Work is continuing, but problems persist over the common consolidated corporate tax base (CCCTB). The meeting of the national experts at the Council on Wednesday 26 April aimed to discuss the initial compromise proposals of the Maltese Presidency of the Council on what the member states like to call the "new aspects" of the proposal, in other words the super-deduction for research and development costs, the system of notional interest and the cross-border loss offsetting mechanism to compensate for the absence of consolidation from the first phase of the CCCTB.
On the super-deduction, there will be many pitfalls, as countries including Germany and France are calling to be able to retain flexibility. Wednesday's discussions also touched upon patent boxes, tax schemes favourable to intellectual property.
Italy had furthermore prepared a document explaining the anti-abuse measures of its system of notional interest. What is at issue here is that the Commission is providing for the anti-abuse measures of its own system ('allowance for growth in investment') to be defined by means of delegated acts. However, the Council does not like anything that could reduce its power over legislative decisions on taxation matters; hence the idea of including the anti-abuse measures in the directive during the negotiations. The Commission has taken its inspiration from the Italian system of notional interest, but this does not mean that the European countries will necessarily be happy to copy and paste the Italian anti-abuse measures.
If detailed anti-abuse rules should be included in the directive itself, this will require considerably more technical work, the Presidency argues, asking the delegations for written contributions.
In a draft compromise on this provision, although the system is fiscally favourable to capital increases, it aims to work in the opposite direction in the event of a company reducing its capital. Instead, the Presidency proposes to freeze the benefits of the system if the reduction of the level of capital of a company is the result of a loss.
Lastly, countries are split over relaunching negotiations on the interest and royalties directive. France and Germany were reportedly open to the Maltese Presidency's compromise proposal. Readers may recall that the Presidency proposed that the state of origin of a payment of interest or royalties would not apply the directive to payments benefiting from preferential regimes in the company's state of residence. A preferential measure allows a significantly lower level of taxation, including zero taxation, than the levels generally applicable in the member state in question, the Presidents document clarifies.
However, delegations such as the Netherlands are reported to have attempted to re-table the idea of excluding patent boxes that comply with the international approach of the OECD, but with mixed results. (Original version in French by Élodie Lamer)