Common Consolidated Corporate Tax Base

EU.

The Common Consolidated Corporate Tax Base (CCCTB) is a European Commission proposal (March 2011).

CCCTB would be a single set of harmonised rules for calculating taxable profits, to replace the current different, national corporate tax rules in each EU Member State. Companies or qualifying groups of companies operating within the EU would use the proposed rules to calculate their taxable profits and losses, and file a single consolidated tax return for the whole of their EU activity. The calculated taxable profits would be shared among Member States on a formula, perhaps related in certain proportions to turnover, wage bill, number of employees, physical capital and such. Each Member State would then collect tax at its own national rate on its portion of the total profits.

A purpose of the common tax base would be to make tax competition among Member States more transparent.

Critics of harmonisation see base differences as socially useful competition among Member States, allowing States differently to influence behaviour of companies as well as influencing tax revenues. Such critics also tend to value competition on tax rates. The critics view both these factors as encouraging governments to be more efficient.

Supporters of harmonisation see base differences (and often rate differences too) as distortions, encouraging damaging corporate tax arbitrage between competing jurisdictions.

Progress

At Autumn 2014, no agreement had been reached on tax base harmonisation.

Supporters of harmonisation continue to argue the case, especially before their domestic electorates. Supporters of harmonisation have also proposed the introduction of a common tax base among a voluntary coalition of willing Member States (enhanced co-operation) if agreement among all Member States is not forthcoming.

For example, French President François Hollande [1] said in 2014 that he wanted "[tax base] harmonisation with our largest neighbours" by 2020.

In June 2015, the Commission presented a strategy to re-launch the CCCTB.

The aim of the re-launch was to kick-start negotiations on the CCCTB in Council, which stalled largely due to the scale of the proposal.

The Commission will come forward with a new proposal to revive the CCCTB, based on two key changes.

It will propose:

1. A mandatory CCCTB - to improve its capacity to prevent profit shifting.

2. The CCCTB is introduced through a step-by-step approach - to make it more manageable for Member States to agree.

See also

• Base erosion and profit shifting
• Corporation Tax
• Tax base

Other links

• The Common Tax Base, European Commission