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EU COMMON CORPORATE CONSOLIDATED TAX BASE

Tax avoidance and improvement of Single Market for businesses are among the main concerns of the European Union. Specifically, the European Commission aims at reinforcing entrepreneurship and boosting economic growth by promoting tax transparency. In October 2016, the European Commission re-launched the Common Corporate Consolidated Tax Base (CCCTB), a single set of rules to calculate companies’ taxable profits in the EU.

According to the proposal of the European Commission, companies that are tax-residents in an EU Member State and have an annual turnover of more than €750 million will be taxed in the country where they make their profits based on assets, sales and labour. The proposed legislation would apply to EU-resident companies and Permanent Establishments located in the EU. Furthermore, this proposal supports innovation through tax incentives for Research and Development activities. Corporate tax rates are NOT covered by the CCCTB because these remain an area of national sovereignty.

Combating tax avoidance and improving the Single Market for businesses will endorse the competitiveness of the EU, as well as the welfare of EU citizens.  The CCCTB will be mandatory for multinational companies. Moreover, the CCCTB would prevent multinational companies from taking their profits from one Member State and hiding them in a tax heaven inside the EU.  According to the official website of ‘Taxation and Customs’[1] unit, the CCCTB will eliminate discrepancies between national systems and hidden tax rulings. Therefore, profit shifting will be further controlled. The CCCTB contains strong anti-abuse measures to dissuade companies from shifting profits to non-EU countries. In addition, the European Commission outlines that this legislation would simplify tax reporting and collection of tax revenues for companies with cross-border business operations.

Some Member States opposed to CCCTB:

Malta, Luxembourg, Sweden, The Netherlands, Ireland and Denmark expressed their concerns and officially opposed this legislation. The Committee of Commerce of the Cyprus House of Representatives expressed its opposition to the introduction of the CCCTB as this would affect the flexible tax environment of the Republic of Cyprus. Angelos Votsis, chairman of the Committee of Commerce, outlined that adopting the CCCTB would have effects on the Cyprus economy as it would affect the flexible tax environment of the island[2]. The Institute of Certified Public Accountants of Cyprus and Cyprus Chamber of Commerce and Industry expressed their opposition underlining the importance of Cyprus’ flexible tax environment in the national economy.

Our lawyers will monitor the ongoing developments:

The legal team of Michael Chambers & Co. LLC will monitor all the ongoing developments so that to be able to provide you with the best possible legal advice. Our team of Cyprus lawyers is committed to providing creative and innovative solutions. If you wish to speak to one of our lawyers, in absolute confidence, then please contact us: info@chambers.law