Taxation

EU Parliament in favor of common corporate tax base


On April 19, 2012, the members of the European Parliament voted in favor of the compulsory introduction of a common corporate tax base with a clear majority of 452 against 172 votes at first reading of the consultation procedure. With this decision, the Parliament goes beyond the draft legislation of the European Commission, which only provides for a voluntary system.

The common corporate tax base (CCTB) will become mandatory after expiry of a transitional period. European companies and cooperatives shall be the first to apply the new system. After five years, all large enterprises will be obliged to put the system into use. Only small and medium-sized enterprises (SME) will be exempted from the mandatory CCTB system, although voluntary participation shall be facilitated.

The introduction is not expected to fail, even if met with resistance by individual Member States. Should the latter be the case, the Parliament suggests to those states willing to introduce the system to proceed along the institutionalized path of "enhanced cooperation".

Marianne Thyssen, parliamentary correspondent for the European People's Party (EPP), gives the following reasons for the decision: "This harmonized system for the calculation of the tax base would enable organizations to consolidate the results of their individual companies and branch offices and thereby also to offset losses recorded by single subsidiaries. This facilitates the opening of regional offices in different member states and leads to a reduction of the administrative burden for enterprises. Furthermore, the system ensures that not only fiscal considerations, but also economic and social aspects are decisive criteria for the choice of location."

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