The Effect of Corporate Tax Base Harmonization in the EU

23 October 2016

The European Commission (EC) has renewed its proposals on the Common Consolidated Corporate Tax Base (CCCTB) initiative. The initiative refers to two proposals by the European Commission for an EU-wide tax code aimed at companies operating in more than one Member State. Under CCCTB, businesses would compute their annual EU taxable income and apportion shares of it to different Member States according to a set formula, taking into account revenue, employee numbers, wages and assets. Under CCCTB, each Member State would apply national tax rates on profits of its companies. The renewed proposal introduces a two-step approach: efforts will first concentrate on compiling the rules for the Common Corporate Tax Base (CCTB), and consolidation (CCCTB) will be left for a later stage. According to the EC, Member States will have to transpose the CCTB directive into their national laws by 31 December 2018 and CCCTB directive by 31 December 2020.

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