Brussels, 06/02/2012 (Agence Europe) - On Monday 6 February, the French president, Nicolas Sarkozy, and the German chancellor, Angela Merkel, jointly chaired a meeting of French and German cabinet ministers in Paris to pursue a joint objective, namely making French and German companies more competitive by harmonising company tax in the two countries from 1 January 2013 onwards, tackling tax dumping in the EU and laying the foundations for joint company taxation that could be extended to other EU member states in the future.
At the meeting, the two leaders were handed a Green Paper outlining details of convergence of company taxation in the two countries, along with areas where it would not be beneficial to do so. The Green Paper recommends identical treatment of loans, mortgages, group systems, certain companies and parent-subsidiary relations, but suggests that harmonisation should not cover tax territoriality rules or research tax credits. The Green Paper says that company tax should be neither increased nor decreased, but the tax basis should be extended and taxation rates reduced where possible. Employers' organisations and the parliaments of the two countries will now be consulted to decide exactly what should be done.
There is a certain European interest in this because once up and running, the joint tax system could be copied by other European countries and in time be used to put pressure on countries like Ireland, which has a very competitive rate of company tax, far lower than its competitors, which is used to attract the headquarters of many multinationals to Ireland. (FG/transl.fl)