The Common Consolidated Corporate Tax Base (CCCTB), proposed by the Commission in 2011, could be an extremely effective tool for meeting the objectives of fairer and more efficient taxation.
The CCCTB would greatly improve the environment for businesses in the EU. It is one of the Commission's REFIT initiatives, aimed at reducing administrative burdens and simplifying the Single Market for businesses. The CCCTB would reduce the complexities and compliance costs for cross-border companies, who would only have to follow one set of rules when computing their taxable income, rather than face up to 28 different systems. In addition, consolidation offers groups the significant advantage of being able to offset losses in one Member State against profits in another.
At the same time, the CCCTB could be highly effective in tackling profit shifting and corporate tax abuse in the EU. The common base would eliminate mismatches between national systems which aggressive tax planners often exploit, and remove the possibility of using preferential regimes for profit shifting. The possibility to manipulate transfer pricing would be removed, as intra-group transactions would be ignored and the consolidated group profit figure shared by a formula. The CCCTB could also be a useful instrument to address the debt bias. Moreover, the common base would introduce complete transparency on the effective tax rate of each jurisdiction, thereby reducing the scope for harmful tax competition.
In addition, the CCCTB would allow Member States to implement a common approach vis-à-vis third countries and defend the Single Market against aggressive tax planning. For example, Member States would have a unified response to controlled foreign companies, to prevent profits from being shifted to non-cooperative tax jurisdictions.
Given the benefits that the CCCTB can offer, and taking into account the comments of Member States, businesses and other stakeholders, the Commission has decided to re-launch the CCCTB. The aim is to strengthen the CCCTB so that it addresses the current challenges in corporate taxation. The key changes will be:
