Brussels, 10/06/2015 (Agence Europe) - According to a European source who has seen a version of the action plan (see EUROPE 11331), next week, the European Commission is planning to recommend (when it unveils its taxation action plan) that work should continue at the Council of Ministers on draft legislation already unveiled to introduce a common consolidated company tax basis (CCCTB) while new draft legislation is prepared. The Commission is also planning to take advantage of the reworking of the interest and dividends directive to ensure companies actually pay tax.
For the CCCTB, the Commission says that the time required to unveil new legislation should be used to make progress at the Council of Ministers on a number of international aspects of the CCCTB connected with the OECD's draft 'BEPS' to combat the inter-company transfer of profits. The legislation would, for example, adjust the definition of 'permanent establishment' to stop companies from artificially avoiding paying tax in countries where they do business. The European Commission says that a consensus deal on these aspects of BEPS (like the question of permanent establishment) should be legally binding.
The Commission will unveil new draft legislation for CCCTB “as soon as possible” and will drop all mention of the next eighteen months as the timeline, as stated in a previous version of the action plan. The first stage should decide upon the common tax basis and the Commission wants to revise aspects of the tax basis to reflect the talks at the Council of Ministers to ensure the plans will contribute to the jobs and growth agenda. It also wants to examine further development of favourable treatment of expenditure on research and development compared with the current proposals. The Commission is reported to be planning to be looking at whether to address the question of balance in how debt and the issuance of capital on the markets is treated for tax purposes (the corporate debt equity bias question), in order to give greater weight to the planned Capital Union (see EUROPE 11330).
On effective taxation, the Commission is expected to give more details than in the first draft action plan and will recommend that the Council of Minsters' Code of Conduct Group examine practices that lead to the payment of low levels of tax.
A revision of the interest and dividends directive will provide the first opportunity to avoid double taxation by introducing an amendment to ensure member states are no longer required by the directive to offer favourable treatment for interest payments and dividends if proper levels of tax are not paid elsewhere in the EU. After this first stage, the Commission will adjust the partner-subsidiary directive along the same lines. It wants to preserve member states' entitlement to tax revenue generated in the Single Market and reduce the loopholes that allow companies to wriggle out of tax.
Finally, for the list of non-cooperative non-EU jurisdictions, alongside publication of a compilation of member states' own lists, the Commission is planning for the next stage to be the coordination of counter-measures against non-cooperative jurisdictions to tackle failure to respect good governance in the fiscal domain. (Elodie Lamer)