MAJOR CORPORATE TAX REFORM PROPOSED BY THE COMMISSION

The European Commission announced plans to overhaul company taxes in the Single Market, delivering a growth-friendly and fair corporate tax system. The Common Consolidated Corporate Tax Base (CCCTB), as part of a broader package of corporate tax reforms, will make easier and cheaper to do business in the Single Market and will act as a powerful tool against tax avoidance by closing off avenues used for tax avoidance.

As a result of the CCCTB, companies will have a single rulebook for calculating their taxable profits throughout the EU. The new corporate taxation system will be mandatory for large multinational groups which have the greatest capacity for aggressive tax planning, making certain that companies with global revenues exceeding EUR 750 million a year will be taxed where they actually make their profits. The aims in addition are to tackle loopholes currently associated with profit-shifting for tax purposes, to encourage companies to finance their activities through equity and by tapping into markets rather than turning to debt, and to support innovation through tax incentives for Research and Development (R&D) activities. Corporate tax rates are not covered by the CCCTB, as these remain an area of national sovereignty.