MEP Evelyn Regner (S&D, Austrian) relaunched discussions on the initiative ‘Business in Europe: Framework for Income Taxation’ (BEFIT), which had not been successful during the previous mandate (see EUROPE 13351/5). On Wednesday 4 June, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) discussed her new report.
“This is a fundamental step towards a more integrated and a more fair European Union”, said the rapporteur. BEFIT, presented in June 2023 (see EUROPE 13205/2), proposes a common system for calculating the tax base of large cross-border companies operating within the EU, and thus introduces a means of distributing it between Member States “in a transparent, predictable and fair manner”, according to the Commission.
In her new report, Mrs Regner proposes four main amendments. To maximise the effectiveness of the text, she proposes to lower the revenue threshold after the transitional period to €40 million, instead of €50 million, so that more large companies fall within the scope. While Manon Aubry (The Left, French) approved of this lowering, Danuše Nerudová (EPP, Czech) and Gilles Boyer (Renew Europe, French) were more sceptical. Ms Nerudová is concerned that this will have “a considerable impact on businesses and run counter to our objective of improving competitiveness”.
The rapporteur also suggested strengthening the rules on limiting interests and the rules on controlled foreign companies. In this way, she hopes to make it more difficult to artificially transfer profits between jurisdictions. She refined as well the depreciation rules to avoid significant tax base losses.
Finally, she wants to give priority to investment-based tax incentives, particularly for research and development, while limiting tax loopholes. After 2035, the transitional allocation method would be replaced by a formula based on material factors with the aim of balancing labour-related assets and sales. This is to better reflect real economic activity and eliminate the need for complex transfer pricing within the groups concerned.
MEPs have until Thursday 12 June to table their amendments. On the EU Council side, work is still in progress.
To read the draft report: https://aeur.eu/f/h6d (Original version in French by Anne Damiani)