtaining or securing income, including ~~cost~~genuine expenses for research and development and under the conditions of Article 13, costs incurred in raising equity or debt for the purposes of the business.

2017/09/29
Committee: ECON

Proposal for a directive
Article 9 – paragraph 2 a (new)

2a. By way of derogation to paragraph 2, expenses for research and development shall not be deductible as far as they concern financial undertakings as defined in Article 3(29).

2017/09/29
Committee: ECON

Proposal for a directive
Article 9 – paragraph 2 b (new)

2b. Recurring costs relating to environmental protection and reduction of carbon emissions may also be regarded as deductible expenses.

2017/09/29
Committee: ECON

Proposal for a directive
Article 9 – paragraph 3 – subparagraph 1

In addition to the amounts which are deductible as costs for research and development in accordance with paragraphs 2 and 2a, the taxpayer may ~~also~~ deduct~~, per tax year,~~ an extra 50% of ~~such~~its costs~~, with the exception of the cost related to movable tangible fixed assets, that it incurred during that year. To the extent that costs for research and development reach beyon~~ for research and development up to EUR 10 000 000 where that taxpayer meets all of the following conditions: (a) it is an unlisted enterprise with fewer than 250 employees and an annual turnover and/or annual balance sheet total that does not exceed EUR 240 000 000~~, the taxpayer may deduct 25% of the exceeding amount~~; (b) it has not been formed through a merger; (c) it does not have any associated enterprises.

2017/09/29
Committee: ECON

Proposal for a directive
Article 9 – paragraph 3 – subparagraph 2

By way of derogation from the first subparagraph, the taxpayer may deduct an extra 100% of its costs for research and development up to EUR 20 000 000 where that taxpayer meets all of the following conditions: (a) it is an unlisted enterprise with fewer than 50 employees and an annual turnover and/or annual balance sheet total that does not exceed EUR 10 000 000; (b) longer than five years. If the taxpayer is not subject to registration, the period of five years may be taken to start at the moment that the enterprise either starts, or is liable to tax for, its economic activity; (c) merger; (d) enterprises.deleted it has not been registered for it has not been formed through a it does not have any associated

2017/09/29
Committee: ECON

Proposal for a directive
Article 9 – paragraph 3 – subparagraph 2 a (new)

Member States shall not grant additional R&D tax incentives to taxpayers on the outputs of their R&D processes.

2017/09/29
Committee: ECON

Proposal for a directive
Article 9 – paragraph 3 a (new)

3a. Member States shall put in place national innovation action plans with the aim of effectively stimulating research and development investments, including by granting public subsidies or guaranteed state loans. Member States shall transmit every year their action plans to the European Commission which shall review them and make recommendations, in particular with a view to avoid abuses of national R&D incentives.

2017/09/29
Committee: ECON

Proposal for a directive
Article 11

~~[...]~~deleted

2017/09/29
Committee: ECON

Proposal for a directive
Article 12 – paragraph 1 – point b

(b) 50 % of ~~entertainment costs~~ordinary and necessary entertainment costs directly related or associated with the business of the taxpayer, up to an amount that does not exceed [x] % of revenues in the tax year;

2017/09/29
Committee: ECON

Proposal for a directive
Article 13 – paragraph 2 – subparagraph 1

Exceeding borrowing costs shall be deductible in the tax year in which they are incurred for maximum of 310 % of the taxpayer's earnings before interest, tax, depreciation and amortisation (‘EBITDA’) or for a maximum amount of EUR 31 000 000, whichever is higher.

2017/09/29
Committee: ECON

Proposal for a directive
Article 13 – paragraph 2 – subparagraph 2

For the purposes of this Article, where a taxpayer is permitted or required to act on behalf of a group, as defined in the rules of a national group taxation system, the entire group shall be treated as a taxpayer. In those circumstances, exceeding borrowing costs and the EBITDA shall be calculated for the entire group. The amount of EUR 31 000 000 shall also be considered for the entire group.

2017/09/29
Committee: ECON

Proposal for a directive
Article 13 – paragraph 6

6. Exceeding borrowing costs that cannot be deducted in a given tax year shall be carried forward ~~without time limitation~~for a maximum period of two years.

2017/09/29
Committee: ECON

Proposal for a directive
Article 13 – paragraph 7

~~7. Paragraphs 1 to 6 shall not apply to financial undertakings, including those that are part of a consolidated group for financial accounting purposes.~~deleted

2017/09/29
Committee: ECON

Proposal for a directive
Article 13 – paragraph 7 a (new)

7a. Five years after the implementation date of this Directive, Member States shall no longer apply paragraphs 2 to X (currently 2, 3 and 6).

2017/09/29
Committee: ECON

Proposal for a directive
Article 41 – paragraph 1

1. Losses incurred in a tax year by a resident taxpayer or a permanent establishment of a non-resident taxpayer may be carried forward and deducted in subsequent tax years, ~~unless otherwise provided by this Directive~~during a maximum of five years.

2017/09/29
Committee: ECON

Proposal for a directive
Article 42

1. profitable after having deducted its own losses pursuant to Article 41 may additionally deduct losses incurred, in the same tax year, by its immediate qualifying subsidiaries, as referred to in Article 3(1), or by permanent establishment(s) situated in other Member States. This loss relief shall be given for a limited period of time in accordance with paragraphs 3 and 4 of this Article. 2. proportion to the holding of the resident taxpayer in its qualifying subsidiaries as referred to in Article 3(1) and full for permanent establishments. In no case shall the reduction of the tax base of the resident taxpayer result in a negative amount. 3. back to its tax base, up to the amount previously deducted as a loss, any subsequent profits made by its qualifying subsidiaries as referred to in Article 3(1) or by its permanent establishments. 4. Losses deducted pursuant to paragraphs 1 and 2 shall automatically be reincorporated into the tax base of the resident taxpayer in any of the following circumstances: (a) year after the losses became deductible, no profit has been reincorporated or the reincorporated profits do not correspond to the full amount of losses deducted; (b) referred to in Article 3(1) is sold, wound up or transformed into a permanent establishment; (c) establishment is sold, wound up or transformed into aArticle 42 deleted Loss relief and recapture A resident taxpayer that is still The deduction shall be in The resident taxpayer shall add where, at the end of the fifth tax where the qualifying subsidiary~~; (d)~~ as where the p~~arent company no longer fulfils the requirements of Article 3(1).~~ermanent

2017/09/29
Committee: ECON

Proposal for a directive
Article 47

A taxpayer bringing forward unrelieved losses incurred before the rules of this Directive became applicable to him or her, may deduct those losses from its tax base if and to the extent that the national legislation applicable to the taxpayer and according to which those losses were incurred, allow for such deduction.rticle 47 deleted Pre-entry losses

2017/09/29
Committee: ECON

Proposal for a directive
Article 53 – paragraph 1 – subparagraph 1

By way of derogation from points (c) and (d) of Article 8, a taxpayer shall not be exempt from tax on foreign income that the taxpayer received as a profit distribution from an entity in a third country or as proceeds from the disposal of shares held in an entity in a third country where that entity in its country of tax residence is subject to a ~~statutory~~n effective corporate tax rate lower than ~~half~~75% of the statutory tax rate that the taxpayer would have been subject to, in connection with such foreign income, in the Member State of its residence for tax purposes.

2017/09/29
Committee: ECON

Proposal for a directive
Article 53 – paragraph 1 – subparagraph 2

~~The first subparagraph shall not apply where a~~Member States’ conventions for the avoidance of double taxation between the Member State in which the taxpayer is resident for tax purposes and the third country where that entity is resident for tax purposes ~~does not allow switching over from a tax exemption to taxing the designated categories of foreign income~~shall be amended accordingly.

2017/09/29
Committee: ECON

Proposal for a directive
Article 58 – paragraph 1

1. For the purposes of calculating the tax base under the rules of this Directive, a Member State shall disregard an arrangement or a series of arrangements which, having been put in place for the ~~essential~~one of the main purposes of obtaining a tax advantage that defeats the object or purpose of this Directive, are not genuine, having regard to all relevant facts and circumstances. An arrangement may comprise more than one step or part.

2017/09/29
Committee: ECON

Proposal for a directive
Article 59 – paragraph 1 – subparagraph 1 – point b

(b) ~~the actual corporate tax paid by~~profits of the entity or the permanent establishment on its profits is lower than the difference between the corporate tax that would have been charged on the profits of the entity or permanent establishment in accordance with the rules of this Directive and the actual corporate tax paid on those profits by the entity or permanent establishmentare subject to an effective corporate tax rate lower than 75 percent of the effective tax rate that would have been charged under the applicable corporate tax system in the Member State of the taxpayer.

2017/09/29
Committee: ECON

Proposal for a directive
Article 59 – paragraph 3

3. An entity or permanent establishment shall not be treated as a controlled foreign company as referred to in paragraph 1 where not more than one third of the income accruing to the entity or permanent establishment falls within categories (a) to (f) of paragraph 2. Financial undertakings shall not be treated as controlled foreign companies under paragraph 1 where not more than one third of the income accruing to the entity or permanent establishment from categories (a) to (f) of paragraph 2 comes from transactions with the taxpayer or its associated enterprises.deleted

2017/09/29
Committee: ECON

Proposal for a directive
Article 61 – paragraph 1 – subparagraph 1

To the extent that a hybrid mismatch between Member States results in a double deduction of the same payment, expenses or losses, the deduction shall be ~~given only~~denied in the Member State wh~~ere such payment has its source, the expenses are incurred or the losses are suffered~~ich is the investor jurisdiction.

2017/09/29
Committee: ECON

Proposal for a directive
Article 61 – paragraph 1 – subparagraph 2

To the extent that a hybrid mismatch involving a third country results in a double deduction of the same payment, expenses or losses, the Member State concerned shall deny the deduction of such payment, expenses or losses, unless the third country has already done so. The burden of proof to demonstrate that a third country has denied the deduction lies on the taxpayer.

2017/09/29
Committee: ECON

Proposal for a directive
Article 61 – paragraph 2 – subparagraph 1

To the extent that a hybrid mismatch between Member States results in a deduction without inclusion, the Member State ofwhich is the payer jurisdiction shall deny the deduction of such payment. Where the deduction is not denied in the payer jurisdiction, the Member State concerned shall require the taxpayer to include the amount of the payment that would otherwise give rise to a mismatch in the income of the payee jurisdiction.

2017/09/29
Committee: ECON

Proposal for a directive
Article 61 – paragraph 2 – subparagraph 2 – introductory part

To the extent that a hybrid mismatch that involves a third country results in a deduction without inclusion:, the deduction shall be denied in the Member State which is the payer jurisdiction of such payment. Where the deduction is not denied in the payer jurisdiction, the Member State concerned shall require the taxpayer to include the amount of the payment that would otherwise give rise to a mismatch in the income in the payee jurisdiction.

2017/09/29
Committee: ECON

Proposal for a directive
Article 61 – paragraph 2 – subparagraph 2 – point a

~~(a) if the payment has its source in a Member State, that Member State shall deny the deduction, or~~deleted

2017/09/29
Committee: ECON

Proposal for a directive
Article 61 – paragraph 2 – subparagraph 2 – point b

(b) if the payment has its source in a third country, the Member State concerned shall require the taxpayer to include such payment in the taxable base, unless the third country has already denied the deduction or has required that payment to be included.deleted

2017/09/29
Committee: ECON

Proposal for a directive
Article 66 – paragraph 2

2. The power to adopt delegated acts referred to in Articles 2(5), 4(5), ~~11(6),~~ 32(5) and 40 shall be conferred on the Commission for an indeterminate period of time from the date of entry into force of this Directive.

2017/09/29
Committee: ECON

Proposal for a directive
Article 66 – paragraph 3

3. The delegation of power referred to in Articles 2(5), 4(5), ~~11(6),~~ 32(5) and 40 may be revoked at any time by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.

2017/09/29
Committee: ECON

Proposal for a directive
Article 66 – paragraph 5

5. A delegated act adopted pursuant to Articles 2(5), 4(5), ~~11(6),~~ 32(5) and 40 shall enter into force only if no objection has been expressed by the Council within a period of [two months] of notification of that act to the Council or if, before the expiry of that period, the Council has informed the Commission that it will not object. That period shall be extended by [two months] at the initiative of the Council.

2017/09/29
Committee: ECON

Proposal for a directive
Article 66 a (new)

Article 66a Minimum effective tax rate 1. Two years after the date of implementation of this Directive, Member States shall not be allowed to set an effective corporate tax rate below 20%, whilst no upper limit is set by this Directive. 2. By way of derogation of paragraph 1, Member States may request an extended deadline to the European Commission, so as to keep an effective corporate tax rate below 20% for longer than two years after the implementation of this Directive, but for no longer than seven years after its implementation. The derogation request shall be motivated and authorised by the European Commission. When deciding on a possible extension of the phasing-in period for a particular Member State, due account shall be taken of the specific situation of that Member State, the objective reasons for the request, and the impact of such a derogation on other Member States.

2017/09/29
Committee: ECON

Proposal for a directive
Article 66 b (new)

Article 66b Measures against tax treaty abuses Member States shall amend their bilateral tax treaties according to this Directive to ensure such treaties contain: (a) a clause ensuring that both parties to the treaty commit that tax will be paid where economic activities are taking place and where value is created; (b) an addendum to clarify that the objective of bilateral treaties, beyond avoiding double taxation is also to fight tax evasion and aggressive tax planning; (c) a clause for a principal purpose test based general anti-avoidance rule.

2017/09/29
Committee: ECON

Proposal for a directive
Article 67 a (new)

Article 67a Monitoring The Commission shall put in place a specific monitoring mechanism to ensure the proper implementation of this Directive and the homogeneous interpretation of its measures by Member States.

2017/09/29
Committee: ECON

Proposal for a directive
Article 69 – paragraph 1

The Commission shall, five years after the entry into force of this Directive, review its application and report to the Council and the European Parliament on the operation of this Directive.

2017/09/29
Committee: ECON

Proposal for a directive
Article 69 – paragraph 1 a (new)

The review shall include an impact assessment of an extension of the scope of this Directive to all companies.

2017/09/29
Committee: ECON

Proposal for a directive
Article 69 – paragraph 2

Notwithstanding the first subparagraph, the Commission shall, three years after the entry into force of this Directive, examine the functioning of Article 11 and consider adjustments to the definition and calibration of the AGI. The Commission shall undertake a thorough analysis of how the AGI can encourage companies that are entitled to opt for applying the rules of this Directive to finance their activities through equity.deleted

2017/09/29
Committee: ECON

Proposal for a directive
Article 69 – paragraph 3

~~The Commission shall communicate its findings to Member States with the aim to take those findings into account for the design and implementation of national corporate tax systems.~~deleted

2017/09/29
Committee: ECON

Proposal for a directive
Article 70 – paragraph 1 – subparagraph 1

Member States shall adopt and publish, by 31st December 20189 at the latest, the laws, regulations and administrative provisions necessary to comply with this Directive. They shall forthwith communicate to the Commission the text of those provisions.

2017/09/29
Committee: ECON

Proposal for a directive
Article 70 – paragraph 1 – subparagraph 2

They shall apply those provisions from 1st January 201920.

2017/09/29
Committee: ECON