Council Resolution of 2 December 2008 on coordinating exit taxation
Date: 2008-12-02
Institutions: Council of the European Union
Subjects: EU Member State, administrative cooperation, economic activity, tax system

18.12.2008

EN

Official Journal of the European Union

C 323/1

I

(Resolutions, recommendations and opinions)

RESOLUTIONS

COUNCIL

COUNCIL RESOLUTION

of 2 December 2008

on coordinating exit taxation

(2008/C 323/01)

THE COUNCIL OF THE EUROPEAN UNION,

NOTING the two communications of 19 December 2006 from
the Commission to the Council, the European Parliament and
the European Economic and Social Committee on coordinating
direct tax systems in the internal market and on exit taxation,

RECALLING that, because various tax jurisdictions coexist within
the EU, the transfer of an economic activity which is subject to
the tax system of a single tax jurisdiction is not treated in the
same way as the transfer of an economic activity which is
subject to the legislation of two or more tax jurisdictions,

therefore,

the appropriateness of coordination
RECOGNISING,
aimed at avoiding, with due regard for
the principle of
subsidiarity, the double taxation which could result from the
transfer of economic activities which are subject to two or more
jurisdictions,

EMPHASISING that any solution put forward to achieve these
objectives must be pragmatic, based as far as possible on
existing instruments,
including the bilateral double taxation
conventions, restrict the administrative burden on taxpayers and
authorities, and safeguard the legitimate financial interests of the
Member States,

EMPHASISING,
furthermore, that the guiding principles are a
political commitment, whose implementation is left to the deci-
sion of
the Member States, and therefore affect neither the
rights and obligations of the Member States nor the respective
competencies of
the Community
the Member States and of
under the Treaty,

INVITES the Member States to adopt
principles:

the following guiding

A.

‘Transfer of
economic activities’ means any operation
whereby a taxpayer subject to corporation tax or a natural
person engaged in a business:

1. ceases to be subject to corporate or personal income tax
in a Member State (the exit State) while at the same time
becoming subject to corporate or personal income tax in
another Member State (the host State); or

2. transfers a combination of assets and liabilities from a
head office or a permanent establishment in the exit
State to a permanent establishment or a head office in
the host State.

B. When, in connection with a transfer of economic activities,
the exit State reserves the option to exercise its taxing rights
on the reserves made (profits realised but not yet taken into
account for tax purposes) and to take back,
in full or in
part, the provisions made (expenditure not yet incurred but
already taken into account for tax purposes), the host State
may provide for the creation of reserves or provisions of
identical or different amounts, in accordance with the rules
governing the tax base in that State, and allow deduction
from taxable results for
in which they were
established.

the year

C. When, in connection with a transfer of economic activities,
the exit State reserves the option to exercise its taxing rights
on the unrealised gains corresponding to the assets held by
the taxpayer, calculated as the difference between the market
value of these assets on the transfer date and their book
value, the host State takes the market value on the transfer
date when calculating the subsequent added value in the
event of disposal.

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Official Journal of the European Union

18.12.2008

D. In case of disagreement between the host State and the exit
State regarding the market value of the assets on the transfer
date, the two States settle their dispute using the appropriate
procedure.

E. The host State can require the taxpayer engaged in a transfer
of economic activities to provide evidence that the exit State
has exercised or will exercise its rights under the conditions

set out above, as well as evidence of
applied by the exit State.

the market value

F. The provisions laid down at Community level in relation to
Mutual Assistance provide the framework for the host State
to assist the exit State,
in particular for the purposes of
determining the disposal date.