Some thoughts on the CCCTB after the parliament amendments

Jan van de Streek [email protected]

13 April 2012 Amsterdam Center for Tax Law 1

Where do we stand?

• Proposal, 16 March 2011 • Completion Yellow card procedure, 18 May 2011 • Opinion EESC, 26 October 2011 • Draft Report European Parliament, 9 November 2012  425 draft amendments • Opinion Committee of the Regions, 14 December 2011 • • • Green book France/Germany, 6 February 2012 • Report European Parliament, 21 March 2012  38 amendments

Scheduled

: Debate European Parliament, 18 April 2012

Scheduled

: Agenda ECOFIN Council, 15 May 2012 2

European Parliament Report 28 March 2012 • Only an advisory role  Special legislative procedure (115 TFEU) • Two major statements:  EP approves the proposal as amended  EP calls the Commission to alter its proposal • Remarkable research on changing legal basis…  Art. 136 instead of art. 115  Why?

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Amendments on four fundamental topics Tax rate and tax credits Optionality Apportionment Formula Anti-abuse Other: CCCTB forum, Audit initiation 4

Amendments on tax rate and tax credits (4, 9, 10, 38) • New recital: Fair tax competition on tax rates should be encouraged at MS level • New recital: MS should retain the power to adopt incentives for business, particularly in the form of

tax credits

• New recital: CCCTB is not about harmonisation of tax rates, however…  Amended art. 133 review clause 5

Amendments on optionality (14, 21, 38) • EP advocates ‘road map/phased plan’ for a compulsory CCCTB • New art. 6a  After 2 years, all SE’s and SCE’s shall be considered to have opted  After five years, all companies shall be considered to have opted, except SME’s • Amended art. 133 review clause  Also looking at SME’s… 6

Amendments on the apportionment formula (16, 31) • EP advocates ‘minor change’ apportionment formula • Assets 45%, Labour 45%, Sales 10% • Why?

 Less departure of source entitlement  No disproportional disadvantage small and medium sized MS  Reduce effect of ‘easy manipulation via independent sales agent’ 7

Easy formula tax planning 8

Amendments on anti-abuse measures (15, 27, 28, 29) • New recital: MS should not be prevented from introducing and coordinating additional measures among each other in order to reduce the negative effects of low tax third countries that do not exchange necessary tax information • Amended art. 80 GAAR: sole → mainly • Amended art. 73 Switch-over: 40% →70% • Amended art. 82 CFC: 40% → 70% 9

Enhanced cooperation • EP is already anticipating on enhanced cooperation!

 New recital 4a saying enhanced cooperation should be initiated by the € MS’s • Only possible if interested MS request the EC to make proposal (art. 329(1) TFEU) • Consent of the EP is required (art. 329(1) TFEU)  It is Yes or No  This makes the EP-amendments much less soft!

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Dutch position (29 March 2012) • State Secretary of Finance : CCCTB = bad proposal and unfortunately not blocked by yellow card procedure • Dutch Parliament: stop discussion in Brussels because it is only ‘Therapy to keep themselves busy’ • State Secretary of Finance:  I let my officials join the discussion just to keep informed  It is possible that there will be point of no return just because to many other MS follow a certain course 11