European Commission: EU-wide business taxation

Jun 2, 2021 Benn-Ibler Rechtsanwälte

In a Communication on Business Taxation for the 21^st Century, the European Commission (EC) has introduced its vision on how to promote a robust, efficient and fair business tax system in the European Union.

To this end, the EC will present by 2023 a new framework for business taxation. EU-wide, uniform regulations on business taxation providing for fairer allocation of taxing rights for Member States are to be introduced. The measures should

·        Remove administrative burdens

·        Reduce compliance costs

·        Minimize tax loopholes

·        Support EU jobs and investment in the Single Market

In addition, a proposal for a Common Consolidated Corporate Tax Base is to be created.

Furthermore, the Communication defines a tax agenda for the next two years. This includes the following measures:

·        Certain large companies operating in the EU are to publish their effective tax rates

·        Measures addressing the misuse of shell companies for purposes of tax avoidance

·        Companies are to be encouraged to finance their activities through equity rather than debt

Finally, the Commission has adopted a Recommendation on the domestic treatment of losses. This prompts Member States to allow loss carry-back for businesses to at least the previous fiscal year. This would allow business to offset their losses of 2020 and 2021 against taxes paid before 2020, a measure of particular benefit to SMEs.

European Commission – Press release (18.05.2021)