Increasing sustainability by harmonizing EU corporate tax bases (WP5)

For some time, there has been a discussion if the EU should try to implement a CCCTB. The aim of introducing a CCCTB would be to harmonise and coordinate the corporate tax base in EU Member States. This unique system carries hopes of many potential advantages for corporations, for the EU as a whole, and for individual Member States: It may help to establish a fair tax competition, to remove obstacles in the international trade of financial capital, to prevent profit shifting and – maybe the most challenging of all – to open up a chance to reduce tax base erosion through offshore tax planning.

The implementation of a CCCTB represents a highly ambitious project, and to achieve a maximum effect it will require a high level of harmonisation for implementation. The most pressing issues will definitely be the design of the mechanism for the sharing of the tax base and the impact of its adoption on the corporate tax revenues of EU Member States. These are the crucial issues that will affect Member States' willingness to adopt the CCCTB.

In their latest deliverable (5.3), the researchers in WP5 have developed a model to research the impacts of the CCCTB system on the budget revenues of individual EU Member States. The model is based on datasets from the Amadeus and Bankscope databases, and it covers groups of companies operating in the EU that meet the criteria for consolidation and group taxation under the CCCTB system. The next research will attempt to introduce a dynamic component into the model, reflecting the behaviour of the companies. Moreover, reflecting the current developments in the area of the OECD's initiatives within its BEPS project, further research will aim at the identification of the impact on corporate tax revenues connected with the introduction of cross-border loss offsetting, suggested by the EU Commission in the first implementation step.