EU Consultation on BEFIT Proposals

The European Commission launched a public consultation on Business in Europe: Framework for Income Taxation (BEFIT). What are the similarities between this and previous initiatives in the area, such as CCCTB?

Michelle Adams, Tax Manager: The European Commission launched a public consultation on Business in Europe: Framework for Income Taxation (BEFIT) which is aimed at introducing a single corporate tax rulebook for the EU based on the key features of a common tax base and the allocation of profits between Member States by using a formulary apportionment. The European Commission have confirmed that BEFIT replaces the existing Common Consolidated Corporate Tax Base (CCCTB) proposal with BEFIT reflecting on significant changes that have occurred, in the meantime, in the economy and the international framework.

There are several similarities between BEFIT and CCCTB with the key objective of both initiatives being the introduction of a single set of rules for EU companies to calculate their taxable profits.

According to the call for evidence, BEFIT aims at boosting the competitiveness of the single market, reducing compliance costs and supporting investment in the EU. BEFIT also aims at complementing other EU policies on direct taxation such as the Anti-Tax Avoidance Directive. Some of these objectives may sound familiar as they are similar to those set out in the CCCTB proposal which also aimed at cutting compliance costs, combating tax avoidance, and supporting growth, jobs, and investment in the EU.

CCCTB was designed to be mandatory for all groups with global consolidated revenues of more than €750 million with an opt-in option for smaller groups. The call for evidence for BEFIT sets out two options for the scope of the initiative with the first option being that groups with consolidated global revenues of more than €750 million, which is similar to that of the CCCTB, and the second option being the revenue threshold is lowered making the framework more inclusive with an opt-in option included for SME’s. The call for evidence also sets out the tax base calculation options, formula for allocating taxable profits and allocation of profits related to entities outside the group.

The feedback period is open until 26 January 2023.

Content adapted from Finance Dublin’s Irish Tax Monitor.

Subscribe to receive the latest BDO News and Insights

Please fill out the following form to access the download.