A review of the corporate tax framework within the EU will also provide the foundation for a more coherent and competitive EU approach in the global context.
Internationally, the OECD is working on the Base Erosion and Profit Shifting (BEPS) project to close loopholes that facilitate avoidance, and to find solutions to today's tax challenges, including those raised by the digital economy. The EU can build on these international reforms, and it must consider how best to integrate the results of the BEPS project at EU level 5 .
Certain factors which are unique to the EU need to be taken into account in developing effective solutions. These include the unique elements of the Single Market and the single currency area. The Treaties require that the fundamental freedoms – including the freedom of establishment – be respected. Reforms must therefore be tailored for the EU context and fix inconsistencies on an EU-wide basis. In this respect, the EU has the advantage of being able to introduce legislation.
A common EU approach will reinforce the Single Market as a whole and protect it from base erosion. EU solutions to implement the OECD BEPS measures and additional anti-avoidance initiatives should maintain a strong focus on preventing profits generated in the EU from being shifted elsewhere without being taxed anywhere in the EU.
