On 17 June, the European Commission presented its action plan for Fair and Efficient Corporate Taxation in the European Union ("Action Plan").
The Action Plan features five main points to be achieved by 2017: (i) relaunching the Common Consolidated Corporate Tax Base ("CCCTB"), (ii) ensuring fair taxation of profits, (iii) creating a better business environment, (iv) increasing transparency and (v) improving EU coordination.
Direct taxation has increasingly attracted the attention of the European Commission in recent years, and while the European Union does not itself have competence to deal with direct taxation (corporate tax, income tax, property tax, etc.), the Commission has used tools such as state aid or competition law to influence national legislation and tax policies.
In terms of priorities, the Commission has placed increasing transparency ahead of all other points in the Action Plan. The principal tools for implementing tax transparency are the publication of an annual list of non-cooperative tax jurisdictions and the implementation of automatic exchange of information on tax rulings, expected to start at the beginning of 2016. In fact, the European Commission is pushing for the Council to start immediate discussions over tax rulings.
It is worth noting that the first list of non-cooperative tax jurisdictions contains four countries on the Continent: Liechtenstein, Andorra, Monaco and Guernsey. The list of the top 30 non-cooperative countries can be found here.
Also in 2016, the Commission will relaunch the proposal for the CCCTB, which has been rumbling on since 2011, and possibly a proposal for effective taxation so that profits are effectively taxed where generated. The CCCTB proposes a common system for calculating the tax base applicable across the EU, but it does not touch upon the Member States’ competence to establish corporate tax rates.
Finally, the Commission will continue its work on improving the transfer pricing framework and agreement on common anti-avoidance measures, linked to BEPS (Base Erosion and Profit Shifting).
For a comprehensive overview of the Action Plan, please click on this link.