Apportionment of Consolidated Tax Base under the Common Consolidated Corporate Tax Base Proposal

Apportionment of Consolidated Tax Base under the Common Consolidated Corporate Tax Base Proposal



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“The decisive political reorientation, which is linked to the concept of a uniform taxable base for group tax, lies in the new method for apportioning the group profit between the Member States involved.”


As Wolfgang Schön notices, the apportionment mechanism of the tax base under the European’s Comission Common Consolidated Corporate Tax Base Project comes across as a highly sensitive issue that generated heated debate in the academic, political and business arena, since it represents a radical departure from traditional taxing principles and could fundamentally change the way multinational groups are structured within Europe.

In fact, the peculiar structure of the international community, supposing the coexistence of plural sovereign tax policies lies at the core of the specificity of international tax law as a fairly complex example of legal pluralism, which combines supranational perspectives with national law of the States.

On this background and in the light of an increasingly global business world, where multinational enterprises play a prominent role, the European Union became aware of the need to put into place a common market, epitomized by the four freedoms- of goods, workers, capital and services- in order to remove “obstacles which still stifled the free flow of goods and services”.


In this context, such an obstacle came across as being engendered by the notably diverse national approaches to corporate taxation. Tax harmonization has long been a heavily debated issue within the European community and since the establishment of the European Economic Community through the Rome Treaty in 1957, taxation has been regarded a key element in achieving the internal market. After establishing the Lisbon Strategy, the Commission saw the need for a new EU policy on taxation representing a shift from viewing taxation as single isolated issues to viewing it in the light of wider EU policies and objectives.

Thus, since the interaction of national tax systems often leads to over-taxation and double taxation, with heavy administrative burdens and high tax compliance costs for businesses7, the idea of adopting common corporate tax rules emerged in the European arena.

Therefore, in order “to tackle some major fiscal impediments to growth in the Single Market”8and to “make it easier, cheaper and more convenient to do business in the EU”9the Commission published on 16 March 2011 a proposal for a CCCTB directive (hereinafter directive proposal)10. Therefore it provides for a common corporate tax base system, with rules relating to both the calculation of the tax base and the apportionment mechanism to be used in order to share the tax base amongst the entities of a group.





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