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Brussels, 30th April 2002

Conference on company taxation supports further work on an EU-wide consolidated company tax base

At the European Conference on Company Taxation hosted by the European Commission on 29-30 April in Brussels, business operators and academics gave considerable support to the Commission's suggestion that companies should ultimately be allowed to use a single consolidated tax base for their EU-wide business activities. The Commission had indicated in its Communication on company taxation of 23 October 2001 (see IP/01/1468) that such an EU-wide tax base is the only systematic remedy to the various tax obstacles in the Internal Market and the current costly inefficiencies resulting from the operation of fifteen different sets of tax rules. During the conference, more than 500 high-level tax specialists from the public and private sectors in the EU, candidate countries and beyond debated the four options that the Commission had presented to achieve this objective and their political and technical implications. Discussions will continue with Member States and all interested parties and the Commission will at the same time work on the technical aspects. The Commission will publish a progress report in early 2003.

"Without determined action on the tax front, the EU will fail to achieve its self-imposed objective of becoming, in this decade, the most competitive and dynamic knowledge-based economy in the world", said Taxation Commissioner Frits Bolkestein in his opening keynote speech. "The concept of a common consolidated tax base for the EU-wide activities of companies, which is the subject of today's Conference, is ultimately the only means of tackling the various tax obstacles in the Internal Market 'in one stroke'."

The conference proceedings consisted of panel discussions followed by open debates involving more than 500 high-level taxation specialists, officials from Member States, candidate countries and the Commission, business and trade union representatives and academics. Contributors included Spanish Minister of Finance Cristobal Montoro Romero, Benedetto Della Vedova MEP, the Secretary General of the European employer's organisation UNICE, Philippe De Buck, and the Secretary General of the European Trade Union Confederation (ETUC), Emilio Gabaglio.

Many participants, including the European Parliament, UNICE and ETUC representatives, agreed with the Commission's view that, while targeted legislative measures should be agreed at EU level to resolve individual tax obstacles, in the long term only a common EU tax base would provide greater efficiency, simplicity and transparency in company tax systems. Many participants' preferred approach was that of a Common Consolidated Tax Base (where a multinational group would be able to opt to calculate the taxable profits for all its EU operations according to a new common set of tax rules applicable across the EU).

A Home State Taxation approach (where a multinational group would be able to opt to calculate the taxable profits for all its EU operations according to the tax rules of the Member State where its headquarters are based, i.e. its 'Home State') was not generally favoured, but there was some interest in its use for small and medium enterprises for which this approach might present simplification advantages. Many participants agreed with the Commission's view that the third and fourth options (a European Corporate Income Tax and compulsory harmonisation of existing tax bases), seemed unfeasible at this time, although they might have the advantage of completely eliminating distortions..

The comprehensive and lively debate touched on the need for corporate tax reform in the EU, the choice of the approach to achieving a common tax base and how to organise the transition in practice. The possibility of testing the common EU tax base in experimental "pilot projects" such as for the European Company (see IP/01/1376) which needs an EU-wide tax regime to be a useful corporate vehicle were among the topics which received the most attention.

A number of specific issues were identified for further research. These included the potential for using the International Accounting Standards (IAS), which will be binding for the consolidated accounts of EU listed companies from 2005 (see IP/01/200 and MEMO/01/40), as a starting point for developing a common tax base. Another issue that requires research is the possible competition and discrimination problems that could arise from having an optional common tax base running alongside traditional national tax bases. Above all, it would be necessary to develop an appropriate mechanism to apportion a common EU tax base between Member States which would, regardless of the technical approach chosen, continue to apply their individual company tax rates.

The conference highlighted the need for these activities to involve continued research and support on the part of all stakeholders, in particular EU businesses and tax practitioners. One tool for assisting the necessary debate is the Commission's dedicated company tax website. This website not only provides detailed information on the state of play of the conference follow-up and on company taxation in general, but also allows visitors to contribute their views via the inter-active "Forum" online discussion page. The website is located at:

Following these political and technical discussions and public consultations, the Commission will publish a report on its policy conclusions on the common tax base concept by 2003.


The European Commission in its Communication of 23 October 2001 identified a number of tax obstacles to cross-border economic activity in the Internal market where Community action is necessary and proposed a two-track strategy to remove them. It plans a number of targeted measures on such issues as the extension of the Directives on dividends and mergers, cross-border loss relief, transfer pricing and double taxation conventions. It is currently working with Member States on such targeted proposals.

At the same time the Commission in its Communication stated its belief that in the longer term companies should be allowed a consolidated corporate tax base for their EU wide activities to eliminate completely cross-border taxation problems, such as compliance costs, transfer pricing problems and many other forms of discrimination.

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