Blog

15 november 2014, common consolidated corporate parking

Common consolidated corporate tax and base are not words to send a surge of excitement through journalists or their reading public, but that is what is behind the ever-bubbling stories about amazon and their like's taxpaying habits, recently attached to now-european commission president juncker. Given that everyone best plays the system they find themselves in, his deflection to the european question is not unreasonable. The basic argument (heard both nationally and at european level) is the merits of tax rate competition versus harmonisation. However, we cannot even have that debate because of the massive variance between national tax frameworks. Comparing ireland's headline 12.5% corporate tax rate against germany's 30% is apples and bananas. Whichever way the competition v. harmonisation cookie crumbles, ccctb, as it is lovingly known, is a precondition and brings significant transparency benefits. Achievable is a single cross-border ("29th") regime, available to companies operating in at least two member states, enabling them to calculate group taxable-income on one common set of rules. Tax receipts would be divided between governments, according to each company's weight there. This would significantly reduce compliance costs, for some companies, by 500% - aren't we supposed to be obsessed by "reducing the costs of doing business here" ? - and reduce double taxation problems, as well as helping with transfer pricing. It would massively increase taxation transparency, helping eliminate tax distortions, administrative burdens and so, probably, the amazon issue. A dozen or so member states are in favour. However, while ccctb doesn't necessarily mean loss of national sovereignty, that is the perception - and it certainly leads to that possibility, currently excluded by opacity. A value-adding europe would be asking whether this is best achieved just for the eurozone through the new lisbon procedures or for all members through enhanced co-operation. In reality, the issue/opportunity is parked. Tants pis. Reverting to my european law days, I know of course it is not so simple: lisbon probably don't stretch to it and enhanced co-operation may be excluded (though I think not) because of the unanimity requirement for council decisions on taxation and with the eu only being able to act where necessary for the proper functioning of the single market - but now, as on so many matters european, I feel I am losing you...