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Fair and simpler taxation in the European Union

The draft of “Fair and simpler taxation supporting the recovery strategy” was presented and debated at the European Parliament Subcommittee on Tax Matters (FISC) meeting on 11 October 2021. The legislative own-initiative report contains concrete recommendations for legislative proposals covering the following topics: (i) simplification and costs of compliance reduction for taxpayers, (ii) more certainty for taxpayers and (iii) reduction of tax gap and compliance costs. In the field of direct taxation, the report welcomes the BEPS 2.0 and the Commission’s action plan announced through its May 18 Communication.

The report asks the Commission to assess the option introducing a pan-European (common) corporate income tax regime for certain European companies and starts-ups. In this case the system would be optional and the revenues would be allocated to Member States based on an agreed formula. The report also asks the Commission to propose a new and more consistent determination of tax residency for both individuals and companies within the EU. The text of the draft will be subject of further negotiations at the European Parliament. The aim is the adoption of the final draft in the form of a resolution.