On Monday 14 July, the European Parliament's Committee on Economic and Monetary Affairs (ECON) examined the amendments relating to the ‘Business in Europe: A Framework for Income Taxation’ (BEFIT) initiative. For the time being, opinions differ.
The initiative, which was unsuccessful during the previous mandate (see EUROPE 13653/6), has been the subject of a new draft report, drawn up by MEP Evelyn Regner (S&D, Austrian). 361 amendments were tabled.
As was expressed when the draft report was presented in June, lowering the turnover threshold from €750 million to €40 million for income after the transition period is not convincing to the more conservative fringe of the European Parliament.
“This would bring many more companies under BEFIT-SCOPE, break-in alignment with pillar two and creating even more complex tax environment and significant burdens for companies even for the smaller ones”, said Enikő Győri (PfE, Hungarian). The EPP also wishes to maintain the threshold initially proposed.
Luděk Niedermayer (EPP, Czech), representing his compatriot Danuše Nerudová, expressed “strong reservation about the allocation rule based on tangible factors”. “More broadly, we believe the use of the delegated act should be limited as much as possible”, he said, describing them as “unpredictable and concentrating too much power in the hands of a single institution”.
On flat-rate distribution, Gilles Boyer (Renew Europe, French) called for “a comprehensive and impact assessment at the end of the transitional period to evaluate its effects on competitiveness, administrative burden, and legal certainty”. The MEP wanted to reword the part of the text concerning royalties and controlled foreign companies, so as not to penalise structures with real economic substance.
Finally, Manon Aubry (The Left, French) deplored the fact that the distribution formula was not based on the real economic activity of companies: “Tax avoidance, which until now has been swept under the carpet, is becoming the rule”.
The text will be put to the vote on Wednesday 24 September.
Read the amendments: https://aeur.eu/f/hvi (Original version in French by Anne Damiani)