European Commission proposes CCCTB

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On March 16, 2011, the European Commission released a proposal for a council directive on a Common Consolidated Corporate Tax Base (“CCCTB”), accompanied by an impact assessment. The CCCTB purports to reduce existing inefficiencies and distortions resulting from the co-existence of twenty-seven different regimes by offering a single set of rules which taxpayers operating within the EU can use to calculate their taxable profits. Under the proposal, the application of the CCCTB is optional for taxpayers. Taxpayers that opt for the CCCTB regime will only have to file a single tax return with the tax authorities of one EU Member State for their activities in the entire EU (one-stop-shop system). A single consolidated tax return will be used to establish the corporate tax base, after which all EU Member States in which the company or CCCTB group is active would be entitled to tax a certain portion of that base, according to a specific formula based on three equally-weighted factors (assets, labor and sales).

The European Commission aims for the current proposal to be unanimously approved by the Council of the European Union in 2013, after consultation of the European Parliament. Two or three years after adoption, EU Member States should have transposed the proposal into national law.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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