The second session of the working party of the Council of the EU on the proposed common consolidated corporate tax base ('CCCTB') hit its first hurdles on Thursday 16 February (see EUROPE 11647).
One of the proposals aiming to breathe new life into the discussions - the super deduction mechanism for costs related to research and development - does not appear to have been much to the tastes of countries such as France and Germany, which are both reported to have openly criticised it and called for it to be deleted. These states would rather keep in place a little flexibility at national level for tax incentives. Other countries that are not greatly in favour of the proposal, such as the Netherlands and Ireland, would rather have a system based on tax credit rather than deductions.
The second charge mounted by the member states against the CCCTB relates to the impact study carried out by the Commission. The Commission is reported to have told the working party that all that was needed was to play on the rates (in other words increase them) to make the CCCTB neutral from a budgetary point of view. Ireland and Denmark, amongst others, are reported to have described this as ridiculous. The level of tax rates is still a sensitive issue. In addition, a number of countries are to carry out their own impact studies, among them Belgium and Ireland. They will be called upon to present their conclusions to the working party. The impact study is based on a CCCTB, whereas the base may never end up being consolidated. The 'consolidation' aspect of the legislative text, providing for results to be consolidated at group level by 2022, is the most sensitive element of the discussions. (Original version in French by Élodie Lamer)