EU Commission Seeks to Revive Corporate Tax-Base Plan

EU Economic and Tax Commissioner Pierre Moscovici
Pierre Moscovici, European Union economic and tax commissioner. Photographer: Kostas Tsironis/Bloomberg

The European Union will press for countries in the bloc to align their corporate tax bases as part of efforts to overhaul a long-stalled proposal, according to a document prepared for discussions on Wednesday.

The paper doesn’t call for EU nations to adopt the same tax rates. Instead, the European Commission aims to make it harder for companies to dodge taxes by aligning the way governments define what to tax.

The commission, the EU executive in Brussels, would revamp its proposal for a “common consolidated corporate tax base” with the aim of winning more support among the bloc’s 28 member states, according to the May 20 document obtained by Bloomberg News. The new plan will be put forward on June 17, after initial discussions this week in Brussels.

If the package goes forward, the commission would spend the next 18 months revamping the proposal and splitting it into two elements. The new proposal would involve mandatory changes toward a common corporate tax base while delaying any move to consolidate profits and losses across national borders, the commission document shows.

“Postponing consolidation implies that until its introduction in the future, losses can be carried forward and offset against current and future profits only within the same country,” according to the document.

The proposal also calls for short-term measures so the EU can adopt global taxation standards while it reviews the tax-base plan. It also suggests allowing “the possibility” for cross-border companies to offset profits and losses alongside safeguards for countries that lose revenues as a result.

Tax-Base Plan

Tax rules across the 28-nation bloc must be approved unanimously to take effect. EU Economic and Tax Commissioner Pierre Moscovici said in March that a corporate tax-base plan for a smaller group of nations would be a “last resort” if negotiations fail to reach a broader deal.

“The commission has no plans to propose a minimum rate of taxation for businesses in the EU,” Vanessa Mock, a spokeswoman for the commission, said by e-mail. “More broadly, we do however want to ensure effective taxation of profits where they are generated,” she said, adding that “the June Action Plan will set out concrete steps that could be taken towards achieving this goal.”

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