By Ninja-Antonia Reggelin & Julie Martin
Germany and France’s joint proposal for an EU-wide common corporate tax base (CCTB) would apply to all companies, regardless of size, and would exclude tax incentives for research and development or equity financing, the countries’ June 19 joint position paper says.
Germany and France have been working to jointly develop a CCTB position to propose to the rest of Europe.
The requirement of unanimity among the Member States has made harmonized EU corporate taxation difficult to attain in the past, so this surprisingly detailed position paper of the two European powerhouses could revive and increase the pace of negotiations on the proposed two-step approach of the EU‘s Commission’s CC(C)TB Directive.
According to this latest German-French position paper, the two countries have agreed that the CCTB should apply to all corporate entities regardless of their size, namely, without a revenue threshold. It, however, remains unclear if and how especially German partnerships would be treated.
Moreover, several of the EU Commission’s proposals are deleted, such as all tax incentives for research and development and equity financing.
Cross-border loss relief is only to be considered during the second step (consolidation) of the directive, according to Germany and France – if at all.
In addition to the principle of recording all profit and loss within the framework of CCTB, both countries suggest that the calculation of the tax base should also follow uniform accounting rules and be determined by a so-called operating assets comparison.
Moreover, deductions would be limited if payments are made to a country with low taxation, the agreement states.
The two countries have agreed that the transition period for harmonized corporate taxation system should be four years.
Ninja-Antonia Reggelin
Ninja-Antonia Reggelin is based in Berlin, where she is head of tax policy at a business association.
She previously worked at the OECD, contributing to the project that led to the publication of the BEPS Action Plan. Prior to that, she was with PwC Germany, where she focused on international tax structuring.
Ninja holds a Master’s degree (LL.M.) in International Trade Law from Bond University Australia and a Master’s degree (M.A.) in International Relations from the University of Kent Brussels School of International Studies.
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Julie Martin
Julie Martin is the founder of MNE Tax. She edits the publication and regularly contributes articles on new developments in cross-border business taxation.
Julie has worked as a tax journalist and editor for more than 13 years. Prior to that, she worked as an in-house tax attorney in New York. She also holds an LLM in taxation from New York University School of Law.
Julie can be reached at [email protected].
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