Since 2001, the European Commission has been planning the introduction of a Common Consolidated Corporate Tax Base (CCCTB). One of the purposes of such directive is to eliminate transfer tax and double taxation issues within international groups of companies. In particular, a cross-border use of tax losses shall be made possible. The European Court of Justice (ECJ) as well as the national legislators and courts have been dealing for years with the question of the use of such losses in international scenarios (please also cf. the Federal Fiscal Court (Bundesfinanzhof, BFH) Ruling of 9 November 2010 dealt with in this TaxInfo under IV.1). A solution of the issue within the CCCTB is desirable. Moreover, the CCCTB shall reduce the administrative and compliance costs of companies in the EU and improve the clarity of the law.  

The CCCTB shall enable international groups of companies to opt for one single consolidated corporate tax base for all profits and losses generated in the EU; one single national tax administration shall be competent. The calculation of the tax base entirely disregards the respective national rules. National rules on tax balance sheets are replaced by European rules on the calculation of profits. The applicable tax rate continues to be within the competence of the national legislator.  

Content of the Commission’s proposal

The proposal of the Commission is a very comprehensive set of rules, consisting of 136 articles. The rules relate, inter alia, to the requirements under which a group of companies can opt for the CCCTB, to the calculation of the tax base and its apportionment and to the consolidation of losses. Moreover, the draft directive contains provisions aiming at the avoidance of abuses and dealing with the administrative tasks of the member states.  

Tax base and apportionment

The tax base shall be calculated as revenues less exempt revenues, deductible expenses and other deductible items, all of which are defined in the draft. The tax base so calculated shall be apportioned between the relevant member states on the basis of a formula taking into account the factors sales, labor (payroll and number of employees) and assets.  

Qualifying subsidiaries

For a subsidiary company to belong to a CCCTB group depends on three factors, voting rights and participation in capital or profits. Upon application, all subsidiary companies form a CCCTB group with their parent if the parent holds more than 50% of the voting rights and more than 75% of the capital or is entitled to more than 75% of the profits of the respective company. Permanent establishments are also part of the group. CCCTB taxation is, as stated above, a mere option. If no use is made of this option, the current taxation continues to apply.  

Avoidance of abuse

The cross-border determination of tax bases may be abused. The draft directive contains one general anti-abuse rule and additional specific provisions.


The legislative procedure that shall result in a CCCTB is only at its beginning. Given the scope and the substantial impact of the proposed set of rules, difficult negotiations lie ahead. Real efficiency gains may be the outcome of this burdensome procedure.