Commissioner responsible for Taxation
European Corporate tax base: making it easier and cheaper to do business in the EU
Brussels, March 16 2011
The Economic Crisis has hit our businesses hard.
They need all the support and assistance they can get in their efforts to recover and rebuild.
The Commission’s goal – indeed its duty – is to come forward with concrete measures to facilitate companies in this recovery and put them back on the path to prosperity.
This means strengthening the Single Market and creating an environment which encourages enterprise, innovation, investment and growth.
This, in turn, is essential for European prosperity as a whole.
On that basis, the Commission has today adopted a key proposal to break down fundamental tax barriers and make it cheaper and easier to do business across the EU.
So what is the Common Consolidated Corporate Tax Base all about?
It is about offering companies the choice of applying just one set of rules and working with just one administration, rather than 27 different ones, when filing their corporate tax returns.
It is about ensuring that the cross-border nature of enterprises is properly recognised, by allowing them to offset losses in one Member State against profits in another.
It is about removing the need for the highly-complicated, highly-costly and highly-contentious transfer pricing system that is in place today for intra-group transactions.
In short, the CCCTB is about eliminating huge administrative burdens, heavy compliance costs and legal uncertainties that companies currently face when operating in more than one Member State.
Instead, we would have a simpler, common system that truly reflects the spirit of the Internal Market.
This will also make the EU a more attractive market for foreign investment, as has been consistently re-affirmed by international partners.
The CCCTB is a system designed for every size of company.
Bearing in mind that small-and-medium-sized enterprises are the backbone of the European economy, I have made great efforts to ensure that our proposal is accessible to SMEs as well as to large corporations.
The CCCTB will be optional for companies, meaning that they will be able to decide for themselves whether they think it is worth their while using it, or whether they would prefer to stay within the national system.
When it comes to the benefits of the common consolidated corporate tax base, the figures speak for themselves:
Our studies show that the CCCTB will save companies across the EU up to €2 billion every year, through consolidation and reduced compliance costs.
In addition, it will reduce costs for companies looking to expand cross- border by up to 1 billion euro
It should therefore come as no surprise to you that the vast majority of European businesses have already expressed strong support for a CCCTB in Europe.
Let me point out that the CCCTB does not just offer benefits to businesses.
It will also benefit each and every Member State – each and every EU citizen – by encouraging growth and employment, attracting foreign investment and allowing the EU to become a more competitive global player.
Before I conclude, there is a final important point to underline – pre-empting, perhaps, the first question you might have for me!
The CCCTB is not about harmonising corporate tax rates. Nor is it even a first step in that direction.
I firmly believe that corporate tax rates are an issue of national sovereignty and - so long as it is done in a fair manner – something for each Member State to decide for itself, in line with national needs.
Ladies and gentlemen, it has become abundantly clear that Europe needs a common approach for our collective economic re-growth.
The Common Consolidated Corporate Tax Base is just one of a series of measures being put forward by the Commission to this end – but an important one nonetheless.
This is an initiative which is supported by businesses, investors and academics.
And I hope that now that we have a robust proposal on the table, it will also be supported by Member States.
In that way, we can move forward together as a Union in improving our corporate environment and laying another block upon which we can build a stronger and more sustainable economy.