EC Public consultation on CCCTB
3. Important notice on the publication of responses
*Please note: In order to ensure a fair and transparent consultation process only responses
received through our online questionnaire will be taken into account. Furthermore,
the European Commission will prepare a report summarising the responses. Contributions
received are thus intended for publication on the Commission’s website.
Do you agree to your contribution being published? ,
XX Yes I consent to all of my answers being published under my name ,
Yes, I consent to all of my answers/personal data being published anonymously .
No, I do not want my response to be published.
*I declare that none of the information I provide in this consultation is subject to copyright
restrictions
XX Yes
No
4. Policy directions
The Commission believes that the CCCTB system can be an effective tool against
aggressive tax planning and at the same time retain its attractiveness to the business.
What are your views?
I agree
Neutral
I don't agree
Other
Comments (optional):
2000 character(s) maximum (2000 characters left)
The original plan for a CCCTB, dating back to a Council decision under the
presidency of The Netherlands in 2004, was aimed at creating a strong and dynamic
Internal Market, able to compete with other major economies. EU having some 550
mln. people is a major trade force but not when fragmented into 28 different taxing
jurisdictions all competing for FDI. In addition, 28 MS with much intra-MS trade would
1
continue to create issues and conflicts on how to share the EU wide profits of a
corporate taxpayer.
ICC sees the CCCTB foremost and most urgent as a tool to create a strong Internal
Market. The additional effect of stopping undesired behaviour is beneficial for intraEU transactions but will apply to transactions with non-EU parties. In addition, the
political desire to use CCCTB to address aggressive tax planning cannot and should
not go further than agreed by G20/OECD. If it were to do so, CCCTB will reduce
growth in the EU rather than stimulate; other trade blocks will be more attractive from
an FDI and competition angle.
ICC is concerned about the collision between the recently agreed ECOFIN anti-BEPS
proposals and the anti-avoidance measures (end January 2016) and CCCTB
proposals (Summer 2016) to be announced by the EU Commission.
The Commission envisages re-launching the CCCTB in a staged approach which will
consist of 2 steps: Firstly, agreement on the tax base, secondly, moving on to
consolidation.
What are your views on the staged approach?
in favour of the staged approach
Neutral
I'm against the staged
approach
Other
Comments (optional):
2000 character(s) maximum (2000 characters left)
The business community urgently needs stability and certainty. These two elements
are crucial when deciding on new investments and location thereof. Given past track
record, it is difficult to believe that MS will be willing to move (even if agreed in a
document) from CCTB to CCCTB at an agreed date. The political landscape in EU
does not excel in stability. Hence the two staged approach is seen as unnecessarily
losing time and we urge the Commission to put the efforts instead into creating a true
CCCTB as quickly as possible. The Commission is working on this since 2004 and it
will be a major challenge on its own; the intermediate step complicates matters.
It is a priority of the Commission to promote discussion in Council of certain BEPSrelated international aspects of the common base before the re-launched CCCTB is
proposed. The aim will be to arrive at consensus on how to implement certain OECD
anti-BEPS best practice recommendations in a uniform fashion across the EU. The
2
intention would be to create a common playing field in defending the Single Market
against base erosion and profit shifting.
What are your views on agreeing on such a common approach?
I'm in favour of such a common approach
Neutral
Don't know
Other
I'm
against
such a
common
approach
Comments (optional):
2000 character(s) maximum (2000 characters left)
ICC agrees with G20/OECD to address the BEPS topics. However, spending time on
obtaining consensus between MS ahead of CCCTB is not a useful exercise. Such
consensus BEPS measures, once agreed, first have to be translated into domestic
legislation in all 28 MS. This is a long and tedious process and only prolongs the
current period of instability and uncertainty. ICC rather sees the efforts focussed on
getting the CCCTB off the ground and moving.
In case the Commission wants to address BEPS ahead of CCCTB we urge the
Commission to undertake impact assessments and analyse effects of implementing
these measures in comparison to other trade blocks (USA, China, India). BEPS has
shown that the global tax landscape is best characterised by a global play field and
this should be levelled, not uprooted by EU measures.
5. Scope, Anti-avoidance
5.1 Scope of the CCTB/CCCTB proposal
The Commission considers making the new proposal for a CCCTB obligatory for all EU
companies which are part of a group. A group can be formed:
- Between parent and subsidiary companies where there is a holding of more than 50%
of the voting rights; and direct or indirect holding amounting to more than 75% of capital
or more than 75% of the profit rights); or
- Between a Head Office and its permanent establishment where a company has one or
more permanent establishment in other Member States.
What are your views on making the proposal for a CCCTB obligatory for all EU
companies which are part of a group?
I'm in favour of this
obligation
Neutral
Don't know
Other
I'm against this
obligation
Would you suggest a different approach to defining who should be required to use the
3
CCCTB? If yes, please explain your suggestion briefly.
2000 character(s) maximum (2000 characters left)
We favour a CCCTB stimulating growth within the EU. If so, it will also stimulate
growth in other countries, developing and developed. CCCTB should not be a
hindrance to starting a cross border business nor should it be a barrier to non-EU
business wanting to set-up shop in the EU. We do not know whether the 28 MS will
continue to run two systems, CCCTB and domestic tax rules. All these elements let us
conclude to analyse the impact of proposal that could deteriorate or improve the
functioning of the Internal Market. The methodology used in earlier studies should be
reviewed; it did not sufficiently take into account the impact of not having CCCTB
compared to having CCCTB for the attractiveness of the EU for new business
investments and activities.
With respect to SME’s, we consider it already now relevant to determine a threshold
below which no obligation exists to file a CCCTB tax return. The threshold can be a
mix of countries (say minimum 3) and turnover.
The Commission envisages providing the following option:
Companies which would not be subject to the mandatory CCCTB - because they do not
fulfil the requirements of being part of a group - could still have the possibility to apply
the rules of the system.
What are your views on offering non-qualifying companies the option to apply the
rules?
I'm in favour of this
option
Neutral
Don't know
Other
I'm against this
option
Comments (optional):
2000 character(s) maximum (2000 characters left)
Having a choice is evidently attractive to taxpayers.
5.2 Anti-avoidance elements
In view of recent developments, the CCCTB system should include more robust rules to
defend itself against aggressive tax planning.
Which of the elements of the CCCTB system would you reinforce so that the
system can better respond to tax avoidance?
(Multiple answers possible)
Rules for limiting interest deductibility
Disallowance of tax exemption for portfolio participations
Exit taxation rules
More robust rules on controlled foreign companies regimes (CFC)
4
Anti-abuse rules based on effective rather than statutory rates
Addressing distortions caused by debt/equity bias
Other suggestion :
A. ICC considers the inclusion of a mandatory and binding dispute
resolution framework necessary. Such resolution process should
be completed in a short time period (eg. 6-12 months after conflict
has first been identified).
 By way of background: ICC, as the world business organization,
notes in the event all countries around the world were to agree
to such framework -- thus eradicating likelihood of double
taxation-- most anti-avoidance rules would generate less
objection by business. Currently these rules are a major source
of conflict and disputes between countries. Such dispute
resolution framework will not only be required for CCCTB
(resolution of profit allocation conflicts to MS) but also for EU
versus non-EU countries.
B. The One Stop Shop principle should be included in the CCCTB. Not
only does it assist taxpayers in their dealings with the Revenue
Authorities in the EU, it also assists MS in their quest regarding
tax avoidance.
None of the above
6 Hybrid Mismatches, Research and Development
6.1 Hybrid mismatches
Hybrid mismatches are the result of disparities in the tax treatment of an entity or
financial instrument under the laws of two or more States. Currently, arrangements can
be set up to exploit such mismatches for the purpose of lowering their overall tax
burden. The risk of such arrangements would be removed in transactions between
enterprises applying the common tax base rules within a consolidated group. It would
however persist in relations with enterprises outside the common rules as well as during
step 1 of the staged approach to a CCCTB, in the absence of tax consolidation amongst
the companies applying the common rules.
One option to address hybrid mismatches would be to require enterprises to follow in a
Member State the classification of entities and/or of financial instruments adopted in the
other Member State or the third country which is party to the transaction.
In your view, can hybrid mismatches be effectively addressed through any other
measures than the one suggested above?
Yes
No
Don't
Other
know
Please explain your response and/or provide further comments:
5
We are unpleasantly surprised by the suggestion that EU may chart a different course
than agreed by G20/OECD on BEPS and Action 2 specifically. This even more so
since the EU Commission, part of the G20, agreed on November 16, 2015 the
measures should have a “widespread and consistent implementation” (our
underlining; ref. para 15 of the Communique in Antalya).
6.2 Treatment of costs for Research and Development
In the currently pending CCCTB proposal, the Commission has proposed a
favourable treatment of costs for Research and Development (R&D) by
making these costs fully deductible in the tax year they are incurred, with
the exception of costs relating to immovable property.
What are your views on the existing framework for R&D?
I support the existing framework for R&D
Neutral
Don't know
Other
I don't
support
the
existing
framework
for R&D
Comments (optional):
2000 character(s) maximum (2000 characters left)
In addition to the existing framework, the Commission could consider including in the
CCCTB proposal the flexibility for temporarily increasing the incentives. This in case
necessary to give R&D a boost in EU. This observation not only applies to R&D but to
all elements likely relevant to stimulate business activities in the EU. The impression
currently exists the CCCTB text will be grafted in stone and difficult to change once
adopted. What the effects are can be seen in the USA.
One option for rendering the CCCTB more favourable to promoting R&D
could be to introduce more generous provisions for deducting R&D costs,
such as super deductions which are currently applied by a number of
Member States (e.g. Croatia, the Netherlands and the UK)?
What are your views on making the existing framework for R&D more
favourable?
I'm in favour of making the existing framework more
favourable for R&D
Neutral
I'm
against
making
the
existing
framework
6
more
favourable
for R&D
Don't know
Other
Would you suggest an alternative scheme? If so, please explain in your response and/or
provide further comments
2000 character(s) maximum (2000 characters left)
See our comments in previous box on R&D and flexibility of rules.
7 Debt-Equity Tax Bias, Cross-Border Loss Relief
7.1 Debt-Equity Tax Bias
Corporate tax systems usually favour debt-financing over equity-financing by treating
interest payments as a tax deductible expense with no equivalent deduction for the
return paid to equity.
Should the aspect of debt-equity tax bias be addressed in the proposal?
Yes
Neutral
Don't
know
Other
No
Comments (optional):
2000 character(s) maximum (2000 characters left)
The proposal should follow and not deviate from the BEPS agreed Actions and
specifically Action 4 with respect to this topic. The reasons for this have been
explained earlier in this contribution.
The corporate tax debt-equity bias could be addressed via three possible policy options.
- Option 1 is the Comprehensive Business Income Tax (CBIT) that disallows any
financing costs as deductible expense.
- Option 2 is the Allowance for Corporate Equity (ACE) that allows the deductibility of
actual interest payments and of a notional interest on equity.
- Option 3 is the Cost of Capital Allowance (COCA) that allows the deductibility of a
notional interest on capital (equity and debt).
In your view, which option would be best suited to address the debt-equity
tax bias?
Comprehensive Business Income Tax
(CBIT)
7
Allowance for Corporate Equity (ACE)
Cost of Capital Allowance (COCA)
None of the above
Don't know
Other
If you suggest that another option would be better suited to address the debt-equity tax
bias, what design would you suggest? Please explain your response and/or provide
further comments:
Comments (optional):
2000 character(s) maximum (2000 characters left)
7.2 Temporary mechanism for cross-border loss relief
The Commission envisages proposing a temporary mechanism for crossborder loss relief with recapture until the consolidation step (CCCTB) is
agreed. The aim will be to balance out the absence of the benefits of
consolidation during the first step (CCTB) of the proposal.
What are your views on such a temporary mechanism for crossborder loss relief?
I'm in favour of such a temporary mechanism
Neutral
Don't know
Other
I'm against
such a
temporary
mechanism
Which other measures could temporarily substitute the absence of consolidation?
Please explain your response and/or provide further comments.
The only functioning substitute can be mandatory and binding dispute resolution on
all matters relating to tax. The current avalanche of tax disputes between MS, and
rising, renders the term Internal Market an anachronism.
Comments (optional):
2000 character(s) maximum (2000 characters left)
Such a temporary cross-border loss relief system will take time away from the most
urgent action: to get a growth and jobs stimulating tax system in the EU. This can
only be based on full consolidation.
As an aside: the problems since 2004 in the discussions between MS and
Commission show discussions on loss relief are expected to be on par with the
allocations of profit discussions after 2004. Hence unnecessarily a loss of time.
8
8 Final remarks, additional information
Is there anything else you would like to bring to the attention of the Commission?
ICC looks forward to the time the EU has a well functioning corporate tax system,
doing justice to the Internal Market. This would boost the attractiveness of the EU
compared to other trade blocks. Ahead of this, we suggest MS to follow the OECD
Forum on Tax Administration (FTA) call to introduce a framework of cooperative
compliance. Most MS in the EU still do not have this system in place. For those MS
wanting to be truly be engaged and have full insight, we suggest to follow the FTA
suggested joint tax audit route. The benefit for the taxpayer should be no double
taxation and no expensive conflicts between MS disagreeing on how to share the
profits.
Whatever the EU Commission decides by way of next step, we consider it imperative
a thorough and detailed impact assessment is carried out on proposals to be
published. This enables political decision makers to know what the impact is of any
scenario and route published. The tax proposals are crucial to determining whether or
not to invest in the EU, what the expected net earnings are from fresh corporate
monies invested within the EU. Whether the EU sees this as relevant will become
clear in the months to come. We are ready to discuss our ideas with the Commission.
files
9