Category Archives: Taxation

Tax policy in the European Union (EU) consists of two components: direct taxation, which remains the sole responsibility of Member States, and indirect taxation, which affects free movement of goods and the freedom to provide services. With regard to direct taxation, Member States have taken measures to prevent tax avoidance and double taxation. Tax policy ensures that competition between Member States on the internal market is not distorted by differences in indirect taxation rates and systems. Measures have also been adopted to prevent the adverse effects of tax competition if companies transfer money between European Union Member States.

Indirect Taxation

Indirect Taxation

Indirect taxes on raising capital
Tax- and duty-free salesArchives
Taxation of heavy goods vehicles: Eurovignette Directive
Passenger car related taxes

Value-added tax (VAT)

Common system of value added tax (VAT) (‘the VAT Directive’)
Harmonisation of turnover taxesArchives
VAT: special scheme for goldArchives
VAT: special arrangements applicable to second-hand goods, works of art, antiques and collector’s itemsArchives
VAT: labour-intensive servicesArchives
VAT: special arrangements applicable to services supplied electronicallyArchives
VAT: Special scheme applicable to travel agencies
VAT and electronic commerceArchives
Exemption from VAT: final importation of goods
Exemption from VAT: Convention on Temporary Admission
Refund of VAT: taxable persons established in another EU country
Refunds to non-EEC taxable persons (13th VAT Directive)
Action plan to combat VAT fraud in the European Union
VAT anti-fraud strategyArchives

Excise duties

General arrangements for the holding and movement of products subject to excise duty
General arrangements for, and the holding and movement of, products subject to excise dutyArchives
Excise duty on manufactured tobacco
Manufactured tobacco: harmonisation of the structure of excise duties in several stagesArchives
Cigarettes: approximation of ratesArchives
Tobacco other than cigarettes: approximation of ratesArchives
Alcohol and alcoholic beverages: harmonisation of the structure of excise duties
Alcohol and alcoholic beverages: approximation of excise rates
Community framework for the taxation of energy products and electricity
Fiscal marking of gas oils and kerosene

Tax exemptions

Exemptions for travellers
Tax free allowances: international travelArchives
Tax-free allowances: small consignments of goods of a non-commercial character from Non-EU Member Countries
Tax-free allowances: permanent imports of personal property
Tax-free allowances: permanent imports of personal propertyArchives
Tax-free allowances: temporary importation of certain means of transport
Tax-free allowances: permanent or temporary importation of private motor vehicles

Indirect taxation in Administrative Cooperation

Administrative cooperation in the field of excise dutiesArchives
Administrative cooperation in the field of value added tax (until 31.12.2011)
Administrative cooperation in the field of VAT (from 1.1.2012)

Fiscalis 2013

Fiscalis 2013

Outline of the Community (European Union) legislation about Fiscalis 2013

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Taxation

Fiscalis 2013 (2008-2013)

Document or Iniciative

Decision No 1482/2007/EC of the European Parliament and of the Council of 11 December 2007 establishing a Community programme to improve the operation of taxation systems in the internal market (Fiscalis 2013) and repealing Decision No 2235/2002/EC.

Summary

The Fiscalis 2013 programme is set up for the period from 1 January 2008 to 31 December 2013 and is intended to improve the operation of the taxation systems * in the internal market of the European Union (EU).

Objectives

The overall objective of Fiscalis 2013 is to improve the functioning of the tax systems in the internal market by strengthening cooperation between participating countries, their administrations and any other body.

The contribution of the Fiscalis 2013 programme to the development of cooperation between tax administrations will mean that the following objectives can be attained:

  • the uniform application of the EU tax laws in all the EU countries;
  • the protection of national and EU financial interests;
  • the smooth functioning of the internal market through the combating of tax avoidance and evasion, including its international dimension;
  • the avoidance of distortions of competition;
  • the ongoing reduction of compliance burdens on administrations and tax-payers alike.

Activities

Activities under Fiscalis 2013 are based in particular on:

  • communication and information-exchange systems;
  • multilateral controls;
  • seminars and project groups;
  • working visits;
  • training activities.

The Excise Movement Control System (EMCS) will be incorporated in the Fiscalis 2013 programme from 2009.

Participation in the programme

The countries participating in the Fiscalis 2013 programme are the EU member countries. The programme is also open to participation by the candidate countries benefiting from a pre-accession strategy, potential candidate countries (following the establishment of framework agreements concerning their participation in EU programmes), as well as some partner countries under the European Neighbourhood Policy.

Budgetary implications

The Fiscalis 2013 programme will run for a period of six years, in line with the duration of the 2007-2013 Financial Perspective. The amount to be borne by the EU budget is EUR 156.9 million.

Key terms used in the act
  • Taxation systems: this refers to the following taxes applied in the countries participating in the programme:
    1. value added tax;
    2. excise duties on alcohol, tobacco products and energy products;
    3. taxes on income and on capital as defined in Article 1(2) of Council Directive 77/799/EEC;
    4. taxes on insurance premiums as defined in Article 3 of Council Directive 76/308/EEC.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Decision No 1482/2007/EC

4.1.2008

OJ L 330, 15.12.2007

Related Acts

Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Midterm evaluation of the Fiscalis 2013 programme [COM (2011) 538 final – Not published in the Official Journal].
The midterm evaluation concluded that the programme operates cost efficiently and is effective in the achievement of its objectives. Further improvements in the monitoring and the reporting of activities are possible, although the achievement of this may be restricted due to the limited human resources available in the European Commission and the participating countries’ tax administrations for managing the programme. The report recommends the following improvements for the remaining programming period:

  • prioritise cooperation in the field of direct taxation;
  • make the reduction of administrative burdens on taxpayers a specific objective of Fiscalis;
  • set up a results-based monitoring and evaluation system;
  • improve dissemination and application of knowledge and best practices in national administrations;
  • explore the potential for further improvement and development of the value-added tax information exchange system (VIES);
  • introduce a dedicated planning, monitoring and reporting system for the organisation and follow-up of working visits;
  • involve a larger community of stakeholders;
  • ensure proportionate programme management capacity.

Elimination of double taxation

Elimination of double taxation

Outline of the Community (European Union) legislation about Elimination of double taxation

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Taxation

Elimination of double taxation (arbitration)

Document or Iniciative

Convention 90/436/EEC on the elimination of double taxation in connection with the adjustment of transfers of profits between associated undertakings.

Summary

There is at present no formal obligation on Member States to eliminate double taxation (bilateral conventions merely require the parties to make every effort to do so).

When double taxation arises, the firm affected presents its case to the tax authorities concerned; if those authorities cannot solve the problem satisfactorily, they endeavour to reach mutual agreement with the authorities of the Member State where the associated firm is taxed.

If no agreement can be reached, the authorities present the case to an advisory commission, which suggests a way of solving the problem.

Although the tax authorities may subsequently adopt, by mutual agreement, a solution different from that suggested by the advisory commission, they are bound to adopt the commission’s advice if they cannot reach agreement.

The commission consists of a chairman, two representatives from each of the tax authorities concerned, and an even number of independent members.

On 21 December 1995 the Council adopted a Convention on the accession of the Republic of Austria, the Republic of Finland and the Kingdom of Sweden to the Convention on the elimination of double taxation in connection with the adjustment of profits of associated enterprises. The Convention allows Austria, Finland and Sweden to accede to the Convention on the elimination of double taxation in connection with the adjustment of profits of associated enterprises following their accession to the European Union. This Convention will come into force, between the States which have ratified it, on the first day of the third month following the deposit of the last instrument of ratification by the Republic of Austria, the Republic of Finland or the Kingdom of Sweden and by one State which has ratified the Convention on the elimination of double taxation in connection with the adjustment of profits of associated enterprises. It enters into force for each Contracting State which subsequently ratifies it on the first day of the third month following the deposit of its instrument of ratification.

On 25 May 1995 the Council adopted a Protocol amending Convention 90/436/EEC extending it for further periods of five years at a time. The Protocol enters into force on the first day of the third month following the deposit of the instrument of ratification, acceptance or approval by the last Contracting State complying with this formality. It entered into force on 1 January 2000.

As not all Member States have ratified the Protocol extending the Arbitration Convention, the Convention ceased to have effect in 2000. Consequently, enterprises can currently only avail of the dispute settlement provisions of double taxation conventions which do not impose any binding obligation to eliminate double taxation, unlike the Arbitration Convention.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Convention 90/436/EEC 1.1.1995 OJ L 225 of 20.8.1990

Related Acts

Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee on the work of the EU Joint Transfer Pricing Forum in the field of dispute avoidance and resolution procedures and on Guidelines for Advance Pricing Agreements within the EU [COM(2007) 71 final – Not published in the Official Journal].

Resolution of the Council and of the representatives of the governments of the Member States, meeting within the Council, of 27 June 2006 on a code of conduct on transfer pricing documentation for associated enterprises in the European Union [Official Journal C 176 of 28.7.2006].

Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee on the work of the EU Joint Transfer Pricing Forum on transfer pricing documentation for associated enterprises in the EU [COM(2005)543 – Not published in the Official Journal].

Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee on the work of the EU Joint Transfer Pricing Form in the field of business taxation from October 2002 to December 2003 and on a proposal for a Code of Conduct for the effective implementation of the Arbitration Convention (90/436/EEC) [COM(2004) 297 – Not published in the Official Journal].

The Commission proposes that a Code of Conduct be adopted to ensure more effective and more uniform implementation of the 1990 Arbitration Convention by Member States to eliminate double taxation of enterprises carrying out intergroup operations. The Code of Conduct proposed is the result of work by the EU Joint Transfer Pricing Form. The Commission also intends to adopt procedural rules (concerning the starting points for the periods for dealing with complaints, the procedural rules of the advisory commission to be drawn up by the Member States if no agreement can be reached on the elimination of double taxation within two years and the suspension of tax collection pending dispute settlement) and recommends that the Member States apply these rules to the dispute settlement provisions of their bilateral double taxation agreements.

Harmonisation of turnover taxes

Harmonisation of turnover taxes

Outline of the Community (European Union) legislation about Harmonisation of turnover taxes

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Taxation

Harmonisation of turnover taxes

1) Objective

To phase in a common system of value-added tax.

2) Community Measures

First Council Directive 67/227/EEC of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes.

Amended by the following measures:

Council Directive 69/463/EEC of 9 December 1969;
Council Directive 77/388/EEC of 17 May 1977.

3) Contents

The following text contains a consolidation of the Directives.

By 1 January 1972 at the latest each Member State is to replace, its system of turnover taxes by the common system of value-added tax, but without an accompanying harmonisation of rates and exemptions.

The common system is to be based on the neutrality principle: within each Member State similar goods and services are to bear the same tax burden, whatever the length of the production and distribution chain.

The structure of, and the procedure for applying, the common system of value-added tax are to be the subject of a second Directive.

During a second stage and on a proposal from the Commission presented before 1 January 1969, the Council is to adopt measures relating to the abolition of tax controls at intra-Community frontiers.

4) Deadline For Implementation Of The Legislation In The Member States

  • Directive 67/227/EEC: 12.04.1967
  • Directive 69/463/EEC: 15.12.1969
  • Directive 77/388/EEC: 23.05.1977

5) Date Of Entry Into Force (If Different From The Above)

  • Directive 67/227/EEC: 01.01.1970, apart from derogations
  • Directive 69/463/EEC: 01.01.1972
  • Directive 77/388/EEC: 31.12.1978

6) References

Official Journal L 71, 14.04.1967
Official Journal L 320, 20.12.1969
Official Journal L 145, 23.05.1977

7) Follow-Up Work

8) Commission Implementing Measures

 

Recovery of claims relating to taxes, duties and other measures

Recovery of claims relating to taxes, duties and other measures

Outline of the Community (European Union) legislation about Recovery of claims relating to taxes, duties and other measures

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Taxation

Recovery of claims relating to taxes, duties and other measures

Document or Iniciative

Council Directive 2010/24/EU of 16 March 2010 concerning mutual assistance for the recovery of claims relating to taxes, duties and other measures.

Summary

This directive applies to claims relating to:

  • all taxes and duties levied by or on behalf of any European Union (EU) country or on behalf of the EU as a whole;
  • refunds, interventions and other measures which contribute to the total or partial financing of the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD);
  • levies and other duties on the sugar sector market.

EU countries must notify the Commission of its competent national authority or authorities by 20 May 2010. The Commission will then publish a list of all competent national authorities in the Official Journal. Each competent authority must designate a central liaison office which will be responsible for contacts with other EU countries in this field.

Request for information

A competent authority is obliged to provide another competent authority with any information relevant to that applicant authority in the recovery of its claims, except if:

  • the requested authority would not be able to obtain such information for the recovery of similar claims occurring in its own country;
  • the information would disclose any commercial, industrial or professional secrets;
  • the disclosure of the information would put at risk the security or contravene the public policy of the requested EU country.

Request for notification of documents

When requested for notification of documents relating to claims, the requested authority must notify to the addressee all documents which emanate from the applicant EU country relating to a claim or to its recovery.

The request for notification must include relevant information, such as the name and address of the addressee, the purpose of the notification, a description of the nature and amount of the claim, and the contact details of the offices responsible for the documents and for obtaining further information.

Recovery procedures

Any available appropriate recovery procedures must be applied before the applicant authority makes a request for recovery, except where:

  • it is evident that there are insufficient or no assets for recovery in the applicant EU country but that the person concerned has the necessary assets in the requested EU country;
  • it would result in disproportionate difficulty.

Any request for recovery must be accompanied by a uniform instrument permitting enforcement in the requested EU country.

The requested competent authority will employ the powers and procedures provided under the laws, regulations or administrative provisions of the requested EU country regarding claims on the same or similar tax or duty. If the requested authority does not consider that the same or similar taxes or duties are applicable in the requested EU country, it shall instead apply the rules relating to tax levied on personal income.

Disputes

Disputes relating to the claim, the initial or uniform instrument permitting enforcement, and the validity of a notification by the applicant authority are the responsibility of the competent authorities of the applicant EU country. Disputes relating to the validity of a notification made by a competent authority of the requested EU country will be brought before the competent authority of that EU country.

The applicant authority may make a request for recovery of a contested claim. If the contestation is successful, the applicant authority will be responsible for the reimbursement of the amount recovered, in addition to any compensation due.

Amendment or withdrawal of the request for recovery assistance

The applicant authority must immediately notify the requested authority of any amendment to or withdrawal of its request for recovery, detailing the reasons for amendment or withdrawal.

Request for precautionary measures

Where the claim or the instrument permitting enforcement in the applicant EU country is contested at the time when the request is made, the requested authority will take precautionary measures, in accordance with its national law, to ensure recovery when requested to do so by the applicant authority.

Limits to the requested authority’s obligations

The requested authority is not obliged to grant the recovery assistance if:

  • recovery of the claim would result in serious economic or social difficulties in the requested EU country;
  • the initial request for assistance relates to claims more than 5 years old;
  • the total sum of the claims is less than EUR 1 5000.

General provisions

Any information and documents disclosed under this directive will be covered by the obligation of official secrecy and will therefore be protected under the appropriate national law of the EU country which received it.

This directive repeals Directive 2008/55/EC from 1 January 2012. References to the repealed directive will be understood as references to this directive.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Council Directive 2010/24/EU

20.4.2010

31.12.2011

OJ L84 of 31.3.2010

Refund of VAT: taxable persons established in another EU country

Refund of VAT: taxable persons established in another EU country

Outline of the Community (European Union) legislation about Refund of VAT: taxable persons established in another EU country

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Taxation

Refund of VAT: taxable persons established in another EU country

Document or Iniciative

Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State [See amending act(s)].

Summary

This directive lays down the detailed rules for the refund of value added tax (VAT), provided for in Directive 2006/112/EC, to taxable persons not established in the European Union (EU) country of refund * but established in another EU country.

This directive applies to any taxable person not established in the EU country of refund who, during the refund period:

  • has not had in the EU country of refund, the seat of his economic activity, a fixed establishment from which business transactions were effected or, in the absence of such a seat or fixed establishment, his domicile or normal place of residence;
  • has not supplied any goods or services in the EU country of refund, with the exception of the supply of certain transport services and the supply of goods and services to a person who is liable to pay VAT.

Directive 2006/112/EC establishes the transactions which EU countries may exempt from VAT. EU countries must therefore refund to any taxable person not established in the country of refund any VAT charged in respect of goods or services supplied to him by other taxable persons in that EU country or in respect of the importation of goods into that country, when used for the purposes of the transactions listed in Directive 2006/112/EC.

To be eligible for a refund in the EU country of refund, a taxable person not established in this country must carry out transactions giving rise to a right of deduction in the EU country of establishment. When a taxable person not established in the EU country of refund carries out in his EU country of establishment both transactions producing a right of deduction and transactions not producing a right of deduction in that country, the EU country of refund will only pay the proportion of refundable VAT.

Refund application

This directive establishes a fully electronic procedure, whereby the taxable person not established in the EU country of refund addresses an electronic refund application to the EU country of refund and submits it to his EU country of establishment via the electronic portal of that country. The refund application relates to the purchase of goods or services which was invoiced during the refund period, and the importation of goods during the refund period.

The refund application must be submitted to the EU country of establishment by the 30 September of the calendar year following the refund period. The amount of VAT refund applied for must not be less than EUR 400. If the country is late in making the refund payment, the applicant will be entitled to interest on the amount of the refund.

This directive repeals Directive 79/1072/EEC, however its provisions continue to apply to refund applications submitted before 1 January 2010.

Key terms used in the act
  • EU country of refund: the EU country in which the VAT was charged to the taxable person in respect of goods or services supplied to him by other taxable persons in that EU country or in respect of the importation of goods into that EU country.

References

Act Entry into force Deadline for transposition in the Member States Official Journal

Directive 2008/9/EC

20.2.2008

1.1.2010

OJ L 44, 20.2.2008

Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal

Directive 2010/66/EU

21.10.2010

OJ L 275, 20.10.2010

Successive amendments and corrections to Directive 2008/9/EC have been incorporated into the basic text. This consolidated version is for reference only.

Related Acts

Commission Regulation (EC) No 1174/2009 of 30 November 2009 laying down rules for the implementation of Articles 34a and 37 of Council Regulation (EC) No 1798/2003 as regards refunds of value added tax under Council Directive 2008/9/EC [Official Journal 314 of 1.12.2009].

This summary is for information only. It is not designed to interpret or replace the reference document, which remains the only binding legal text.

Administrative cooperation in the field of taxation

Administrative cooperation in the field of taxation

Outline of the Community (European Union) legislation about Administrative cooperation in the field of taxation

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Taxation

Administrative cooperation in the field of taxation

Document or Iniciative

Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC.

Summary

This directive repeals Directive 77/799/EEC and establishes new rules and procedures for the cooperation between European Union (EU) countries with a view to exchanging information that is relevant to the administration and enforcement of national laws in the field of taxation. It applies to all taxes except the following:

  • value added tax (VAT) and customs duties, or excise duties covered by other EU legislation on administrative cooperation between EU countries;
  • compulsory social security contributions payable to the EU country;
  • fees, such as for certificates and other documents issued by public authorities;
  • dues of a contractual nature, such as consideration for public utilities.

In accordance with this directive, on 17 June 2011 the Commission published a list of the EU countries’ competent national authorities in the Official Journal. The competent authority must designate a single central liaison office which is responsible for contacts with other EU countries in the field of administrative cooperation and may be responsible for contacts with the Commission. The competent authority may also designate liaison departments and competent officials with competences assigned according to national legislation or policy. Where a liaison department or a competent official receives a request for cooperation requiring action which is outside their area of competence, they must immediately send such a request to their country’s central liaison office and inform the requesting authority thereof.

EXCHANGE OF INFORMATION

Exchange of information on request

The requested authority must, at the request of the requesting authority, communicate any relevant information that it has in its possession or that it obtains from administrative enquiries. In order to obtain the requested information or to conduct the administrative enquiry requested, the requested authority must follow the same procedures as it would when acting on its own initiative or at the request of another authority in its own EU country. EU countries may not refuse to supply information solely because this information is held by a bank or other type of financial institution.

The requested authority must confirm receipt of the request within seven working days and must then provide the information as quickly as possible, and no later than six months after receipt of the request. If, however, the requested authority already possesses the information, it must be provided within two months of that date.

Mandatory automatic exchange of information

Each competent national authority must send to the competent authority of any other EU country, by automatic exchange, available information concerning taxable periods as from 1 January 2014 relating to residents in that other EU country on the following categories of income and capital:

  • income from employment;
  • director’s fees;
  • life insurance products not covered by other EU legal instruments on exchange of information and other such measures;
  • pensions;
  • ownership of and income from immovable property.

Spontaneous exchange of information

Each competent national authority must communicate information to the competent authority of any other EU country in the following situations:

  • the competent authority of one EU country has reason to suppose that there may be a loss of tax in the other EU country;
  • a person liable to tax obtains a reduction in, or an exemption from, tax in one EU country which would give rise to an increase in tax or to liability to tax in the other EU country;
  • business dealings between two persons liable to tax in different EU countries are conducted through one or more countries in such a way that a saving in tax may result in either or both of the EU countries;
  • the competent authority of one EU country has grounds for supposing that a saving of tax may result from artificial transfers of profits within groups of enterprises;
  • information forwarded to one EU country by another EU country’s competent authority has enabled information to be obtained which may be relevant in assessing liability to tax in the latter EU country.

Feedback

If requested, the competent authority which has received information has to send feedback to the sending country as soon as possible and no later than three months after the outcome of the use of the requested information is known.

OTHER FORMS OF ADMINISTRATIVE COOPERATION

Other forms of administrative cooperation include:

  • by agreement between the requesting authority and the requested authority, officials authorised by the requesting authority may be present in administrative offices and may participate in administrative enquiries in the requested country;
  • simultaneous controls of persons of common or complementary interest between two or more EU countries, with a view to exchanging the information obtained;
  • administrative notification;
  • sharing of best practices and experience to improve cooperation.

Any information communicated between EU countries in accordance with this directive is covered by the obligation of official secrecy and benefits from the protection extended to similar information under the national law of the EU country which received it. This information may be used in the following instances:

  • for the assessment and enforcement of other taxes and duties covered by Directive 2010/24/EU;
  • for the assessment and enforcement of compulsory social security contributions;
  • in judicial and administrative proceedings resulting from tax law infringements.

References

Act Entry into force Deadline for transposition in the Member States Official Journal

Directive 2011/16/EU

11.3.2011

1.1.2013

Article 8: 1.1.2015

OJ L 64, 11.3.2011

Common Consolidated Corporate Tax Base

Common Consolidated Corporate Tax Base

Outline of the Community (European Union) legislation about Common Consolidated Corporate Tax Base

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Taxation

Common Consolidated Corporate Tax Base

Proposal

Proposal for a Council Directive of 16 March 2011 on a Common Consolidated Corporate Tax Base (CCCTB).

Summary

The Common Consolidated Corporate Tax Base (CCCTB) is a single set of rules that companies operating within the European Union (EU) could use to calculate their taxable profits. This would mean that a company would only have to comply with one EU system for computing its taxable income instead of dealing with up to 27 different sets of rules. The CCCTB would not affect the discretion of EU countries to set their own national rate of corporate taxation. It is not designed to harmonise tax rates, but instead would ensure consistency between national tax systems in the EU.

The CCCTB would be available for businesses of all sizes established under the laws of an EU country, so long as the company takes one of the forms listed in Annex I to this proposal or the company is subject to one of the corporate taxes listed in Annex II or to a similar tax subsequently introduced. The directive would also apply to certain companies established under the laws of a non-EU country.

A company which fulfils the above requirements and is a tax resident in an EU country may opt for the system. The company would be subject to corporate tax under the system on all income derived from any source, both inside and outside its EU country of residence. A company which fulfils the above requirements but is not a tax resident in an EU country may also opt for the system but in respect of a permanent establishment maintained by it in an EU country. The company would be subject to corporate tax under the system on all income from an activity carried on through the permanent establishment in an EU country. A company that qualifies and opts for the CCCTB would no longer be subject to the national corporate tax arrangements for all matters regulated by the common rules.

The tax base would be determined for each tax year and shall be calculated as revenues less exempt revenues, deductible expenses and other deductible items. All revenues should be taxable unless explicitly exempted. Revenues which would be exempted from corporate tax include:

  • subsidies directly linked to the acquisition, construction or improvement of fixed assets;
  • proceeds from the disposal of pooled assets, including the market value of non-monetary gifts;
  • received profit distributions;
  • proceeds from a disposal of shares;
  • income of a permanent establishment in a third country.

Subject to certain conditions, fixed assets should be depreciable for tax purposes. Long-life assets should be depreciated individually, while others should be placed in a pool. Assets not subject to depreciation include:

  • fixed tangible assets not subject to wear and tear and obsolescence such as land, fine art, antiques, or jewellery;
  • financial assets.

Losses incurred in one tax year may be deducted in subsequent years. A reduction of the tax base on account of losses from previous tax years shall not result in a negative amount.

For a subsidiary to be eligible for consolidation (group membership for companies), the parent company must have:

  • the right to exercise over 50 % of the voting rights;
  • the ownership of over 75 % of the company’s capital or over 75 % of the rights giving entitlement to profit.

The CCCTB proposal is based on the ‘all-in all-out’ approach. Companies that fulfil the requirements for forming a group have to consolidate, which implies that they may not just opt to have their individual tax results computed under the common rules.

A tax resident shall form a group with:

  • all its permanent establishments located in other EU countries;
  • all permanent establishments, located in an EU country, of its qualifying subsidiaries which are resident in a non-EU country;
  • all its qualifying subsidiaries which are resident in one or more EU countries;
  • other resident taxpayers which are qualifying subsidiaries of the same company which is resident in a non-EU country and fulfils the necessary conditions.

The consolidated tax base shall be shared between the group members in each tax year on the basis of a formula for apportionment. This formula gives equal weight to the factors of sales, labour and assets.

The proposal also details anti-abuse rules. Artificial transactions undertaken for the sole purpose of avoiding taxation shall not be taken into account in the calculation of the tax base. This does not, however, apply to genuine commercial activities where the taxpayer may choose between two or more possible transactions which have the same commercial result but which produce different taxable amounts.

The CCCTB administrative framework provides for a ‘one-stop-shop’ approach which would allow groups with a taxable presence in more than one EU country to deal primarily with a single tax authority across the EU. A consolidated tax return will be filed with that authority.

References And Procedure

Proposal Official Journal Procedure

COM (2011) 121 final

Consultation CNS(2011)0058

Tax-free allowances: permanent imports of personal property

Tax-free allowances: permanent imports of personal property

Outline of the Community (European Union) legislation about Tax-free allowances: permanent imports of personal property

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Taxation

Tax-free allowances: permanent imports of personal property

Document or Iniciative

Council Directive 2009/55/EC of 25 May 2009 on tax exemptions applicable to the permanent introduction from a Member State of the personal property of individuals.

Summary

This directive provides an exemption for personal property which is permanently introduced from another European Union (EU) country by private individuals from consumption taxes which would normally apply to such property. Personal property refers to property for the personal use of the persons concerned or the needs of their household. Such property must neither have a commercial nature nor be intended for an economic activity. The tools necessary for exercise of a person’s trade or profession are, however, to be treated as personal property.

Riding horses, motor-driven road vehicles (including their trailers), caravans, mobile homes, pleasure boats and private aircraft may only be granted exemption if the private individual concerned transfers his normal residence to the EU country of destination. For the purposes of this directive, ‘normal residence’ is defined as the place where a person usually lives (for at least 185 days in each calendar year) because of personal and occupational ties, or in the case of a person with no occupational ties, because of personal ties which show close links between that person and the place where he/she is living.

Motor-driven road vehicles (including their trailers), caravans, mobile homes, pleasure boats and private aircraft must not be disposed of, hired out or lent during the 12 months following their tax exempt introduction, except in circumstances justified to the satisfaction of the competent authorities in the EU country of destination.

The introduction of the property may be undertaken all at once or in stages, and for any of the following reasons:

  • in connection with a transfer of normal residence: all of the property must be introduced within 12 months of the transfer of normal residence;
  • in connection with the furnishing or relinquishment of a secondary residence: the property must correspond to the normal furniture of the secondary residence and the person concerned must be the owner of the secondary residence or be renting it for a period of at least 12 months;
  • on the occasion of a marriage: the property must be introduced between two months before the marriage date envisaged and four months after the actual marriage date, and proof of marriage must be provided;
  • acquired by inheritance: the property must be introduced within two years of the date on which the person concerned enters into possession of the property, and proof must be provided that the property was acquired by inheritance.

With the exception of certain goods, EU countries have the right to retain or introduce more liberal conditions for granting tax exemptions than those provided for in this directive.

References

Act Entry into force Deadline for transposition in the Member States Official Journal

Directive 2009/55/EC

30.6.2009

OJ L 145, 10.6.2009

Excise duty on manufactured tobacco

Excise duty on manufactured tobacco

Outline of the Community (European Union) legislation about Excise duty on manufactured tobacco

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Taxation

Excise duty on manufactured tobacco

Document or Iniciative

Council Directive 2011/64/EU of 21 June 2011 on the structure and rates of excise duty applied to manufactured tobacco.

Summary

This directive establishes general principles for the harmonisation of the structure and rates of the excise duty which European Union (EU) countries apply to manufactured tobacco.

For the purposes of this directive, the term ‘manufactured tobacco’ includes the following:

  • cigarettes;
  • cigars and cigarillos;
  • smoking tobacco, including fine-cut tobacco for the rolling of cigarettes and other smoking tobacco.

Provisions applicable to cigarettes

Both cigarettes manufactured within the EU and those imported from non-EU countries are subject to an ad valorem excise duty calculated on the maximum retail selling price, including customs duties, and also to a specific excise duty calculated per unit of the product. EU countries may, however exclude customs duties from the calculation of ad valorem excise duty on cigarettes.

The rate of the ad valorem excise duty and the amount of the specific excise duty must be identical for all cigarettes.

The percentage of the specific component of excise duty in the amount of the total tax burden on cigarettes is established in accordance with the weighted average retail selling price. The weighted average retail selling price is calculated in accordance with the total value of all cigarettes released for consumption, based on the retail selling price including all taxes, divided by the total quantity of cigarettes released for consumption. The weighted average retail selling price must be determined by 1 March of each year based on the data for the previous year’s releases for consumption.

The specific component of the excise duty must not be less than 5 % and not more than 76.5 % of the amount of the total tax burden resulting from the sum of the specific excise duty and the ad valorem excise duty and the value added tax (VAT) imposed on the weighted average retail selling price. From 1 January 2014, the specific component must be between 7.5 % and 76.5 %. Where there is a change in the weighted average retail selling price of cigarettes in an EU country that takes the specific component of the excise duty below 5 % or 7.5 %, whichever is applicable, or above 76.5 % of the total tax burden, the EU country concerned may refrain from adjusting the amount of the specific excise duty until 1 January of the second year following that in which the change occurs.

EU countries may impose a minimum excise duty on cigarettes.

EU countries must apply minimum consumption taxes to cigarettes. This tax includes a specific excise duty per unit of the product, an ad valorem excise duty based on the maximum retail selling price, and a VAT proportional to the retail selling price.

The overall excise duty on cigarettes is the specific duty and ad valorem duty excluding VAT, and shall constitute at least 57 % of the weighted average retail selling price of cigarettes released for consumption. This excise duty must not be less than EUR 64 per 1 000 cigarettes irrespective of the weighted average retail selling price. EU countries which impose an excise duty of at least EUR 101 per 1000 cigarettes are not required to comply with the 57 % condition.

When an EU country increases the rate of VAT on cigarettes, it may reduce the overall excise duty to an amount equal to the increase in the rate of VAT when expressed as a percentage of the weighted average retail selling price.

Provisions applicable to manufactured tobacco other than cigarettes

EU countries shall apply an excise duty to manufactured tobacco other than cigarettes, which may be:

  • an ad valorem duty calculated on the basis of the maximum retail selling price of each product;
  • a specific duty expressed as an amount per kilogram or per 1000 pieces;
  • a mixture of an ad valorem element and a specific element.

The overall excise duty must be at least equivalent to the rates or minimum amounts established for:

  • cigars or cigarillos: 5 % of the retail selling price inclusive of all taxes or EUR 12 per 1000 items or per kilogram;
  • fine-cut smoking tobacco intended for the rolling of cigarettes: 40 % of the weighted average retail selling price or EUR 40 per kilogram;
  • other smoking tobaccos: 20 % of the retail selling price inclusive of all taxes, or EUR 22 per kilogram.

Maximum retail selling price

Manufacturers, their representatives or authorised agents in the EU, and importers of tobacco from non-EU countries have the right to determine the maximum retail selling price for each of their products for each EU country in which the products concerned are to be released for consumption. This does not however affect the implementation of national legislation regarding price control or the observance of imposed prices, provided that they are compatible with EU legislation.

This directive repealed directives 92/79/EEC, 92/80/EEC and 95/59/EC.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Directive 2011/64/EU

1.1.2011

OJ L 176, 5.7.2011