MEPs of the European Parliament’s Committee on Economic and Monetary Affairs (ECON) examined, on Thursday 15 February, the amendments to the draft report on the ‘Business in Europe: Framework for Income Taxation’ (BEFIT) initiative (see EUROPE 13349/26). They stressed the importance of taking account in this text of the directive transposing pillar II of the OECD agreement on the minimum international taxation of multinationals, which came into force on 1 January (see EUROPE 13320/17).
The BEFIT Directive proposes a set of common rules for calculating the tax base for large cross-border groups of companies in the EU. Its objectives are therefore to harmonise European tax systems more closely and to facilitate cross-border activities by reducing administrative complexity and compliance costs. The 314 amendments tabled relate, among other things, to the minimum level of annual income for groups of multinational companies, the mandatory and optional scope of application, the transition period and the distribution key.
Eleni Stavrou (EPP, Greek) and Gilles Boyer (Renew Europe, French) both insisted on the alignment between ‘BEFIT’ and Pillar II. “A misalignment might lead to undesired outcomes of increased complexity”, stressed Ms Stavrou. “Therefore we included amendments to maintain the threshold as introduced in Pillar II as well as amendments in their adjustments on the financial accounting net income or loss section to align with Pillar II”, she explained.
She also welcomed the European Commission’s proposals to take account of the specific characteristics of the sector and said she hopes that they will be maintained in the text. “We believe that this being taken into account, the framework will be simpler and less overburden for the companies”, she said. She also stressed the importance of the Commission carrying out and presenting a full review and impact assessment before the end of the transition period.
For his part, Mr Boyer said he was “in favour” of a transition period between now and 2035 for the distribution of taxing rights between Member States, as proposed by the Commission at the end of this transition period. He also supports the distribution formula based on specific factors.
“On the other hand, given that we are talking about a fairly distant future – 10 years – we need to retain a degree of flexibility with regard to the content of this formula, by including measures in the text to ensure that, when the time comes, we are perfectly aligned with the rules in force at international level and that the factors selected are indeed relevant”, he stressed.
“We have a common objective and it is important to achieve it”, concluded the rapporteur, Evelyn Regner (S&D, Austrian), highlighting the importance of bringing coherence to a highly fragmented market. Negotiations are due to end on Tuesday 27 February.
To read the proposed amendments: https://aeur.eu/f/avl (Original version in French by Anne Damiani)