EU Actors support EU-wide consolidated company tax base

At an EU conference on company taxation on 29-30 April, EU Actors gave considerable support to the Commission’s proposal that companies should ultimately be allowed to use a single consolidated tax base for their EU-wide business activities.

The main issues discussed or concluded at the conference were:

  • 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;
  • preference was shown for the approach of a ‘common consolidated tax base’ (where a multinational group could calculate its tax dues for all its EU operations according to a new common set of EU tax rules);
  • the ‘home state taxation’ approach (where a multinational group could calculate its tax dues for all its EU operations according to the tax rules of the Member State where its headquarters are based) was not generally favoured, except perhaps for SMEs;
  • many participants judged a ‘European corporate income tax’ and ‘compulsory harmonisation of existing tax bases’ as unfeasible for the moment;
  • further research would be necessary:
    • in the potential for using the International Accounting Standards (IAS);
    • the possible competition and discrimination problems that could arise from having an optional common tax base running alongside traditional national tax bases
    • development of an appropriate mechanism to apportion a common EU tax base between Member States.


TheUnion of Industrial and Employers' Confederations of Europe (UNICE)welcomed the examination of and debate on longer-term goals for corporate taxation within the EU, such as the concept of optional consolidated base.

In its recent research report, theCentre for European Policy Studies (CEPS), concluded that the coming into force of the European Company Statute provides a unique opportunity to develop a more co-ordinated European corporate tax system. Failure to do this now will most likely hold back future progress as the EU devotes more of its energy to enlargement.

TheEuropean Association of Craft, Small and Medium-Sized Enterprises (UEAPME)see this initiative by the Commission as an important step towards necessary tax reforms on European level, which could reduce the administrative burdens and the compliance costs of the current system as well as distortions of the market resulting from unfair tax competition.


A Communication published by the Commission in October 2001, argued that the EU must agree a strategy to allow companies, in the longer term, to use a single consolidated base (but not harmonised rates) for computing tax on their EU-wide profits. The Commission's studies into this issue have confirmed that the current tax rules (different in each Member State) create compliance costs and cause problems related to transfer pricing, double taxation and the absence of relief for losses on cross border transactions. In the short term, the Communication identified several steps that could be taken to remove specific tax obstacles to cross-border trade.


The Commission is due to publish a progress report on this matter in early 2003.


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