Common corporate tax base (CCTB) and common consolidated corporate tax base (CCCTB) - a BusinessEurope position paper

Key messages

• A common EU consolidated corporate tax base (CCCTB), has the potential, by improving the functioning of the single market and making it easier and cheaper for cross-border companies to expand, to promote investment and jobs. A CCCTB would also eliminate transfer pricing within the EU and reduce the risk of double taxation.
• The proposal for a common corporate tax base (CCTB), i.e. without consolidation, would not bring sufficient benefits to the business environment to offset the reduction in competitiveness and increase in administration costs. Major improvements on the common base are required to make it more competitive vis-a-vis the world. These include especially the depreciation rules, the switch-over rule, CFC rules and specific limitations on deductibility of legitimate business costs and final losses. The initial loss offset proposed in the CCTB stage is not sufficiently comprehensive to replace full consolidation.
• While some businesses have welcomed the Commission’s CCCTB proposal, others believe it needs to be further developed in order better to support competitiveness and growth given the loss in flexibility for member states, particularly for smaller countries. Both the allocation key and the investment allowances could better reflect modern business models if they recognised intangible investment, whilst the allowance for growth and investment risks punishing companies during economic downturns. Many businesses see a need to make the proposed CCCTB optional for all firms.

What does BusinessEurope aim for?

• We support a corporate tax system that promotes competitiveness, investment, employment and growth.
• A CCCTB has the potential to support growth, but putting in place a CCTB (i.e. without consolidation and mandatory for large businesses), will raise costs, without providing competitiveness benefits.