The European Parliament adopted its position on the legislative proposal entitled ‘Business in Europe: Framework for Income Taxation’ (BEFIT) by 370 votes to 160, with 107 abstentions, at its plenary session in Brussels on Thursday 13 November.
The rapporteur, Evelyn Regner (S&D, Austrian), relaunched discussions on this text in June (see EUROPE 13653/6). “Europe needs a fairer and more simplified approach to corporate taxation. A message communicated clearly by the Parliament to the EU Council through today’s ‘BEFIT’ vote”, she commented.
MEPs added a ‘significant economic presence clause’, which stipulates that companies with a turnover in excess of €1 million in a Member State will be deemed to be permanently established there (see EUROPE 13716/21).
In order to guarantee a minimum level of royalty taxation, MEPs propose to introduce a royalty limitation rule for companies within a scope. In addition, they suggest that a similar rule should also be introduced to prevent companies from transferring their profits to subsidiaries located in non-EU low-tax jurisdictions that do not carry out any real economic activity. They have also provided for faster tax write-offs for certain assets that support the EU’s climate, social, digital or defence objectives.
Finally, the recommendation provides that, if a subsidiary’s loss results in a negative taxable amount, the parent company may use it to reduce its own taxable income, but only for five years and shall be set off against the next positive tax base.
Read the recommendation: https://aeur.eu/f/jes (Original version in French by Anne Damiani)