Proposal for a COUNCIL DIRECTIVE on a Common Consolidated Corporate Tax Base (CCCTB)
Date: 2011-03-16
Institutions: European Commission
Subjects: approximation of laws, basis of tax assessment, competitiveness, corporation tax, economic growth

EUROPEAN COMMISSION 

Brussels, 3.10.2011 
COM(2011) 121 final/2 

2011/0058 (CNS) 

CORRIGENDUM 
Annule et remplace le document COM(2011)121 final du 16 mars 2011 
Concerne: toutes les versions linguistiques 
(Descriptif: 'Cyprus/Kibris' de l'Annexe II est remplacé par 'Κύπρος'; le mot 'Kibris' de 
l'Annexe III est effacé.) 

Proposal for a 

COUNCIL DIRECTIVE 

on a Common Consolidated Corporate Tax Base (CCCTB) 

{SEC(2011) 315 final} 
{SEC(2011) 316 final} 

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TABLE OF CONTENTS 

EXPLANATORY MEMORANDUM ....................................................................................... 4 

1. 

2. 

3. 

4. 

CONTEXT OF THE PROPOSAL............................................................................... 4 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND 
IMPACT ASSESSMENTS.......................................................................................... 6 

LEGAL ELEMENTS OF THE PROPOSAL .............................................................. 9 

BUDGETARY IMPLICATION ................................................................................ 10 

COUNCIL DIRECTIVE on a Common Consolidated Corporate Tax Base (CCCTB) .......... 12 

CHAPTER I - SCOPE.............................................................................................................. 15 

CHAPTER II - FUNDAMENTAL CONCEPTS..................................................................... 16 

CHAPTER III - OPTING FOR THE SYSTEM PROVIDED FOR BY THIS DIRECTIVE.. 21 

CHAPTER IV - CALCULATION OF THE TAX BASE ....................................................... 22 

CHAPTER V - TIMING AND QUANTIFICATION ............................................................. 25 

CHAPTER VI - DEPRECIATION OF FIXED ASSETS........................................................ 31 

CHAPTER VII - LOSSES ....................................................................................................... 35 

CHAPTER VIII - PROVISIONS ON ENTRY TO AND EXIT FROM THE SYSTEM 
PROVIDED FOR BY THIS DIRECTIVE .............................................................................. 35 

CHAPTER IX - CONSOLIDATION ...................................................................................... 37 

CHAPTER X - ENTERING AND LEAVING THE GROUP................................................. 39 

CHAPTER XI - BUSINESS REORGANISATIONS.............................................................. 42 

CHAPTER XII - DEALINGS BETWEEN THE GROUP AND OTHER ENTITIES............ 43 

CHAPTER XIII - TRANSACTIONS BETWEEN ASSOCIATED ENTERPRISES ............. 45 

CHAPTER XIV - ANTI-ABUSE RULES............................................................................... 46 

CHAPTER XV - TRANSPARENT ENTITIES ...................................................................... 48 

CHAPTER XVI - APPORTIONMENT OF THE CONSOLIDATED TAX BASE ............... 49 

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CHAPTER XVII - ADMINISTRATION AND PROCEDURES............................................ 55 

CHAPTER XVIII - FINAL PROVISIONS ............................................................................. 64 

ANNEXES ............................................................................................................................... 67 

ANNEX I.................................................................................................................................. 67 

ANNEX II ................................................................................................................................ 70 

ANNEX III............................................................................................................................... 72 

LEGISLATIVE FINANCIAL STATEMENT FOR PROPOSALS ........................................ 75 

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

The Common Consolidated Corporate Tax Base (CCCTB) aims to tackle some major fiscal 
impediments to growth in the Single Market. In the absence of common corporate tax rules, 
the  interaction  of  national  tax  systems  often  leads  to  over-taxation  and  double  taxation, 
businesses  are  facing  heavy  administrative  burdens  and  high  tax  compliance  costs.  This 
situation  creates  disincentives  for  investment  in the  EU  and,  as  a  result,  runs  counter  to  the 
priorities set  in Europe  2020 – A  strategy for smart, sustainable and inclusive growth1.  The 
CCCTB is an important initiative on the path towards removing obstacles to the completion of 
the Single Market2 and was identified in the Annual Growth Survey3 as a growth-enhancing 
initiative to be frontloaded to stimulate growth and job creation. 

The  common  approach  proposed  would  ensure  consistency  in  the  national  tax  systems  but 
would not harmonise tax rates. Fair competition on tax rates is to be encouraged. Differences 
in rates allows a certain degree of tax competition to be maintained in the internal market and 
fair  tax  competition  based  on  rates  offers  more  transparency  and  allows  Member  States  to 
consider both their market competitiveness and budgetary needs in fixing their tax rates. 

The CCCTB is compatible with the rethinking of tax systems and the shift to more growth-
friendly and green taxation advocated in the Europe 2020 strategy. In designing the common 
base  supporting  research  and  development  has  been  a  key  aim  of  the  proposal.  Under  the 
CCCTB all costs relating to research and development are deductible. This approach will act 
as  an  incentive  for  companies  opting  in  to  the  system  to  continue  to  invest  in  research  and 
development. To the extent that there are economic losses to be offset on a cross-border basis, 
consolidation under the CCCTB tends to shrink the common base. However, in general, the 
common base would lead to an average EU base that is broader than the current one, mostly 
due to the option retained for the depreciation of assets.  

A key obstacle in the single market today involves the high cost of complying with transfer 
pricing  formalities  using  the  arm's  length  approach.  Further,  the  way  that  closely-integrated 
groups tend to organise  themselves  strongly indicates that transaction-by-transaction pricing 
based on the 'arm's length' principle may no longer be the most appropriate method for profit 
allocation.  The  possibility  of  cross-border  loss  offsets  is  only  made  possible  in  a  limited 
number of circumstances within the EU, which leads to over-taxation for companies engaged 
in cross-border activities. In addition, the network of Double Tax Conventions (DTCs) does 
not offer an appropriate solution for the elimination of double taxation in the single market, as 
it is designed  to operate in a bilateral  context at  the  international  level, rather than within a 
closely integrated setting. 

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3 

Communication from the Commission, 'EUROPE 2020 - A strategy for smart, sustainable and inclusive 
growth' - COM(2010) 2020, 3.3.2010. 
Communication from the Commission, 'Towards a Single Market Act – For a highly competitive social 
market  economy  –  50  proposals  for  improving  our  work, business  and  exchanges with  one  another'  - 
COM(2010) 608, 27.10.2010. 
Communication  from  the  Commission,  'Annual  Growth  Survey:  advancing  the  EU's  comprehensive 
response to the crisis', COM(2011) 11, 12.01.2010. 

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The CCCTB is a system of common rules for computing the tax base of companies which are 
tax resident in the EU and of EU-located branches of third-country companies. Specifically, 
the  common  fiscal  framework  provides  for  rules  to  compute  each  company’s  (or  branch's) 
individual tax results, the consolidation of those results, when there are other group members, 
and the apportionment of the consolidated tax base to each eligible Member State.  

The CCCTB will be available for all sizes of companies; MNEs would be relieved from the 
fact of certain tax obstacles in the single market and SMEs would incur less compliance costs 
when they decided to expand commercially to another Member State. The system is optional. 
Since  not  all  businesses  trade  across  the  border,  the  CCCTB  will  not  force  companies  not 
planning  to  expand  beyond  their  national  territory  to  bear  the  cost  of  shifting  to  a  new  tax 
system. 

Harmonisation will only involve the computation of the tax base and will not interfere with 
financial  accounts.  Therefore,  Member  States  will  maintain  their  national  rules  on  financial 
accounting  and  the  CCCTB  system  will  introduce  autonomous  rules  for  computing  the  tax 
base  of  companies.  These  rules  shall  not  affect  the  preparation  of  annual  or  consolidated 
accounts.  

There  is  no  intention  to  extend  harmonisation  to  the  rates.  Each  Member  State  will  be 
applying its own rate to its share of the tax base of taxpayers. 

Under the CCCTB, groups of companies would have to apply a single set of tax rules across 
the Union and deal with only one tax administration (one-stop-shop). A company that opts for 
the CCCTB ceases to be subject to the national corporate tax arrangements in respect of all 
matters regulated by the common rules. A company which does not qualify or does not opt for 
the system provided for by the CCCTB Directive remains subject to the national corporate tax 
rules  which  may  include  specific  tax  incentive  schemes  in  favour  of  Research  & 
Development. 

Business  operating  across  national  borders  will  benefit  both  from  the  introduction  of  cross-
border  loss  compensation  and  from  the  reduction  of  company  tax  related  compliance  costs. 
Allowing  the  immediate  consolidation  of  profits  and  losses  for  computing  the  EU-wide 
taxable bases is a step towards reducing over-taxation in cross-border situations and thereby 
towards improving the tax neutrality conditions between domestic and cross-border activities 
to  better  exploit  the  potential  of  the  Internal  Market.  Calculations  on  a  sample  of  EU 
multinationals  shows  that,  on  average  approximately  50%  of  non-financial  and  17%  of 
financial multinational groups could benefit from immediate cross-border loss compensation.  

A major benefit of the introduction of the CCCTB will be a reduction in compliance costs for 
companies.  Survey  evidence  points  to  a  reduction  in  the  compliance  costs  for  recurring  tax 
related  tasks  in  the  range  of  7%  under  CCCTB.  The  reduction  in  actual  and  perceived 
compliance costs is expected to exert a substantial influence on firms' ability and willingness 
to  expand  abroad  in  the  medium  and  long  term.  The  CCCTB  is  expected  to  translate  into 
substantial savings in compliance time and outlays in the case of a parent company setting up 
a new subsidiary in a different Member State. On average, the tax experts participating in the 
study  estimated  that  a  large  enterprise  spends  over  €140,000  (0.23%  of  turnover)  in  tax 
related  expenditure  to  open  a  new  subsidiary  in  another  Member  State.  The  CCCTB  will 
reduce  these  costs  by  €87,000  or  62%.  The  savings  for  a  medium  sized  enterprise  are  even 
more significant, as costs are expected to drop from €128,000 (0.55% of turnover) to €42,000 
or a decrease of 67%.  

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The  proposal  will  benefit  companies  of  all  sizes  but  it  is  particularly  relevant  as  part  of  the 
effort  to  support  and  encourage  SMEs  to  benefit  from  the  Single  Market  as  set  out  in  the 
review  of  the  Small  Business  Act  (SBA)  for  Europe4.  The  CCCTB  notably  contributes  to 
reduced tax obstacles and administrative burdens, making it simpler and cheaper for SMEs to 
expand  their  activities  across  the  EU.  The  CCCTB  will  mean  that  SMEs  operating  across 
borders and opting into the system will only be required to calculate their corporate tax base 
according to one set of tax rules. The CCCTB complements the European Private Company 
(SPE),  which  is  still  under  discussion  in  the  Council.  A  common  framework  for  computing 
the tax base for companies in the EU would be particularly useful for SPEs operating across 
Member States. 

The  present  proposal  is  not  intended  to  influence  the  tax  revenues  and  the  impact  on  the 
distribution  of  the  tax  bases  between  the  EU  Member  States  has  been  analysed.  In  fact,  the 
impact on the revenues of Member States will ultimately depend on national policy choices 
with regard to possible adaptations of the mix of different tax instruments or applied tax rates. 
In this respect it is difficult to predict the exact impacts on each of the Member States. In this 
context, as an exception to the general principle, where the outcome of the apportionment of 
the tax base between Member States does not fairly represent the extent of business activity, a 
safeguard  clause  provides  for  an  alternative  method.  Moreover,  the  Directive  includes  a 
clause to review the impacts after five years following the entry into force of the Directive.  

For  Member  States,  the  introduction  of  an  optional  system  will  of  course  mean  that  tax 
administrations  will  have  to  manage  two  distinct  tax  schemes  (CCCTB  and  their  national 
corporate  income  tax).  But  it  is  compensated  by  the  fact  that  the  CCCTB  will  mean  fewer 
opportunities for tax planning by companies using transfer pricing or mismatches in Member 
State  tax  systems.  There  will  be  fewer  disputes  involving  the  ECJ  or  the  mutual  agreement 
procedure in double tax conventions.  

To assist Member State tax administrations in the run up to the implementation of the CCCTB 
it is planned that the FISCALIS EU programme will be mobilised to assist Member States in 
the CCCTB implementation and administration. 

The present proposal includes a complete set of rules for company taxation. It details who can 
opt,  how  to  calculate  the  taxable  base  and  what  is  the  perimeter  and  functioning  of  the 
consolidation.  It  also  provides  for  anti-abuse  rules,  defines  how  the  consolidated  base  is 
shared  and  how  the  CCCTB  should  be  administered  by  Member  States  under  a  'one-stop-
shop' approach. 

2. 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND 
IMPACT ASSESSMENTS 

(a) Consultations 

Following publication of the Company Tax Study in 2001, the Commission led a broad public 
debate and held a series of consultations. 

4 

Communication  from 
COM(2011)78 final, 23.2.2011. 

the  Commission, 

'Review  of 

the  "Small  Business  Act"  for  Europe', 

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The most important step in that process was the creation of a Working Group (CCCTB WG) 
consisting of experts from the tax administrations of all Member States. The CCCTB WG was 
set up in November 2004 and met thirteen times in plenary sessions up until April 2008. In 
addition, six sub-groups were established to explore specific areas in more depth and reported 
back to the CCCTB WG. The role of the national experts was limited to providing technical 
assistance  and  advice  to  the  Commission  services.  The  CCCTB  WG  also  met  in  extended 
format  three  times  (i.e.  December  2005,  2006  and  2007)  to  allow  all  key  experts  and 
stakeholders from the business, professions and academia to express their views. 

Further,  the  Commission  consulted  informally,  on  a  bilateral  basis,  several  business  and 
professional associations. Some of those interest groups submitted their views officially. The 
results  of  academic  research  were  also  considered.  Thus,  leading  scholars  furnished  the 
Commission with their insights in connection with various features of the system. 

The  Commission  also  organised  two  events  in  Brussels  (April  2002)  and  Rome  (December 
2003 with the Italian Presidency). In February 2008, another conference, co-sponsored by the 
Commission and an academic institution, took place in Vienna and discussed in detail several 
items relevant to the CCCTB. Finally, on 20 October 2010, the Commission consulted experts 
from Member States, business, think tanks and academics on certain topics which its services 
had  reconsidered  and  further  developed  since  the  last  meeting  of  the  CCCTB  WG  in  April 
2008. 

(b) Impact Assessment 

A very detailed Impact Assessment has been prepared. It includes the results of the following 
studies: (i) European Tax Analyzer (ETA); (ii) Price Waterhouse Cooper-Study (PWC); (iii) 
Amadeus and Orbis database; (iv) Deloitte Study and (v) CORTAX study. 

The report follows the Guidelines of Secretariat General for Impact Assessments and thereby 
it provides: (i) a review of the consultation process; (ii) a description of the existing problems; 
(iii)  a  statement  of  the  objectives  of  the  policy;  and  (iv)  a  comparison  of  alternative  policy 
options  which  could  attain  the  stated  objectives.  In  particular,  a  CCTB  (common  tax  base 
without consolidation) and a CCCTB (common tax base with consolidation), both compulsory 
and optional, are subject to analysis and their respective economic, social and environmental 
impacts are compared. 

Comparison of Policy Options 

The  impact  assessment  looks  at  different  options  with  the  aim  to  improve  the  competitive 
position of European companies by providing them with the possibility to compute their EU-
wide  profits  according  to  one  set  of  rules  and,  hence,  choose  a  legal  environment  that  best 
suits their business needs, while eliminating tax costs related to the existence of 27 separate 
national tax systems. The report considers 4 main policy scenarios, which are compared with 
the 'no action' or 'status-quo' scenario (option 1): 

(i) 

An optional Common Corporate Tax Base (optional CCTB): EU-resident companies 
(and EU-situated permanent establishments) would have the option to compute their 
tax base pursuant to a set of common rules across the Union instead of any of the 27 
national corporate tax systems. 'Separate accounting' (i.e. transaction-by-transaction 
pricing  according  to  the  'arm's  length'  principle)  would  remain  in  place  for  intra-
group  transactions,  as  the  system  would  not  involve  a  consolidation  of  tax  results 
(option 2). 

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(ii) 

(iii) 

A compulsory Common Corporate Tax Base (compulsory CCTB): all qualifying EU-
resident companies (and EU-situated permanent establishments) would be required to 
compute  their  tax  base  pursuant  to  a  single  set  of  common  rules  across  the  Union. 
The  new  rules  would  replace  the  current  27  national  corporate  tax  systems.  In  the 
absence  of  consolidation,  'separate  accounting'  would  continue  to  determine  the 
allocation of profit in intra-group transactions (option 3). 

An optional Common Consolidated Corporate Tax Base (optional CCCTB): a set of 
common rules establishing an EU-wide consolidated tax base would be an alternative 
to the current 27 national corporate tax systems and the use of 'separate accounting' 
in allocating revenues to associated enterprises.  Thus,  the  tax  results  of  each  group 
member (i.e. EU-resident company or EU-situated permanent establishment) would 
be aggregated to form a consolidated tax base and re-distributed according to a pre-
established sharing mechanism based on a formula. Under this scenario, EU-resident 
companies  and/or  EU-situated  permanent  establishments  owned  by  companies 
resident outside the Union would be entitled to apply the CCCTB, provided that they 
fulfil the eligibility requirements for forming a group and all eligible members of the 
same group opt to apply the common rules ('all-in all-out') (option 4). 

(iv) 

A  compulsory  Common  Consolidated  Corporate  Tax  Base  (compulsory  CCCTB): 
EU-resident  companies  and/or  EU-situated  permanent  establishments  owned  by 
companies resident outside the Union would be required to apply the CCCTB rules 
insofar as they fulfilled the eligibility requirements for forming a group. 

Impact Analysis 

The  economic  results  of  the  Impact  Assessment  show  that  the  removal  of  the  identified 
corporate  tax  obstacles  would  allow  business  to  make  sounder  economic  choices  and  thus 
improve the overall efficiency of the economy. The options for an optional and compulsory 
CCCTB will both result in a slightly higher welfare. The optional CCCTB is preferable for a 
number  of  reasons.  The  two  main  reasons  verified  in  the  Impact  Assessment  are  (i)  the 
estimated  impact  on  employment  is  more  favourable  and  (ii)  the  enforced  change  by  every 
single  company  in  the  Union  to  a  new  method  of  calculating  its  tax  base  (regardless  of 
whether it operates in more that one Member State) is avoided. 

The  reforms  under  analysis  are potentially  associated  with  important  dynamic  effects  in  the 
long run. The reduction in uncertainty and in the costs (actual and perceived) that companies 
operating  in  multiple  jurisdictions  currently  incur  is  the  main  channel  through  which  these 
effects are expected to materialize. Ultimately, this will translate into increased cross-border 
investment within the Union, stemming both from further expansion of European and foreign 
multinational  enterprises  and  from  de  novo  investment  of  purely  domestic  companies  into 
other Member States. Notably, the elimination of additional compliance costs associated with 
the obligation to comply with different tax rules across the Union and deal with more than one 
tax  administration  ('one-stop-shop'  principle)  are  likely  to  enhance  companies'  capacity  to 
expand cross-border. Such a prospect should be particularly beneficial for small and medium 
enterprises which are mostly affected by the high compliance costs of the current situation. 

Although  the  Impact  Assessment  points  out  that  the  final  impact  of  the  introduction  of  a 
CCCTB  on  overall  tax  revenues  depends  on  the  Member  States'  own  policy  choices,  it  is 
important that Member States pay close attention to the revenue effects, in particular given the 
very difficult budgetary situation in many Member States. 

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In  general,  the  new  rules  for  the  common  base  would  lead  to  an  average  EU  base  that  is 
broader  than  the  current  one.  To  the  extent  that  there  are  economic  losses  to  be  offset  on  a 
cross-border basis, consolidation under CCCTB tends to shrink the common base. 

In  fact,  the  impact  on  the  revenues  of  Member  States  will  ultimately  depend  on  national 
policy choices with regard to possible adaptations of the mix of different tax instruments or 
applied  tax  rates.  In  this  respect,  it  is  difficult  to  predict  the  exact  impacts  on  each  of  the 
Member States. However, the Directive includes a clause to review the impacts after 5 years. 

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

(a) Legal Basis 

Direct tax legislation falls within the ambit of Article 115 of the Treaty on the Functioning of 
the EU (TFEU). The clause stipulates that legal measures of approximation under that article 
shall be vested the legal form of a Directive. 

(b) Subsidiarity 

This proposal complies with the principle of Subsidiarity. 

The  system  of  the  CCCTB  aims  to  tackle  fiscal  impediments,  mainly  resulting  from  the 
fragmentation of the Union into 27 disparate tax systems, that businesses are faced with when 
they operate within the single market. Non-coordinated action, planned and implemented by 
each  Member  State  individually,  would  replicate  the  current  situation,  as  companies  would 
still need to deal with as many tax administrations as the number of Member States in which 
they are liable to tax. 

The rules set out in this proposal, such as the relief for cross-border losses and tax-free group 
restructurings,  would  be  ineffective  and  likely  to  create  distortion  in  the  market,  notably 
double taxation or non-taxation, if each Member State applied its own system. Neither would 
disparate  national  rules  for  the  division  of  profits  improve  the  current  -  already  complex  - 
process of allocating business profits amongst associated enterprises. 

The nature of the subject requires a common approach. 

A  single  set  of  rules  for  computing,  consolidating  and  sharing  the  tax  bases  of  associated 
enterprises across the Union is expected to attenuate market distortions caused by the current 
interaction of 27 national tax regimes. Further, the building blocks of the system, especially 
cross-border loss relief, tax-free intra-group asset transfers and the allocation of the group tax 
base  through  a  formula,  could  only  be  materialised  under  a  common  regulatory  umbrella. 
Accordingly,  common  rules  of  administrative  procedure  would  have  to  be  devised  to  allow 
the principle of a 'one-stop-shop' administration to function. 

This  proposal  is  limited  to  combatting  tax  obstacles  caused  by  the  disparities  of  national 
systems in computing the tax base between associated enterprises. The work that followed up 
to the Company Tax Study identified that the best results in tackling those obstacles would be 
achieved  if  a  common  framework  regulated  the  computation  of  the  corporate  tax  base  and 
cross-border  consolidation.  Indeed,  these  matters  may  only  be  dealt  with  by  laying  down 
legislation  at  the  level  of  the  Union,  since  they  are  of  a  primarily  cross-border  nature.  This 

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proposal is therefore justified by reference to the principle of Subsidiarity because individual 
action by the Member States would fail to achieve the intended results. 

(c) Proportionality 

This proposal, being shaped as an optional system, represents the most proportionate answer 
to  the  identified  problems.  It  does  not  force  companies  which  do  not  share  the  intention  of 
moving abroad to bear the unnecessary administrative cost of implementing the common rules 
in the absence of any real benefits. 

The present initiative is expected to create more favourable conditions for investment in the 
single  market,  as  tax  compliance  costs  should  be  expected  to  decrease.  Further,  companies 
would  be  likely  to  derive  considerable  benefits  from  the  elimination  of  transfer  pricing 
formalities, the possibility to transfer losses across national borders within the same group as 
well  as  from  tax-free  intra-group  reorganisations.  The  positive  impact  should  outweigh 
possible  additional  financial  and  administrative  costs  which  national  tax  authorities  would 
have to undergo for the purpose of implementing the system at a first stage. 

The  measures  laid  down  in  this  proposal  are  both  suitable  and  necessary  for  achieving  the 
desired  end  (i.e.  proportionate).  They  namely  deal  with  harmonising  the  corporate  tax  base, 
which is a prerequisite for curbing the identified tax obstacles and rectifying the elements that 
distort the single market. In this regard, it should also be clarified that this proposal does not 
involve  any  harmonisation  of  tax  rates  (or  setting  of  a  minimum  tax  rate).  Indeed,  the 
determination of rates is treated as a matter inherent in Member States' tax sovereignty and is 
therefore left to be dealt with through national legislation. 

4. 

BUDGETARY IMPLICATION 

This  proposal  for  a  Directive  does  not  have  any  budgetary  implications  for  the  European 
Union. 

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2011/0058 (CNS) 

Proposal for a 

COUNCIL DIRECTIVE 

on a Common Consolidated Corporate Tax Base (CCCTB) 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 115 thereof, 

Having regard to the proposal from the Commission, 

After transmission of the draft legislative act to the national Parliaments, 

Having regard to the opinion of the European Parliament5, 

Having regard to the opinion of the European Economic and Social Committee6, 

Acting in accordance with a special legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

Companies  which  seek  to  do  business  across  frontiers  within  the  Union  encounter 
serious obstacles and market distortions owing to the existence of 27 diverse corporate 
tax  systems.  These  obstacles  and  distortions  impede  the  proper  functioning  of  the 
internal market. They create disincentives for investment in the Union and run counter 
to  the  priorities  set  in  the  Communication  adopted  by  the  Commission  on  3  March 
2010 entitled Europe 2020 – A strategy for smart, sustainable and inclusive growth7. 
They  also  conflict  with  the  requirements  of  a  highly  competitive  social  market 
economy. 

Tax  obstacles  to  cross-border  business  are  particularly  severe  for  small  and  medium 
enterprises, which commonly lack the resources to resolve market inefficiencies. 

The network of double taxation conventions between Member States does not offer an 
appropriate solution. The existing Union legislation on corporate tax issues addresses 
only a small number of specific problems. 

A system allowing companies to treat the Union as a single market for the purpose of 
corporate tax would facilitate cross-border activity for companies resident in the Union 
and would promote the objective of making the Union a more competitive location for 

5 
6 
7 

OJ C , , p. . 
OJ C , , p. . 
COM(2010) 2020. 

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investment internationally. Such a system would best be achieved by enabling groups 
of companies with a taxable presence in more than one Member State to settle their tax 
affairs in the Union according to a single set of rules for calculation of the tax base and 
to  deal  with  a  single  tax  administration  ('one-stop-shop').  These  rules  should  also  be 
made available to entities subject to corporate tax in the Union which do not form part 
of a group. 

(5) 

(6) 

(7) 

(8) 

(9) 

Since differences in rates of taxation do not give rise to the same obstacles, the system 
(the  Common  Consolidated  Corporate  Tax  Base  (CCCTB))  need  not  affect  the 
discretion of Member States regarding their national rate(s) of company taxation. 

Consolidation is an essential element of such a system, since the major tax obstacles 
faced by companies in the Union can be tackled only in that way. It eliminates transfer 
pricing  formalities  and  intra-group  double  taxation.  Moreover,  losses  incurred  by 
taxpayers  are  automatically  offset  against  profits  generated  by  other  members  of  the 
same group. 

Consolidation  necessarily  entails  rules  for  apportionment  of  the  result  between  the 
Member States in which group members are established. 

Since such a system is primarily designed to serve the needs of companies that operate 
across  borders,  it  should  be  an  optional  scheme,  accompanying  the  existing  national 
corporate tax systems. 

The system (the Common Consolidated Corporate Tax Base (CCCTB)) should consist 
in a set of common rules for computing the tax base of companies without prejudice to 
the  rules  laid  down  in  Council  Directives  78/660/EEC8  and  83/349/EEC9  and 
Regulation of the European Parliament and of the Council 1606/2002/EC10. 

(10)  All revenues should be taxable unless expressly exempted. 

(11) 

Income  consisting  in  dividends,  the  proceeds  from  the  disposal  of  shares  held  in  a 
company outside the group and the profits of foreign permanent establishments should 
be exempt. In giving relief for double taxation most Member States exempt dividends 
and  proceeds  from  the  disposals  of  shares  since  it  avoids  the  need  of  computing  the 
taxpayer's  entitlement  to  a  credit  for  the  tax  paid  abroad,  in  particular  where  such 
entitlement must take account of the corporation tax paid by the company distributing 
dividends.  The  exemption  of  income  earned  abroad  meets  the  same  need  for 
simplicity. 

(12) 

Income consisting in interest and royalty payments should be taxable, with credit for 
withholding tax paid on such payments. Contrary to the case of dividends, there is no 
difficulty in computing such a credit.  

(13)  Taxable  revenues  should  be  reduced  by  business  expenses  and  certain  other  items. 
Deductible  business  expenses  should  normally  include  all  costs  relating  to  sales  and 
expenses linked to the production, maintenance and securing of income. Deductibility 

8 
9 
10 

OJ L 222, 14.8.1978, p. 11. 
OJ L 193, 18.7.1983, p. 1. 
OJ L 243, 11.9.2002, p. 1. 

EN 

12 

   EN 

                                                 
should be extended to costs of research and development and costs incurred in raising 
equity  or  debt  for  the  purposes  of  the  business.  There  should  also  be  a  list  of  non-
deductible expenses. 

(14)  Fixed  assets  should  be  depreciable  for  tax  purposes,  subject  to  certain  exceptions. 
Long-life  tangible  and  intangible  assets  should  be  depreciated  individually,  while 
others  should  be  placed  in  a  pool.  Depreciation  in  a  pool  simplifies  matters  for  both 
the tax authorities  and taxpayers  since  it avoids the need to establish and maintain a 
list of every single type of fixed asset and its useful life. 

(15)  Taxpayers  should  be  allowed  to  carry  losses  forward  indefinitely,  but  no  loss  carry-
back  should  be  allowed.  Since  carry-forward  of  losses  is  intended  to  ensure  that  a 
taxpayer pays tax on its real income, there is no reason to place a time limit on carry 
forward. Loss carry back is relatively rare in the practice of the Member States, and 
leads to excessive complexity. 

(16)  Eligibility for consolidation (group membership) should be determined in accordance 
with  a  two-part  test  based  on  (i)  control  (more  than  50%  of  voting  rights)  and  (ii) 
ownership  (more  than  75%  of  equity)  or  rights  to  profits  (more  than  75%  of  rights 
giving entitlement to profit). Such a test ensures a high level of economic integration 
between  group  members,  as  indicated  by  a  relation  of  control  and  a  high  level  of 
participation. The two thresholds should be met throughout the tax year; otherwise, the 
company  should  leave  the  group  immediately.  There  should  also  be  a  nine-month 
minimum requirement for group membership. 

(17)  Rules on business reorganisations should be established in order to protect the taxing 
rights of Member States in an equitable manner. Where a company enters the group, 
pre-consolidation  trading  losses  should  be  carried  forward  to  be  set  off  against  the 
taxpayer’s  apportioned  share.  When  a  company  leaves  the  group,  no  losses  incurred 
during  the  period  of  consolidation  should  be  allocated  to  it.  An  adjustment  may  be 
made in respect of capital gains where certain assets are disposed within a short period 
after entry to or exit from a group. The value of self-generated intangible assets should 
be assessed on the basis of a suitable proxy, that is to say research and development, 
marketing and advertising costs over a specified period. 

(18)  When  withholding  taxes  are  charged  on  interest  and  royalty  payments  made  by 
taxpayers, the proceeds of such taxes should be shared according to the formula of that 
tax year. When withholding taxes are charged on dividends distributed by taxpayers, 
the  proceeds  of  such  taxes  should  not  be  shared  since,  contrary  to  interest  and 
royalties,  dividends  have  not  led  to  a  previous  deduction  borne  by  all  group 
companies. 

(19)  Transactions between a taxpayer and an associated enterprise which is not a member 
of  the  same  group  should  be  subject  to  pricing  adjustments  in  line  with  the  'arm's 
length' principle, which is a generally applied criterion. 

(20)  The  system  should  include  a  general  anti-abuse  rule,  supplemented  by  measures 
designed  to  curb  specific  types  of  abusive  practices.  These  measures  should  include 
limitations on the deductibility of interest paid to associated enterprises resident for tax 
purposes in a low-tax country outside the Union which does not exchange information 
with  the  Member  State  of  the  payer  based  on  an  agreement  comparable  to  Council 

EN 

13 

   EN 

Directive 2011/16/EU11 concerning mutual assistance by the competent authorities of 
the Member States in the field of direct taxation and taxation of insurance premiums12 
and rules on controlled foreign companies. 

(21)  The formula for apportioning the consolidated tax base should comprise three equally 
weighted factors (labour, assets and sales). The labour factor should be computed on 
the basis of payroll and the number of employees (each item counting for half). The 
asset factor should consist of all fixed tangible assets. Intangibles and financial assets 
should  be  excluded  from  the  formula  due  to  their  mobile  nature  and  the  risks  of 
circumventing  the  system.  The  use  of  these  factors  gives  appropriate  weight  to  the 
interests of the Member State of origin. Finally, sales should be taken into account in 
order to ensure fair participation of the Member State of destination. Those factors and 
weightings should ensure that profits are taxed where they are earned. As an exception 
to  the  general  principle,  where  the  outcome  of  the  apportionment  does  not  fairly 
represent the extent of business activity, a safeguard clause provides for an alternative 
method. 

(22)  Directive  95/46/EC of the European Parliament  and  the  Council of 24 October 1995 
on the protection of individuals with regard to the processing of personal data and on 
the free movement of such data13 applies to the processing of personal data carried out 
within the framework of this Directive. 

(23)  Groups of companies should be able to deal with a single tax administration ('principal 
tax authority'), which should be that of the Member State in which the parent company 
of  the  group  ('principal  taxpayer')  is  resident  for  tax  purposes.  This  Directive  should 
also  lay  down  procedural  rules  for  the  administration  of  the  system.  It  should  also 
provide for an advance ruling mechanism. Audits should be initiated and coordinated 
by the principal tax authority but the authorities of any Member State in which a group 
member  is  subject  to  tax  may  request  the  initiation  of  an  audit.  The  competent 
authority of the Member State in which a group member is resident or established may 
challenge a decision of the principal tax authority concerning the notice to opt or an 
amended  assessment  before  the  courts  of  the  Member  State  of  the  principal  tax 
authority. Disputes between taxpayers and tax authorities should be dealt with by an 
administrative body which is competent to hear appeals at first instance according to 
the law of the Member State of the principal tax authority. 

(24)  The  Commission  should  be  empowered  to  adopt  delegated  acts  in  accordance  with 
Article 290 of the Treaty on the Functioning of the European Union in order to adapt 
the  Annexes  to  take  into  account  the  changes  to  the  laws  of  the  Member  States 
concerning  company  forms  and  corporate  taxes  and  update  the  list  of  the  non-
deductible  taxes  as  well  as  lay  down  rules  on  the  definition  of  legal  and  economic 
ownership  in  relation  to  leased  assets  and  the  calculation  of  the  capital  and  interest 
elements of the leasing payments and of the depreciation base of a leased asset. It is 
necessary that the powers are delegated to the Commission for an indeterminate time, 
in order to allow the rules to be adjusted, if needed. 

11 
12 
13 

OJ L 64, 11.3.2011, p. 1. 
OJ L 336 27.12.1977, p.15. 
OJ L 281, 23.11.1995, p. 31-50. 

EN 

14 

   EN 

                                                 
(25) 

In  order  to  ensure  uniform  conditions  for  the  implementation  of  this  Directive  as 
regards the annual adoption of a list of third country company forms which meet the 
requirements  set  out  in  this  Directive,  laying  down  rules  on  the  calculation  of  the 
labour,  asset  and  sales  factors,  the  allocation  of  employees  and  payroll,  assets  and 
sales to the respective factor as well as the valuation of assets for the asset factor and 
the adoption of a standard form of the notice to opt and of rules on electronic filing, on 
the  form  of  the  tax  return,  on  the  form  of  the  consolidated  tax  return  and  on  the 
required  supporting  documentation,  powers  should  be  conferred  on  the  Commission. 
Those  powers  should  be  exercised  in  accordance  with  Regulation  (EU)  182/2011  of 
the  European  Parliament  and  of  the  Council  of  28  February  2011  laying  down  the 
rules and general principles concerning mechanisms for control by the Member States 
of the Commission's exercise of implementing powers14. 

(26)  The  objective  of  this  Directive  cannot  be  sufficiently  achieved  through  individual 
action  undertaken  by  the  Member  States  because  of  the  lack  of  coordination  among 
national  tax  systems.  Considering  that  the  inefficiencies  of  the  internal  market 
primarily  give  rise  to  problems  of  a  cross-border  nature,  remedial  measures  must  be 
adopted at the level of the Union. Such an approach is in accordance with the principle 
of  subsidiarity,  as  set  out  in  Article  5  of  the  Treaty  on  the  European  Union.  In 
accordance  with  the  principle  of  proportionality,  as  set  out  in  that  Article,  this 
Directive does not go beyond what is necessary to achieve that objective. 

(27)  The Commission should review the application of the Directive after a period of five 
years  and  that  Member  States  should  support  the  Commission  by  providing 
appropriate input to this exercise, 

HAS ADOPTED THIS DIRECTIVE: 

CHAPTER I 

SCOPE 

Article 1 
Scope 

This Directive establishes a system for a common base for the taxation of certain companies 
and groups of companies and lays down rules relating to the calculation and use of that base. 

Article 2 
Eligible companies 

1. 

This  Directive  shall  apply  to  companies  established  under  the  laws  of  a  Member 
State where both of the following conditions are met: 

(a) 

the company takes one of the forms listed in Annex I; 

14 

OJ L 55, 28.2.2011, p. 13. 

EN 

15 

   EN 

 
                                                 
(b) 

the company is subject to one of the corporate taxes listed in Annex II or to a 
similar tax subsequently introduced. 

2. 

This Directive shall apply to companies established under the laws of a third country 
where both of the following conditions are met: 

(a) 

the company has a similar form to one of the forms listed in Annex I; 

(b) 

the company is subject to one of the corporate taxes listed in Annex II. 

The  Commission  may  adopt  delegated  acts  in  accordance  with  Article  127  and 
subject to the conditions of Articles 128, 129 and 130 in order to amend Annexes I 
and  II  to  take  account  of  changes  to  the  laws  of  the  Member  States  concerning 
company forms and corporate taxes. 

Article 3 
Eligible third country company forms 

The  Commission  shall adopt annually a list  of  third  country  company  forms  which 
shall  be  considered  to  meet  the  requirements  laid  down  in  Article  2(2)(a).  That 
implementing  act  shall  be  adopted  in  accordance  with  the  examination  procedure 
referred to in Article 131(2). 

The  fact  that  a  company  form  is  not  included  in  the  list  of  third  country  company 
forms referred to in paragraph 1 shall not preclude the application of this Directive to 
that form. 

3. 

1. 

2. 

CHAPTER II 

FUNDAMENTAL CONCEPTS 

Article 4 
Definitions 

For the purposes of this Directive, the following definitions shall apply: 

(1) 

(2) 

(3) 

(4) 

(5) 

'taxpayer'  means  a  company  which  has  opted  to  apply,  the  system  provided  for  by 
this Directive;  

'single taxpayer' means a taxpayer not fulfilling the requirements for consolidation; 

'non-taxpayer' means a company which is ineligible to opt or has not opted to apply 
the system provided for by this Directive; 

'resident taxpayer' means a taxpayer which is resident for tax purposes in a Member 
State according to Article 6(3) and (4); 

'non-resident taxpayer' means a taxpayer which is not resident for tax purposes in a 
Member State according to Article 6(3) and (4); 

EN 

16 

   EN 

 
EN 

17 

   EN 

(6) 

'principal taxpayer' means: 

(a) 

(b) 

(c) 

(d) 

a resident taxpayer, where it forms a group with its qualifying subsidiaries, its 
permanent  establishments  located  in  other  Member  States  or  one  or  more 
permanent establishments of a qualifying subsidiary resident in a third country; 
or 

the resident taxpayer designated by the group where it is composed only of two 
or more resident taxpayers which are immediate qualifying subsidiaries of the 
same parent company resident in a third country; or 

a  resident  taxpayer  which  is  the  qualifying  subsidiary  of  a  parent  company 
resident  in  a  third  country,  where  that  resident  taxpayer  forms  a  group  solely 
with one or more permanent establishments of its parent; or 

the  permanent  establishment  designated  by  a  non-resident  taxpayer  which 
forms a group solely in respect of its permanent establishments located in two 
or more Member States. 

'group  member'  means  any  taxpayer  belonging  to  the  same  group,  as  defined  in 
Articles  54  and  55.  Where  a  taxpayer  maintains  one  or  more  permanent 
establishments  in  a  Member  State  other  than  that  in  which  its  central  management 
and  control  is  located,  each  permanent  establishment  shall  be  treated  as  a  group 
member; 

'revenues' means proceeds of sales and of any other transactions, net of value added 
tax and other taxes and duties collected on behalf of government agencies, whether 
of  a  monetary  or  non-monetary  nature,  including  proceeds  from  disposal  of  assets 
and rights, interest, dividends and other profits distributions, proceeds of liquidation, 
royalties, subsidies and grants, gifts received, compensation and ex-gratia payments. 
Revenues shall also include non-monetary gifts made by a taxpayer. Revenues shall 
not include equity raised by the taxpayer or debt repaid to it; 

'profit'  means  an  excess  of  revenues  over  deductible  expenses  and  other  deductible 
items in a tax year; 

'loss'  means  an  excess  of  deductible  expenses  and  other  deductible  items  over 
revenues in a tax year; 

'consolidated  tax  base'  means  the  result  of  adding  up  the  tax  bases  of  all  group 
members as calculated in accordance with Article 10; 

'apportioned share' means the portion of the consolidated tax base of a group which is 
allocated to a group member by application of the formula set out in Articles 86-102; 

'value for tax purposes' of a fixed asset or asset pool means the depreciation base less 
total depreciation deducted to date; 

'fixed assets' means all tangible assets acquired for value or created by the taxpayer 
and all intangible assets acquired for value where they are capable of being valued 
independently  and  are  used  in  the  business  in  the  production,  maintenance  or 
securing  of  income  for  more  than  12  months,  except  where  the  cost  of  their 

(7) 

(8) 

(9) 

(10) 

(11) 

(12) 

(13) 

(14) 

EN 

18 

   EN 

(15) 

(16) 

(17) 

(18) 

(19) 

(20) 

(21) 

(22) 

(23) 

acquisition, construction or improvement are less than EUR 1,000. Fixed assets shall 
also include financial assets; 

'financial  assets'  means  shares  in  affiliated  undertakings,  loans  to  affiliated 
undertakings, participating interests, loans to undertakings with which the company 
is  linked  by  virtue  of  participating  interests,  investments  held  as  fixed  assets,  other 
loans, and own shares to the extent that national law permits their being shown in the 
balance sheet; 

'long-life  fixed  tangible  assets'  means  fixed  tangible  assets'  with  a  useful  life  of 
15 years or more. Buildings, aircraft and ships shall be deemed to be long-life fixed 
tangible assets; 

'second-hand  assets'  means  fixed  assets  with  a  useful  life  that  had  partly  been 
exhausted when acquired and which are suitable for further use in their current state 
or after repair; 

'improvement costs' means any additional expenditure on a fixed asset that materially 
increases  the  capacity  of  the  asset  or  materially  improves  its  functioning  or 
represents more than 10% of the initial depreciation base of the asset; 

'stocks and work-in-progress' means assets held for sale, in the process of production 
for  sale  or  in  the  form  of  materials  or  supplies  to  be  consumed  in  the  production 
process or in the rendering of services; 

'economic  owner'  means  the  person  who  has  substantially  all  the  benefits  and  risks 
attached  to  a  fixed  asset,  regardless  of  whether  that  person  is  the  legal  owner.  A 
taxpayer who has the right to possess, use and dispose of a fixed asset and bears the 
risk of its loss or destruction shall in any event be considered the economic owner; 

'competent  authority'  means  the  authority  designated  by  each  Member  State  to 
administer all matters related to the implementation of this Directive; 

'principal tax authority' means the competent authority of the Member State in which 
the  principal  taxpayer  is  resident  or,  if  it  is  a  permanent  establishment  of  a  non-
resident taxpayer, is situated; 

'audit'  means  inquiries,  inspections  or  examinations  of  any  kind  conducted  by  a 
competent authority for the purpose of verifying the compliance of a taxpayer with 
this Directive. 

Article 5 
Permanent establishment 

1. 

A taxpayer shall be considered to have a 'permanent establishment' in a State other 
than the State in which its central management and control is located when it has a 
fixed place in that other State through which the business is wholly or partly carried 
on, including in particular: 

(a) 

a place of management; 

EN 

19 

   EN 

(b) 

a branch; 

(c) 

an office; 

(d) 

a factory; 

(e) 

a workshop; 

2. 

3. 

4. 

5. 

(f) 

a mine, an oil or gas well, a quarry or any other place of extraction of natural 
resources. 

A  building  site  or  construction  or  installation  project  shall  constitute  a  permanent 
establishment only if it lasts more than twelve months. 

Notwithstanding paragraphs 1 and 2, the following shall not be deemed to give rise 
to a permanent establishment: 

a) 

b) 

c) 

d) 

e) 

f) 

the  use  of  facilities  solely  for  the  purpose  of  storage,  display  or  delivery  of 
goods or merchandise belonging to the taxpayer; 

the maintenance of a stock of goods or merchandise belonging to the taxpayer 
solely for the purpose of storage, display or delivery; 

the maintenance of a stock of goods or merchandise belonging to the taxpayer 
solely for the purpose of processing by another person; 

the  maintenance  of  a  fixed  place  of  business  solely  for  the  purpose  of 
purchasing goods or merchandise or of collecting information, for the taxpayer; 

the maintenance of a fixed place of business solely for the purpose of carrying 
on, for the taxpayer, any other activity of a preparatory or auxiliary character; 

the  maintenance  of  a  fixed  place  of  business  solely  for  any  combination  of 
activities mentioned in points (a) to (e), provided that the overall activity of the 
fixed  place  of  business  resulting  from  this  combination  is  of  a  preparatory  or 
auxiliary character. 

Notwithstanding paragraph 1, where a person - other than an agent of an independent 
status to whom paragraph 5 applies - is acting on behalf of a taxpayer and has, and 
habitually exercises, in a State an authority to conclude contracts in the name of the 
taxpayer,  that  taxpayer  shall  be  deemed  to  have  a  permanent  establishment  in  that 
State  in  respect  of  any  activities  which  that  person  undertakes  for  the  taxpayer, 
unless  the  activities  of  such  person  are  limited  to  those  mentioned  in  paragraph  3 
which,  if  exercised  through  a  fixed  place  of  business,  would  not  make  this  fixed 
place of business a permanent establishment under the provisions of that paragraph. 

A taxpayer shall not be deemed to have a permanent establishment in a State merely 
because  it  carries  on  business  in  that  State  through  a  broker,  general  commission 
agent  or  any  other  agent  of  an  independent  status,  provided  that  such  persons  are 
acting in the ordinary course of their business. 

EN 

20 

   EN 

6. 

The fact that a taxpayer which is a resident of a State controls or is controlled by a 
taxpayer  which  is  a  resident  of  another  State,  or  which  carries  on  business  in  that 
other  State  (whether  through  a  permanent  establishment  or  otherwise),  shall  not  of 
itself constitute either taxpayer a permanent establishment of the other. 

CHAPTER III 

OPTING FOR THE SYSTEM PROVIDED FOR BY THIS 
DIRECTIVE 

Article 6 
Opting 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

A  company  to  which  this  Directive  applies  which  is  resident  for  tax  purposes  in  a 
Member  State  may  opt  for  the  system  provided  for  by  this  Directive  under  the 
conditions provided for therein.  

A company to which this Directive applies which is not resident for tax purposes in a 
Member  State  may  opt  for  the  system  provided  for  by  this  Directive  under  the 
conditions laid down therein in respect of a permanent establishment maintained by 
it in a Member State. 

For  the  purposes  of  paragraphs  1  and  2,  a  company  that  has  its  registered  office, 
place  of  incorporation  or  place  of  effective  management  in  a  Member  State  and  is 
not,  under  the  terms  of  an  agreement  concluded  by  that  Member  State  with  a  third 
country, regarded as tax resident in that third country shall be considered resident for 
tax purposes in that Member State. 

Where, under paragraph 3, a company is resident in more than one Member State, it 
shall  be  considered  to  be  resident  in  the  Member  State  in  which  it  has  its  place  of 
effective management. 

If  the  place  of  effective  management  of  a  shipping  group  member  or  of  a  group 
member engaged in inland waterways transport is aboard a ship or boat, it shall be 
deemed to be situated in the Member State of the home harbour of the ship or boat, 
or, if there is no such home harbour, in the Member State of residence of the operator 
of the ship or boat. 

A  company  resident  in  a  Member  State  which  opts  for  the  system  provided  for  by 
this  Directive  shall  be  subject  to  corporate  tax  under  that  system  on  all  income 
derived from any source, whether inside or outside its Member State of residence. 

A company resident in a third country which opts for the system provided for by this 
Directive shall be subject to corporate tax under that system on all income from an 
activity carried on through a permanent establishment in a Member State. 

EN 

21 

   EN 

 
Article 7 
Applicable law 

Where  a  company  qualifies  and  opts  for  the  system  provided  for  by  this  Directive  it  shall 
cease  to  be  subject  to  the  national  corporate  tax  arrangements  in  respect  of  all  matters 
regulated by this Directive unless otherwise stated. 

Article 8 
Directive overrides agreements between Member States 

The provisions of this Directive shall apply notwithstanding any provision to the contrary in 
any agreement concluded between Member States. 

CHAPTER IV 

CALCULATION OF THE TAX BASE 

Article 9 
General principles 

1. 

2. 

3. 

4. 

In computing the tax base, profits and losses shall be recognised only when realised. 

Transactions and taxable events shall be measured individually. 

The  calculation  of  the  tax  base  shall  be  carried  out  in  a  consistent  manner  unless 
exceptional circumstances justify a change. 

The tax base shall be determined for each tax year unless otherwise provided. A tax 
year shall be any twelve-month period, unless otherwise provided. 

Article 10 
Elements of the tax base 

The tax base shall be calculated as revenues less exempt revenues, deductible expenses and 
other deductible items. 

Article 11 
Exempt revenues 

The following shall be exempt from corporate tax: 

(a) 

(b) 

subsidies  directly  linked  to  the  acquisition,  construction  or  improvement  of  fixed 
assets, subject to depreciation in accordance with Articles 32 to 42; 

proceeds from the disposal of pooled assets referred to in Article 39(2), including the 
market value of non-monetary gifts; 

EN 

22 

   EN 

 
(c) 

(d) 

(e) 

received profit distributions; 

proceeds from a disposal of shares; 

income of a permanent establishment in a third country. 

Article 12 
Deductible expenses 

Deductible  expenses  shall  include  all  costs  of  sales  and  expenses  net  of  deductible  value 
added  tax  incurred  by  the  taxpayer  with  a  view  to  obtaining  or  securing  income,  including 
costs of research and development and costs incurred in raising equity or debt for the purposes 
of the business. 

Deductible  expenses  shall  also  include  gifts  to  charitable  bodies  as  defined  in  Article  16 
which are established in a Member State or in a third country which applies an agreement on 
the  exchange  of  information  on  request  comparable  to  the  provisions  of  Directive 
2011/16/EU. The maximum deductible expense for monetary gifts or donations to charitable 
bodies shall be 0.5% of revenues in the tax year. 

Article 13 
Other deductible items 

A  proportional  deduction  may  be  made  in  respect  of  the  depreciation  of  fixed  assets  in 
accordance with Articles 32 to 42. 

Article 14 
Non-deductible expenses 

1. 

The following expenses shall be treated as non-deductible: 

(a) 

profit distributions and repayments of equity or debt; 

(b)  50% of entertainment costs; 

(c) 

the transfer of retained earnings to a reserve which forms part of the equity of 
the company; 

(d) 

corporate tax; 

(e) 

bribes; 

(f) 

fines and penalties payable to a public authority for breach of any legislation; 

(g) 

costs  incurred  by  a  company  for  the  purpose  of  deriving  income  which  is 
exempt pursuant to Article 11; such costs shall be fixed at a flat rate of 5% of 
that  income  unless  the  taxpayer  is  able  to  demonstrate  that  it  has  incurred  a 
lower cost; 

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(h)  monetary  gifts  and  donations  other  than  those  made  to  charitable  bodies  as 

defined in Article 16; 

(i) 

save  as  provided  for  in  Articles  13  and  20,  costs  relating  to  the  acquisition, 
construction  or  improvement  of  fixed  assets  except  those  relating  to  research 
and development; 

(j) 

taxes listed in Annex III, with the exception of excise duties imposed on energy 
products, alcohol and alcoholic beverages, and manufactured tobacco.  

2. 

3. 

Notwithstanding point (j) of paragraph 1 a Member State may provide for deduction 
of  one  or  more  of  the  taxes  listed  in  Annex  III.  In  the  case  of  a  group,  any  such 
deduction shall be applied to the apportioned share of the group members resident or 
situated in that Member State. 

The  Commission  may  adopt  delegated  acts  in  accordance  with  Article  127  and 
subject  to  the  conditions  of  Articles  128,  129  and  130  to  amend  Annex  III  as  is 
necessary in order to include all similar taxes which raise more than 20 % of the total 
amount of corporate tax in the Member State in which they are levied. 

Amendments to Annex III shall first apply to taxpayers in their tax year starting after 
the amendment. 

Article 15 
Expenditure incurred for the benefit of shareholders 

Benefits  granted  to  a  shareholder  who  is  an  individual,  his  spouse,  lineal  ascendant  or 
descendant or associated enterprises, holding a direct or indirect participation in the control, 
capital  or  management  of  the  taxpayer,  as  referred  to  in  Article  78,  shall  not  be  treated  as 
deductible expenses to the extent that such benefits would not be granted to an independent 
third party. 

Article 16 
Charitable bodies 

A body shall qualify as charitable where the following conditions are met: 

(a) 

(b) 

(c) 

(d) 

it has legal personality and is a recognised charity under the law of the State in which 
it is established; 

its sole or main purpose and activity is one of public benefit; an educational, social, 
medical,  cultural,  scientific,  philanthropic,  religious,  environmental  or  sportive 
purpose  shall  be  considered  to  be  of  public  benefit  provided  that  it  is  of  general 
interest; 

its assets are irrevocably dedicated to the furtherance of its purpose; 

it is subject to requirements for the disclosure of information regarding its accounts 
and its activities; 

(e) 

it is not a political party as defined by the Member State in which it is established. 

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CHAPTER V 

TIMING AND QUANTIFICATION 

Article 17 
General principles 

Revenues, expenses and all other deductible items shall be recognised in the tax year in which 
they accrue or are incurred, unless otherwise provided for in this Directive. 

Article 18 
Accrual of revenues 

Revenues  accrue  when  the  right  to  receive  them  arises  and  they  can  be  quantified  with 
reasonable accuracy, regardless of whether the actual payment is deferred. 

Article 19 
Incurrence of deductible expenses 

A deductible expense is incurred at the moment that the following conditions are met: 

(a) 

(b) 

(c) 

the obligation to make the payment has arisen; 

the amount of the obligation can be quantified with reasonable accuracy; 

in the case of trade in goods, the significant risks and rewards of ownership over the 
goods have been transferred to the taxpayer and, in the case of supplies of services, 
the latter have been received by the taxpayer. 

Article 20 
Costs related to non-depreciable assets 

The costs relating to the acquisition, construction or improvement of fixed assets not subject 
to depreciation according to Article 40 shall be deductible in the tax year in which the fixed 
assets are disposed of, provided that the disposal proceeds are included in the tax base.  

Article 21 
Stocks and work-in-progress 

The  total  amount  of  deductible  expenses  for  a  tax  year  shall  be  increased  by  the  value  of 
stocks  and  work-in-progress  at  the  beginning  of  the  tax  year  and  reduced  by  the  value  of 
stocks and work-in-progress at the end of the same tax year. No adjustment shall be made in 
respect of stocks and work-in-progress relating to long-term contracts. 

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Article 22 
Valuation 

1. 

For the purposes of calculating the tax base, transactions shall be measured at: 

(a) 

(b) 

the  monetary  consideration  for  the  transaction,  such  as  the  price  of  goods  or 
services; 

the market value where the consideration for the transaction is wholly or partly 
non-monetary; 

(c) 

the market value in the case of a non-monetary gift received by a taxpayer; 

(d) 

the  market  value  in  the  case  of  non-monetary  gifts  made  by  a  taxpayer  other 
than gifts to charitable bodies; 

(e) 

the fair value of financial assets and liabilities held for trading;  

(f) 

the  value  for  tax  purposes  in  the  case  of  non-monetary  gifts  to  charitable 
bodies. 

2. 

The tax base, income and expenses shall be measured in EUR during the tax year or 
translated into  EUR on the last day of the tax year at the annual average exchange 
rate  for  the  calendar  year  issued  by  the  European  Central  Bank  or,  if  the  tax  year 
does not coincide with the calendar year, at the average of daily observations issued 
by the European Central Bank through the tax year. This shall not apply to a single 
taxpayer  located  in  a  Member  State  which  has  not  adopted  the  EUR.  Nor  shall  it 
apply to a group if all group members are located in the same Member State and that 
state has not adopted the EUR. 

Article 23 
Financial assets and liabilities held for trading (trading book) 

1. 

A financial asset or liability shall be classified as held for trading if it is one of the 
following: 

(a) 

acquired  or  incurred  principally  for  the  purpose  of  selling  or  repurchasing  in 
the near term; 

(b)  part of a portfolio of identified financial instruments, including derivatives, that 
are managed together and for which there is evidence of a recent actual pattern 
of short-term profit-taking. 

Notwithstanding Articles 18 and 19, any differences between the fair value at the end 
of the tax year and the fair value at the beginning of the same tax year, or at the date 
of purchase if later, of financial assets or liabilities held for trading shall be included 
in the tax base. 

When a financial asset or liability held for trading is disposed of, the proceeds shall 
be added to the tax base. The fair value at the beginning of the tax year, or the market 
value at the date of purchase if later, shall be deducted.  

2. 

3. 

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Article 24 
Long-term contracts 

1. 

A long-term contract is one which complies with the following conditions: 

2. 

3. 

1. 

(a) 

it is concluded for the purpose of manufacturing, installation or construction or 
the performance of services; 

(b) 

its term exceeds, or is expected to exceed, 12 months. 

Notwithstanding  Article  18,  revenues  relating  to  a  long-term  contract  shall  be 
recognised, for tax purposes, at the amount corresponding to the part of the contract 
completed  in  the  respective  tax  year.  The  percentage  of  completion  shall  be 
determined  either  by  reference  to  the  ratio  of  costs  of  that  year  to  the  overall 
estimated costs or by reference to an expert evaluation of the stage of completion at 
the end of the tax year. 

Costs  relating  to  long-term  contracts  shall  be  taken  account  of  in  the  tax  year  in 
which they are incurred. 

Article 25 
Provisions 

Notwithstanding Article 19, where at the end of a tax year it is established that the 
taxpayer  has  a  legal  obligation,  or  a  probable  future  legal  obligation,  arising  from 
activities or transactions carried out in that, or previous tax years, any amount arising 
from  that  obligation  which  can  be  reliably  estimated  shall  be  deductible,  provided 
that  the  eventual  settlement  of  the  amount  is  expected  to  result  in  a  deductible 
expense. 

Where  the  obligation  relates  to  an  activity  or  transaction  which  will  continue  over 
future  tax  years,  the  deduction  shall  be  spread  proportionately  over  the  estimated 
duration  of  the  activity  or  transaction,  having  regard  to  the  revenue  derived 
therefrom. 

Amounts  deducted  under  this  Article  shall  be  reviewed  and  adjusted  at  the  end  of 
every tax year. In calculating the tax base in future years account shall be taken of 
amounts already deducted. 

2. 

A  reliable  estimate  shall  be  the  expected  expenditure  required  to  settle  the  present 
obligation  at  the  end  of  the  tax  year,  provided  that  the  estimate  is  based  on  all 
relevant  factors,  including  past  experience  of  the  company,  group  or  industry.  In 
measuring a provision the following shall apply: 

(a) 

(b) 

account shall be taken of all risks and uncertainties. However, uncertainty shall 
not justify the creation of excessive provisions; 

if  the  term  of  the  provision  is  12  months  or  longer  and  there  is  no  agreed 
discount  rate,  the  provision  shall  be  discounted  at  the  yearly  average  of  the 
Euro  Interbank  Offered  Rate  (Euribor)  for  obligations  with  a  maturity  of 

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12 months, as published by the European Central Bank, in the calendar year in 
the course of which the tax year ends; 

future  events  shall  be  taken  into  account  where  they  can  reasonably  be 
expected to occur; 

future benefits directly linked to the event giving rise to the provision shall be 
taken into account. 

(c) 

(d) 

Article 26 
Pensions 

In  case  of  pension  provisions  actuarial  techniques  shall  be  used  in  order  to  make  a  reliable 
estimate of the amount of benefits that employees have earned in return for their service in the 
current and prior period.  

The  pension  provision  shall  be  discounted  by  reference  to  Euribor  for  obligations  with  a 
maturity of 12 months, as published by the European Central Bank. The calculations shall be 
based  on  the  yearly  average  of  that  rate  in  the  calendar  year  in  the  course  of  which  the  tax 
year ends. 

Article 27 
Bad debt deductions 

1. 

A  deduction  shall  be  allowed  for  a  bad  debt  receivable  where  the  following 
conditions are met: 

(a) 

at the end of the tax year, the taxpayer has taken all reasonable steps to pursue 
payment  and  reasonably  believes  that  the debt  will  not  be  satisfied  wholly  or 
partially; or the taxpayer has a large number of homogeneous receivables and 
is  able  to  reliably  estimate  the  amount  of  the  bad  debt  receivable  on  a 
percentage  basis,  through  making  reference  to  all  relevant  factors,  including 
past experience where applicable; 

(b) 

the debtor is not a member of the same group as the taxpayer; 

(c) 

no deduction has been claimed under Article 41 in relation to the bad debt; 

(d)  where  the  bad  debt  relates  to  a  trade  receivable,  an  amount  corresponding  to 

the debt shall have been included as revenue in the tax base. 

2. 

In determining whether all reasonable steps to pursue payment have been made, the 
following shall be taken into account: 

(a)  whether the costs of collection are disproportionate to the debt; 

(b)  whether there is any prospect of successful collection;  

(c)  whether it is reasonable, in the circumstances, to expect the company to pursue 

collection. 

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3. 

Where  a  claim  previously  deducted  as  a  bad  debt  is  settled,  the  amount  recovered 
shall be added to the tax base in the year of settlement. 

Article 28 
Hedging 

Gains  and  losses  on  a  hedging  instrument  shall  be  treated  in  the  same  manner  as  the 
corresponding  gains  and  losses  on  the  hedged  item.  In  the  case  of  taxpayers  which  are 
members of a group, the hedging instrument and hedged item may be held by different group 
members. There is a hedging relationship where both the following conditions are met: 

(a) 

(b) 

1. 

2. 

3. 

4. 

the hedging relationship is formally designated and documented in advance;  

the  hedge  is  expected  to  be  highly  effective  and  the  effectiveness  can  reliably  be 
measured. 

Article 29 
Stocks and work-in-progress 

The cost of stock items and work-in-progress that are not ordinarily interchangeable 
and  goods  or  services  produced  and  segregated  for  specific  projects  shall  be 
measured individually. The costs of other stock items and work-in-progress shall be 
measured by using the first-in first-out (FIFO) or weighted-average cost method. 

A taxpayer shall consistently use the same method for the valuation of all stocks and 
work-in-progress  having  a  similar  nature  and  use.  The  cost  of  stocks  and  work-in-
progress  shall  comprise  all  costs  of  purchase,  direct  costs  of  conversion  and  other 
direct costs incurred in bringing them to their present location and condition. Costs 
shall  be  net  of  deductible  Value  Added  Tax.  A  taxpayer  who  has  included  indirect 
costs in valuing stocks and work-in-progress before opting for the system provided 
for by this Directive may continue to apply the indirect cost approach. 

The valuation of stocks and work-in-progress shall be done in a consistent way. 

Stocks  and  work-in-progress  shall  be  valued  on  the  last  day  of  the  tax  year  at  the 
lower  of  cost  and  net  realisable  value.  The  net  realisable  value  is  the  estimated 
selling price in the ordinary course of business less the estimated costs of completion 
and the estimated costs necessary to make the sale. 

Article 30 
Insurance undertakings 

Insurance  undertakings  that  have  been  authorised  to  operate  in  the  Member  States,  in 
accordance  with  Council  Directive  73/239/EEC15  for  non-life 
insurance,  Directive 
2002/83/EC of the European Parliament and of the Council16 for life insurance, and Directive 

15 
16 

OJ L 228, 16.8.1973, p. 3. 
OJ L 345, 19.12.2002, p. 1. 

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2005/68/EC of the European Parliament and of the Council17 for reinsurance, shall be subject 
to the following additional rules: 

(a) 

(b) 

(c) 

1. 

2. 

the tax base shall include the difference in the market value, as measured at the end 
and the beginning of the same tax year, or upon completion of the purchase if later, 
of assets in which investment is made for the benefit of life insurance policyholders 
bearing the investment risk; 

the tax base shall include the difference in the market value, as measured at the time 
of disposal and the beginning of the tax year, or upon completion of the purchase if 
later,  of  assets  in  which  investment  is  made  for  the  benefit  of  life  insurance 
policyholders bearing the investment risk; 

the  technical  provisions  of  insurance  undertakings  established  in  compliance  with 
Directive  91/674EEC18  shall  be  deductible,  with  the  exception  of  equalisation 
provisions.  A  Member  State  may  provide  for  the  deduction  of  equalisation 
provisions. In the case of a group, any such deduction of equalisation provisions shall 
be applied to the apportioned share of the group members resident or situated in that 
Member State. Amounts deducted shall be reviewed and adjusted at the end of every 
tax year. In calculating the tax base in future years account shall be taken of amounts 
already deducted. 

Article 31 
Transfers of assets towards a third country 

The transfer of a fixed asset by a resident taxpayer to its permanent establishment in 
a  third  country  shall  be  deemed  to  be  a  disposal  of  the  asset  for  the  purpose  of 
calculating  the  tax  base  of  a  resident  taxpayer  in  relation  to  the  tax  year  of  the 
transfer. The transfer of a fixed asset by a non-resident taxpayer from its permanent 
establishment  in  a  Member  State  to  a  third  country  shall  also  be  deemed  to  be  a 
disposal of the asset. 

Paragraph  1  shall  not  apply  where  the  third  country  is  party  to  the  European 
Economic Area Agreement and there is an agreement on the exchange of information 
between that  third  country and the Member State of the resident taxpayer or of the 
permanent establishment, comparable to Directive 2011/16/EU. 

17 
18 

OJ L 232.9.12.2005, p. 1. 
OJ L 374, 19.12.1991, p. 1. 

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CHAPTER VI 

DEPRECIATION OF FIXED ASSETS 

Article 32 
Fixed asset register 

Acquisition,  construction  or  improvement  costs,  together  with  the  relevant  date,  shall  be 
recorded in a fixed asset register for each fixed asset separately. 

Article 33 
Depreciation base 

1. 

The  depreciation  base  shall  comprise  any  cost  directly  connected  with  the 
acquisition, construction or improvement of a fixed asset. 

Costs shall not include deductible value added tax. 

In  the  case  of  fixed  assets  produced  by  the  taxpayer,  the  indirect  costs  incurred  in 
production of the asset shall also be added to the depreciation base in so far as they 
are not otherwise deductible. 

The  depreciation  base  of  an  asset  received  as  a  gift  shall  be  its  market  value  as 
included in revenues. 

The depreciation base of a fixed asset subject to depreciation shall be reduced by any 
subsidy directly linked to the acquisition, construction or improvement of the asset as 
referred to in Article 11(a). 

Article 34 
Entitlement to depreciate 

Subject to paragraph 3, depreciation shall be deducted by the economic owner.  

In  the  case  of  leasing  contracts  in  which  economic  and  legal  ownership  does  not 
coincide, the economic owner shall be entitled to deduct the interest element of the 
lease payments from its tax base. The interest element of the lease payments shall be 
included in the tax base of the legal owner. 

A fixed asset may be depreciated by no more than one taxpayer at the same time. If 
the economic owner of an asset cannot be identified, the legal owner shall be entitled 
to deduct depreciation. In that case the interest element of the lease payments shall 
not be included in the tax base of the legal owner. 

2. 

3. 

1. 

2. 

3. 

4. 

A taxpayer may not disclaim depreciation. 

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5. 

The  Commission  may  adopt  delegated  acts  in  accordance  with  Article  127  and 
subject  to  the  conditions  of  Articles  128,  129  and  130  in  order  to  lay  down  more 
detailed rules concerning: 

(a) 

the  definition  of  legal  and  economic  ownership,  in  relation  in  particular  to 
leased assets; 

(b) 

the calculation of the capital and interest elements of the lease payments; 

(c) 

the calculation of the depreciation base of a leased asset. 

Article 35 
Depreciation of improvement costs 

Improvement  costs  shall  be  depreciated  in  accordance  with  the  rules  applicable  to  the  fixed 
asset which has been improved as if they related to a newly acquired fixed asset. 

Article 36 
Individually depreciable assets 

1. 

Without  prejudice  to  paragraph  2  and  Articles  39  and  40,  fixed  assets  shall  be 
depreciated individually over their useful lives on a straight-line basis. The useful life 
of a fixed asset shall be determined as follows:  

(a) 

buildings: 40 years; 

(b) 

long-life tangible assets other than buildings: 15 years; 

(c) 

intangible assets: the period for which the asset enjoys legal protection or for 
which the right is granted or, if that period cannot be determined, 15 years. 

2. 

Second-hand  buildings,  second-hand  long-life  tangible  assets  and  second-hand 
intangible assets shall be depreciated in accordance with the following rules: 

(a) 

(b) 

(c) 

a second-hand building shall be depreciated over 40 years unless the taxpayer 
demonstrates that the estimated remaining useful life of the building is shorter 
than 40 years, in which case it shall be depreciated over that shorter period; 

a  second-hand  long-life  tangible  asset  shall  be  depreciated  over  15  years, 
unless the taxpayer demonstrates that the estimated remaining useful life of the 
asset  is  shorter  than  15  years,  in  which  case  it  shall  be  depreciated  over  that 
shorter period; 

a  second-hand  intangible  asset  shall  be  depreciated  over  15  years,  unless  the 
remaining  period  for  which  the  asset  enjoys  legal  protection  or  for  which  the 
right is granted can be determined, in which case it shall be depreciated over 
that period. 

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Article 37 
Timing 

1. 

2. 

1. 

A  full  year's  depreciation  shall  be  deducted  in  the  year  of  acquisition  or  entry  into 
use,  whichever  comes  later.  No  depreciation  shall  be  deducted  in  the  year  of 
disposal. 

Where  an  asset  is  disposed  of,  voluntarily  or  involuntarily,  during  a  tax  year,  its 
value  for  tax  purposes  and  the  value  for  tax  purposes  of  any  improvement  costs 
incurred  in  relation  to  the  asset  shall  be  deducted  from  the  tax  base  in  that  year. 
Where a fixed asset has given rise to an exceptional deduction under Article 41, the 
deduction  under  Article  20  shall  be  reduced  to  take  into  account  the  exceptional 
deduction already received. 

Article 38 
Rollover relief for replacement assets 

Where the proceeds from the disposal of an individually depreciable asset are to be 
re-invested  before  the  end  of  the  second  tax  year  after  the  tax  year  in  which  the 
disposal took place in an asset used for the same or a similar purpose, the amount by 
which those proceeds exceed the value for tax purposes of the asset shall be deducted 
in  the  year  of  disposal.  The  depreciation  base  of  the  replacement  asset  shall  be 
reduced by the same amount. 

An  asset  which  is  disposed  of  voluntarily  must  have  been  owned  for  a  minimum 
period of three years prior to the disposal. 

2. 

The replacement asset may be purchased in the tax year prior to the disposal. 

If a replacement asset is not purchased before the end of the second tax year after the 
year in which the disposal of the asset took place, the amount deducted in the year of 
disposal, increased by 10%, shall be added to the tax base in the second tax year after 
the disposal took place. 

3. 

If the taxpayer leaves the group of which it is a member or ceases to apply the system 
provided  for  by  this  Directive  within  the  first  year,  without  having  purchased  a 
replacement asset, the amount deducted in the year of disposal shall be added to the 
tax base. If the taxpayer leaves the group or ceases to apply the system in the second 
year, that amount shall be increased by 10%. 

Article 39 
Asset pool 

Fixed  assets  other  than  those  referred  to  in  Articles  36  and  40  shall  be  depreciated 

1. 
together in one asset pool at an annual rate of 25% of the depreciation base. 

2. 
The depreciation base of the asset pool at the end of the tax year shall be its value for 
tax purposes at the end of the previous year, adjusted for assets entering and leaving the pool 
during the current year. Adjustments shall be made in respect of acquisition, construction or 

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improvement costs of assets (which shall be added) and the proceeds of disposal of assets and 
any compensation received for the loss or destruction of an asset (which shall be deducted). 

3. 
If  the  depreciation  base  as  calculated  in  accordance  with  paragraph  2  is  a  negative 
amount,  an  amount  shall  be  added,  so  that  the  depreciation  base  is  zero.  The  same  amount 
shall be added to the tax base. 

Article 40 
Assets not subject to depreciation 

The following assets shall not be subject to depreciation: 

(a) 

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

(b) 

financial assets. 

Article 41 
Exceptional depreciation 

1. 

2. 

If,  in  exceptional  circumstances,  a  taxpayer  demonstrates  that  the  value  of  a  fixed 
asset not subject to depreciation has permanently decreased at the end of a tax year, it 
may deduct an amount equal to the decrease in value. However, no such deduction 
may  be  made  in  respect  of  assets  the  proceeds  from  the  disposal  of  which  are 
exempt. 

If the value of an asset which has been subject to such exceptional depreciation in a 
previous tax year subsequently increases, an amount equivalent to the increase shall 
be added to the tax base in the year in which the increase takes place. However, any 
such  addition  or  additions,  taken  together,  shall  not  exceed  the  amount  of  the 
deduction originally granted. 

Article 42 
Precision of categories of fixed assets 

The Commission may adopt delegated acts in accordance with Article 127 and subject to the 
conditions  of  Articles  128,  129  and  130  in  order  to  define  more  precisely  the  categories  of 
fixed assets referred to in this Chapter. 

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CHAPTER VII 

LOSSES 

Article 43 
Losses 

1. 

2. 

3. 

A  loss  incurred  by  a  taxpayer  or  a  permanent  establishment  of  a  non-resident 
taxpayer in a fiscal year may be deducted in subsequent tax years, unless otherwise 
provided by this Directive. 

A  reduction  of  the  tax  base  on  account  of  losses  from  previous  tax  years  shall  not 
result in a negative amount. 

The oldest losses shall be used first. 

CHAPTER VIII 

PROVISIONS ON ENTRY TO AND EXIT FROM THE 
SYSTEM PROVIDED FOR BY THIS DIRECTIVE 

Article 44 
General rule on recognition and valuation of assets and liabilities 

When  a  taxpayer  opts  to  apply  the  system  provided  for  by  this  Directive,  all  assets  and 
liabilities  shall  be  recognised  at  their  value  as  calculated  according  to  national  tax  rules 
immediately prior to the date on which it begins to apply the system, unless otherwise stated 
in this Directive. 

Article 45 
Qualification of fixed assets for depreciation purposes 

1. 

2. 

Fixed assets entering the system provided for by this Directive shall be depreciated in 
accordance with Articles 32 to 42. 

Notwithstanding paragraph 1, the following depreciation rules shall apply: 

(a) 

(b) 

fixed assets that are individually depreciable both under the national corporate 
tax law previously applicable to the taxpayer and under the rules of the system 
shall be depreciated according to Article 36(2); 

fixed assets that were individually depreciable under the national corporate tax 
law previously applicable to the taxpayer but not under the rules of the system 
shall enter the asset pool provided for in Article 39; 

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(c) 

(d) 

fixed assets that were included in an asset pool for depreciation purposes under 
the national corporate tax law previously applicable to the taxpayer shall enter 
the system in the asset pool provided for in Article 39, even if they would be 
individually depreciable under the rules of the system; 

fixed  assets  that  were  not  depreciable  or  were  not  depreciated  under  the 
national  corporate  tax  law  previously  applicable  to  the  taxpayer  but  are 
depreciable  under  the  rules  of  the  system  shall  be  depreciated  in  accordance 
with Article 36(1) or Article 39, as the case may be. 

Article 46 
Long-term contracts on entering the system 

Revenues  and  expenses  which  pursuant  to  Article  24(2)  and  (3)  are  considered  to  have 
accrued  or  been  incurred  before  the  taxpayer  opted  into  the  system  provided  for  by  this 
Directive  but  were  not  yet  included  in  the  tax  base  under  the  national  corporate  tax  law 
previously applicable to the taxpayer shall be added to or deducted from the tax base, as the 
case may be, in accordance with the timing rules of national law. 

Revenues which were taxed under national corporate tax law before the taxpayer opted into 
the  system  in  an  amount  higher  than  that  which  would  have  been  included  in  the  tax  base 
under Article 24(2) shall be deducted from the tax base. 

Article 47 
Provisions and deductions on entering the system 

1. 

2. 

3. 

Provisions, pension provisions and bad-debt deductions provided for in Articles 25, 
26  and  27  shall  be  deductible  only  to  the  extent  that  they  arise  from  activities  or 
transactions carried out after the taxpayer opted into the system provided for by this 
Directive. 

Expenses  incurred  in  relation  to  activities  or  transactions  carried  out  before  the 
taxpayer opted into the system but for which no deduction had been made shall be 
deductible. 

Amounts  already  deducted  prior  to  opting  into  the  system  may  not  be  deducted 
again. 

Article 48 
Pre-entry losses 

Where a taxpayer incurred losses before opting into the system provided for by this Directive 
which could be carried forward under the applicable national law but had not yet been set off 
against taxable profits, those losses may be deducted from the tax base to the extent provided 
for under that national law. 

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Article 49 
General rule for opting-out of the system 

When  a  taxpayer  leaves  the  system  provided  for  by  this  Directive,  its  assets  and  liabilities 
shall  be  recognised  at  their  value  as  calculated  according  to  the  rules  of  the  system,  unless 
otherwise stated in this Directive. 

Article 50 
Fixed assets depreciated in a pool 

When  a  taxpayer  leaves  the  system  provided  for  by  this  Directive,  its  asset  pool  under  the 
system provided for by this Directive shall be recognised, for the purpose of the national tax 
rules subsequently applicable,  as one asset pool which shall be depreciated on the declining 
balance method at an annual rate of 25%. 

Article 51 
Long-term contracts on leaving the system 

After the taxpayer leaves the system, revenues and expenses arising from long-term contracts 
shall  be  treated  in  accordance  with  the  national  corporate  tax  law  subsequently  applicable. 
However,  revenues  and  expenses  already  taken  into  account  for  tax  purposes  in  the  system 
provided for by this Directive shall not be taken into account again. 

Article 52 
Provisions and deductions on leaving the system 

After  the  taxpayer  leaves  the  system  provided  for  by  this  Directive,  expenses  which  have 
already been deducted in accordance with Articles 25 to 27 may not be deducted again. 

Article 53 
Losses on leaving the system 

Losses incurred by the taxpayer which have not yet been set off against taxable profits under 
the rules of the system provided for by this Directive shall be carried forward in accordance 
with national corporate tax law. 

CHAPTER IX 

CONSOLIDATION 

Article 54 
Qualifying subsidiaries 

1. 

Qualifying  subsidiaries  shall  be  all  immediate  and  lower-tier  subsidiaries  in  which 
the parent company holds the following rights: 

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(a) 

a right to exercise more than 50% of the voting rights; 

(b) 

an  ownership  right  amounting  to  more  than  75%  of  the  company’s  capital  or 
more than 75% of the rights giving entitlement to profit. 

2. 

For the purpose of calculating the thresholds referred to in paragraph 1 in relation to 
companies other than immediate subsidiaries, the following rules shall be applied: 

(a) 

(b) 

once the voting-right threshold is reached in respect of immediate and lower-
tier  subsidiaries,  the  parent  company  shall  be  deemed  to  hold  100%  of  such 
rights. 

entitlement  to  profit  and  ownership  of  capital  shall  be  calculated  by 
multiplying  the  interests  held  in  intermediate  subsidiaries  at  each  tier. 
Ownership  rights  amounting  to  75%  or  less  held  directly  or  indirectly  by  the 
parent company, including rights in companies resident in a third country, shall 
also be taken into account in the calculation. 

Article 55 
Formation of group 

1. 

A resident taxpayer shall form a group with: 

(a) 

all its permanent establishments located in other Member States; 

(b) 

all  permanent  establishments  located  in  a  Member  State  of  its  qualifying 
subsidiaries resident in a third country; 

(c) 

all its qualifying subsidiaries resident in one or more Member States; 

(d)  other resident taxpayers which are qualifying subsidiaries of the same company 
which is resident in a third country and fulfils the conditions in Article 2(2)(a). 

2. 

A  non-resident  taxpayer  shall  form  a  group  in  respect  of  all  its  permanent 
establishments located in Member States and all its qualifying subsidiaries resident in 
one  or  more  Member  States,  including  the  permanent  establishments  of  the  latter 
located in Member States. 

Article 56 
Insolvency 

A company in insolvency or liquidation may not become a member of a group. A taxpayer in 
respect  of  which  a  declaration  of  insolvency  is  made  or  which  is  liquidated  shall  leave  the 
group immediately. 

Article 57 
Scope of consolidation 

1. 

The tax bases of the members of a group shall be consolidated. 

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2. 

1. 

2. 

1. 

2. 

3. 

4. 

When the consolidated tax base is negative, the loss shall be carried forward and be 
set  off  against  the  next  positive  consolidated  tax  base.  When  the  consolidated  tax 
base is positive, it shall be shared in accordance with Articles 86 to 102. 

Article 58 
Timing 

The thresholds of Article 54 must be met throughout the tax year. 

Notwithstanding paragraph 1, a taxpayer shall become a member of a group on the 
date when the thresholds of Article 54 are reached. The thresholds must be met for at 
least nine consecutive months, failing which a taxpayer shall be treated as if it had 
never having become a member of the group. 

Article 59 
Elimination of intra-group transactions 

In calculating the consolidated tax base, profits and losses arising from transactions 
directly carried out between members of a group shall be ignored. 

For  the  purpose  of  determining  whether  there  is  an  intra-group  transaction,  both 
parties to the transaction must be group members at the time that the transaction is 
effected and the associated revenues and expenses fall to be recognised. 

Groups  shall  apply  a  consistent  and  adequately  documented  method  for  recording 
intra-group transactions. Groups may change the method only for valid commercial 
reasons, at the beginning of a tax year. 

The  method  for  recording  intra-group  transactions  shall  enable  all  intra-group 
transfers and sales to be identified at the lower of cost and value for tax purposes. 

Article 60 
Withholding and source taxation 

No  withholding  taxes  or  other  source  taxation  shall  be  charged  on  transactions  between 
members of a group. 

CHAPTER X 

ENTERING AND LEAVING THE GROUP 

Article 61 
Fixed assets on entering the group 

Where a taxpayer is the economic owner of non-depreciable or individually depreciable fixed 
assets on the date of its entry into a group and any of these assets are disposed of by a member 
of  a  group  within  five  years  of  that  date,  an  adjustment  shall  be  made  in  the  year  of  the 

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disposal to the apportioned share of the group member that held the economic ownership over 
these assets on the date of entry. The proceeds of such disposal shall be added to that share 
and the costs relating to non-depreciable assets and the value for tax purposes of depreciable 
assets shall be deducted. 

Such  an  adjustment  shall  also  be  made  in  respect  of  financial  assets  with  the  exception  of 
shares in affiliated undertakings, participating interests and own shares. 

If,  as  a  result  of  a  business  reorganisation,  the  taxpayer  no  longer  exists  or  no  longer  has  a 
permanent establishment in the Member State in which it was resident on the date of its entry 
into the group, it shall be deemed to have a permanent establishment there for the purpose of 
applying the provisions of this Article. 

Article 62 
Long-term contracts on entering the group 

Revenues and expenses which accrued according to Articles 24(2) and (3) before a taxpayer 
entered the group but had not yet been included in the calculation of tax under the applicable 
national  corporate  tax  law  shall  be  added  to,  or  deducted  from  the  apportioned  share  in 
accordance with the timing rules of national law. 

Revenues which were taxed under the applicable national corporate tax law before a taxpayer 
entered the group in an amount higher than that which would have been charged under Article 
24(2) shall be deducted from the apportioned share. 

Article 63 
Provisions and Deductions on entering the group 

Expenses  covered  by  Articles  25,  26  and  27,  which  are  incurred  in  relation  to  activities  or 
transactions  carried  out  before  a  taxpayer  entered  the  group  but  for  which  no  provision  or 
deduction had been made under the applicable national corporate tax law shall be deductible 
only  against  the  apportioned  share  of  the  taxpayer,  unless  they  are  incurred  more  than  five 
years after the taxpayer enters the group. 

Article 64 
Losses on entering the group 

Unrelieved losses incurred by a taxpayer or a permanent establishment under the rules of this 
Directive  or  under  national  corporate  tax  law  before  entering  a  group  may  not  be  set  off 
against  the  consolidated  tax  base.  Such  losses  shall  be  carried  forward  and  may  be  set  off 
against the apportioned share in accordance respectively with Article 43 or with the national 
corporate  tax  law  which  would  be  applicable  to  the  taxpayer  in  the  absence  of  the  system 
provided for by this Directive. 

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Article 65 
Termination of a group 

When a group terminates, the tax year shall be deemed to end. The consolidated tax base and 
any  unrelieved  losses  of  the  group  shall  be  allocated  to  each  group  member  in  accordance 
with Articles 86 to 102, on the basis of the apportionment factors applicable to the tax year of 
termination. 

Article 66 
Losses after the group terminates 

Following termination of the group, losses shall be treated as follows: 

(a) 

(b) 

(c) 

if  the  taxpayer  remains  in  the  system  provided  for  by  this  Directive  but  outside  a 
group, the losses shall be carried forward and be set off according to Article 43; 

if the taxpayer joins another group, the losses shall be carried forward and be set off 
against its apportioned share; 

if the taxpayer leaves the system, the losses shall be carried forward and be set off 
according  to  the  national  corporate  tax  law  which  becomes  applicable,  as  if  those 
losses had arisen while the taxpayer was subject to that law. 

Article 67 
Fixed assets on leaving the group 

If non-depreciable or individually depreciable fixed assets, except for those which gave rise to 
a  reduced  exemption  under  Article  75,  are  disposed  of  within  three  years  of  the  departure 
from  the  group  of  the  taxpayer  holding  the  economic  ownership  over  these  assets,  the 
proceeds shall be added to the consolidated tax base of the group in the year of disposal and 
the  costs  relating  to  non-depreciable  assets  and  the  value  for  tax  purposes  of  depreciable 
assets shall be deducted. 

The  same  rule  shall  apply  to  financial  assets,  with  the  exception  of  shares  in  affiliated 
undertakings, participating interests and own shares. 

To the extent to which the proceeds of disposal are added to the consolidated tax base of the 
group, they shall not otherwise be taxable. 

Article 68 
Self-generated intangible assets 

Where  a  taxpayer  which  is  the  economic  owner  of  one  or  more  self-generated  intangible 
assets  leaves  the  group,  an  amount  equal  to  the  costs  incurred  in  respect  of  those  assets  for 
research, development, marketing and advertising in the previous five years shall be added to 
the  consolidated  tax  base  of  the  remaining  group  members.  The  amount  added  shall  not, 
however,  exceed  the  value  of  the  assets  on  the  departure  of  the  taxpayer  from  the  group. 
Those costs shall be attributed to the leaving taxpayer and shall be treated in accordance with 

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national corporate tax law which becomes applicable to the taxpayer or, if it remains in the 
system provided for by this Directive, the rules of this Directive. 

Article 69 
Losses on leaving the group 

No losses shall be attributed to a group member leaving a group. 

CHAPTER XI 

BUSINESS REORGANISATIONS 

Article 70 
Business reorganisations within a group 

1. 

2. 

1. 

2. 

A  business  reorganisation  within  a  group  or  the  transfer  of  the  legal  seat  of  a 
taxpayer which is a member of a group shall not give rise to profits or losses for the 
purposes of determining the consolidated tax base. Article 59(3) shall apply. 

Notwithstanding  paragraph  1,  where,  as  a  result  of  a  business  reorganisation  or  a 
series  of  transactions  between  members  of  a  group  within  a  period  of  two  years, 
substantially all the assets of a taxpayer are transferred to another Member State and 
the asset factor is substantially changed, the following rules shall apply. 

In the five years that follow the transfer, the transferred assets shall be attributed to 
the  asset  factor  of  the  transferring  taxpayer  as  long  as  a  member  of  the  group 
continues to be the economic owner of the assets. If the taxpayer no longer exists or 
no longer has a permanent establishment in the Member State from which the assets 
were transferred it shall be deemed to have a permanent establishment there for the 
purpose of applying the provisions of this Article. 

Article 71 
Treatment of losses where a business reorganisation takes place between  
two or more groups 

Where, as a result of a business reorganisation, one or more groups, or two or more 
members  of  a  group,  become  part  of  another  group,  any  unrelieved  losses  of  the 
previously existing group or groups shall be allocated to each of the members of the 
latter in accordance with Articles 86 to 102, on the basis of the factors applicable to 
the  tax  year  in  which  the  business  reorganisation  takes  place,  and  shall  be  carried 
forward for future years. 

Where two or more principal taxpayers merge within the meaning of Article 2(a)(i) 
and (ii) of Council Directive 2009/133/EC19, any unrelieved loss of a group shall be 
allocated to its members in accordance with Articles 86 to 102, on the basis of the 

19 

OJ L 310, 25.11.2009, p. 34. 

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factors applicable to the tax year in which the merger takes place, and shall be carried 
forward for future years. 

CHAPTER XII 

DEALINGS BETWEEN THE GROUP AND OTHER ENTITIES 

Article 72 
Exemption with progression 

Without prejudice to Article 75, revenue which is exempt from taxation under Article 11(c), 
(d) or (e) may be taken into account in determining the tax rate applicable to a taxpayer. 

Article 73 
Switch-over clause 

Article 11(c), (d) or (e) shall not apply where the entity which made the profit distributions, 
the entity the shares in which are disposed of or the permanent establishment were subject, in 
the  entity’s  country  of  residence  or  the  country  in  which  the  permanent  establishment  is 
situated, to one of the following: 

(a) 

(b) 

a  tax  on  profits,  under  the  general  regime  in  that  third  country,  at  a  statutory 
corporate  tax  rate  lower  than  40%  of  the  average  statutory  corporate  tax  rate 
applicable in the Member States; 

a  special  regime  in  that  third  country  that  allows  for  a  substantially  lower  level  of 
taxation than the general regime. 

The average statutory corporate tax rate applicable in the Member States shall be published by 
the Commission annually. It shall be calculated as an arithmetic average. For the purpose of 
this  Article  and  Articles  81  and  82,  amendments  to the rate  shall first apply to taxpayers in 
their tax year starting after the amendment. 

Article 74 
Computation of income of a foreign permanent establishment 

Where Article 73 applies to the income of a permanent establishment in a third country, its 
revenues, expenses and other deductible items shall be determined according to the rules of 
the system provided for by this Directive. 

Article 75 
Disallowance of exempt share disposals 

Where, as a result of a disposal of shares, a taxpayer leaves the group and that taxpayer has 
within  the  current  or  previous  tax  years  acquired  in  an  intra-group  transaction  one  or  more 
fixed assets other than assets depreciated in a pool, an amount corresponding to those assets 

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shall  be  excluded  from  the  exemption  unless  it  is  demonstrated  that  the  intra-group 
transactions were carried out for valid commercial reasons. 

The amount excluded from exemption shall be the market value of the asset or assets when 
transferred less the value for tax purposes of the assets or the costs referred to in Article 20 
relating to fixed assets not subject to depreciation. 

When  the  beneficial  owner  of  the  shares  disposed  of  is  a  non-resident  taxpayer  or  a  non-
taxpayer,  the  market  value  of  the  asset  or  assets  when  transferred  less  the  value  for  tax 
purposes shall be deemed to have been received by the taxpayer that held the assets prior to 
the intra-group transaction referred to in the first paragraph. 

Article 76 
Interest and royalties and any other income taxed at source 

1. 

2. 

3. 

4. 

5. 

Where a taxpayer derives income which has been taxed in another Member State or 
in a third country, other than income which is exempt under Article 11(c), (d) or (e), 
a deduction from the tax liability of that taxpayer shall be allowed.  

The  deduction  shall  be  shared  among  the  members  of  a  group  according  to  the 
formula applicable in that tax year pursuant to Articles 86 to 102. 

The deduction shall be calculated separately for each Member State or third country 
as  well  as  for  each  type  of  income.  It  shall  not  exceed  the  amount  resulting  from 
subjecting the income attributed to a taxpayer or to a permanent establishment to the 
corporate  tax  rate  of  the  Member  State  of  the  taxpayer's  residence  or  where  the 
permanent establishment is situated. 

In calculating the deduction, the amount of the income shall be decreased by related 
deductible  expenses,  which  shall  be  deemed  to  be  2%  thereof  unless  the  taxpayer 
proves otherwise. 

The  deduction  for  the  tax  liability  in  a  third  country  may  not  exceed  the  final 
corporate  tax  liability  of  a  taxpayer,  unless  an  agreement  concluded  between  the 
Member State of its residence and a third country states otherwise. 

Article 77 
Withholding tax 

Interest and royalties paid by a taxpayer to a recipient outside the group may be subject to a 
withholding  tax  in  the  Member  State  of  the  taxpayer  according  to  the  applicable  rules  of 
national law and any applicable double tax convention. The withholding tax shall be shared 
among the Member States according to the formula applicable in the tax year in which the tax 
is charged pursuant to Articles 86 to 102. 

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CHAPTER XIII 

TRANSACTIONS BETWEEN ASSOCIATED ENTERPRISES 

Article 78 
Associated enterprises 

1. 

If a taxpayer participates directly or indirectly in the management, control or capital 
of a non-taxpayer, or a taxpayer which is not in the same group, the two enterprises 
shall be regarded as associated enterprises.  

If the same persons participate, directly or indirectly, in the management, control or 
capital of a taxpayer and a non-taxpayer, or of taxpayers not in the same group, all 
the companies concerned shall be regarded as associated enterprises. 

A  taxpayer  shall  be  regarded  as  an  associated  enterprise  to  its  permanent 
establishment  in  a  third  country.  A  non-resident  taxpayer  shall  be  regarded  as  an 
associated enterprise to its permanent establishment in a Member State. 

2. 

For the purposes of paragraph 1, the following rules shall apply: 

(a) 

participation  in  control  shall  mean  a  holding  exceeding  20%  of  the  voting 
rights; 

(b)  participation in the capital shall mean a right of ownership exceeding 20% of 

the capital; 

(c) 

(d) 

participation  in  management  shall  mean  being  in  a  position  to  exercise  a 
significant influence in the management of the associated enterprise. 

an  individual,  his  spouse  and  his  lineal  ascendants  or  descendants  shall  be 
treated as a single person. 

In indirect participations, the fulfilment of the requirements in points (a) and (b) shall 
be  determined  by  multiplying  the  rates  of  holding  through  the  successive  tiers.  A 
taxpayer holding more than 50% of the voting rights shall be deemed to hold 100%. 

Article 79 
Adjustment of pricing in relations between associated enterprises 

Where  conditions  are  made  or  imposed  in  relations  between  associated  enterprises  which 
differ  from  those  that  would  be  made  between  independent  enterprises,  then  any  income 
which would, but for those conditions, have accrued to the taxpayer, but, by reason of those 
conditions,  has  not  so  accrued,  shall  be  included  in  the  income  of  that  taxpayer  and  taxed 
accordingly. 

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CHAPTER XIV 

ANTI-ABUSE RULES 

Article 80 
General anti-abuse rule 

Artificial transactions carried out for the sole purpose of avoiding taxation shall be ignored for 
the purposes of calculating the tax base. 

The first paragraph shall not apply to genuine commercial activities where the taxpayer is able 
to choose between two or more possible transactions which have the same commercial result 
but which produce different taxable amounts. 

1. 

2. 

3. 

Article 81 
Disallowance of interest deductions 

Interest  paid  to  an  associated  enterprise  resident  in  a  third  country  shall  not  be 
deductible where there is no agreement on the exchange of information comparable 
to the exchange of information on request provided for in Directive 2011/16/EU and 
where one of the following conditions is met: 

(a) 

(b) 

a tax on profits is provided for, under the general regime in the third country, at 
a statutory corporate tax rate lower than 40% of the average statutory corporate 
tax rate applicable in the Member States; 

the  associated  enterprise  is  subject  to  a  special  regime  in  that  third  country 
which allows for a substantially lower level of taxation than that of the general 
regime. 

The  term  "interest"  means  income  from  debt-claims  of  every  kind,  whether  or  not 
secured by mortgage and whether or not carrying a right to participate in the debtor's 
profits,  and  in  particular,  income  from  securities  and  income  from  bonds  or 
debentures,  including  premiums  and  prizes  attaching  to  such  securities,  bonds  or 
debentures. Penalty charges for late payment shall not be regarded as interest. 

Notwithstanding  paragraph  1,  interest  paid  to  an  entity  resident  in  a  third  country 
with which there is no agreement on the exchange of information comparable to the 
exchange  of  information  on  request  provided  for  in  Directive  2011/16/EU  shall  be 
deductible,  in  an  amount  not  exceeding  that  which  would  be  stipulated  between 
independent enterprises, where one of the following conditions is met: 

(a) 

(b) 

the  amount  of  that  interest  is  included  in  the  tax  base  as  income  of  the 
associated enterprise in accordance with Article 82; 

the  interest  is  paid  to  a  company  whose  principal  class  of  shares  is  regularly 
traded on one or more recognized stock exchanges; 

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(c) 

the  interest  is  paid  to  an  entity  engaged,  in  its  country  of  residence,  in  the 
active  conduct  of  a  trade  or  business.  This  shall  be  understood  as  an 
independent  economic  enterprise  carried  on  for  profit  and  in  the  context  of 
which officers and employees carry out substantial managerial and operational 
activities. 

Article 82 
Controlled foreign companies 

1. 

The tax base shall include the non-distributed income of an entity resident in a third 
country where the following conditions are met: 

(a) 

the taxpayer by itself, or together with its associated enterprises, holds a direct 
or indirect participation of more than 50% of the voting rights, or owns more 
than 50% of capital or is entitled to receive more than 50% of the profits of that 
entity; 

(b)  under the general regime in the third country, profits are taxable at a statutory 
corporate  tax  rate  lower  than  40%  of  the  average  statutory  corporate  tax  rate 
applicable in the Member States, or the entity is subject to a special regime that 
allows  for  a  substantially  lower  level  of  taxation  than  that  of  the  general 
regime; 

(c)  more than 30% of the income accruing to the entity falls within one or more of 

the categories set out in paragraph 3; 

(d) 

the  company  is  not  a  company,  whose  principal  class  of  shares  is  regularly 
traded on one or more recognized stock exchanges. 

2. 

3. 

Paragraph  1  shall  not  apply  where  the  third  country  is  party  to  the  European 
Economic Area Agreement and there is an agreement on the exchange of information 
comparable  to  the  exchange  of  information  on  request  provided  for  in  Directive 
2011/16/EU. 

The following  categories of income shall be taken into account for the purposes of 
point (c) of paragraph 1, in so far as more than 50 % of the category of the entity's 
income comes from transactions with the taxpayer or its associated enterprises: 

(a) 

interest or any other income generated by financial assets; 

(b) 

royalties or any other income generated by intellectual property; 

(c) 

dividends and income from the disposal of shares; 

(d) 

income from movable property; 

(e) 

income  from  immovable  property,  unless  the  Member  State  of  the  taxpayer 
would not have been entitled to tax the income under an agreement concluded 
with a third country; 

(f) 

income from insurance, banking and other financial activities. 

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Article 83 
Computation 

The income to be included in the tax base shall be calculated according to the rules 
of Articles 9 to 15. Losses of the foreign entity shall not be included in the tax base 
but  shall  be  carried  forward  and  taken  into  account  when  applying  Article  82  in 
subsequent years. 

The  income  to  be  included  in  the  tax  base  shall  be  calculated  in  proportion  to  the 
entitlement of the taxpayer to share in the profits of the foreign entity. 

The  income  shall  be  included  in  the  tax  year  in  which  the  tax  year  of  the  foreign 
entity ends. 

Where the foreign entity subsequently distributes profits to the taxpayer, the amounts 
of  income  previously  included  in  the  tax  base  pursuant  to  Article  82  shall  be 
deducted  from  the  tax  base  when  calculating  the  taxpayer's  liability  to  tax  on  the 
distributed income. 

If  the  taxpayer  disposes  of  its  participation  in  the  entity,  the  proceeds  shall  be 
reduced,  for  the  purposes  of  calculating  the  taxpayer's  liability  to  tax  on  those 
proceeds, by any undistributed amounts which have already been included in the tax 
base. 

CHAPTER XV 

TRANSPARENT ENTITIES 

Article 84 
Rules for allocating the income of transparent entities to taxpayers holding an interest 

Where  an  entity  is  treated  as  transparent  in  the  Member  State  of  its  location,  a 
taxpayer holding an interest in the entity shall include its share in the income of the 
entity  in  its  tax  base.  For  the  purpose  of  this  calculation,  the  income  shall  be 
computed under the rules of this Directive. 

Transactions between a taxpayer and the entity shall be disregarded in proportion to 
the  taxpayer’s  share  of  the  entity.  Accordingly,  the  income  of  the  taxpayer  derived 
from  such  transactions  shall  be  considered  to  be  a  proportion  of  the  amount  which 
would be agreed between independent enterprises calculated on an arm's length basis 
which corresponds to the third party ownership of the entity. 

The taxpayer shall be entitled to relief for double taxation in accordance with Article 
76(1),(2),(3) and (5). 

1. 

2. 

3. 

4. 

5. 

1. 

2. 

3. 

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Article 85 
Rules for determining transparency in the case of third country entities 

Where an entity is located in a third country, the question whether or not it is transparent shall 
be determined according to the law of the Member State of the taxpayer. If at least two group 
members  hold  an  interest  in  the  same  entity  located  in  a  third  country,  the  treatment  of  the 
latter shall be determined by common agreement among the relevant Member States. If there 
is no agreement, the principal tax authority shall decide. 

CHAPTER XVI 

APPORTIONMENT OF THE CONSOLIDATED TAX BASE 

Article 86 
General principles 

1. 

The  consolidated  tax  base  shall  be  shared  between  the  group  members  in  each  tax 
year  on  the  basis  of  a  formula  for  apportionment.  In  determining  the  apportioned 
share of a group member A, the formula shall take the following form, giving equal 
weight to the factors of sales, labour and assets: 

Share

⎛
⎜
 A 
=
⎜
⎝

1
3

A
Sales

Group

Sales

+

1
3

⎛
⎜⎜
⎝

1
2

A

Payroll
Payroll

Group

+

1
2

 of No

A
employees

 of No

employees

Group

⎞
+⎟⎟
⎠

1
3

A

Assets
Assets

Group

⎞
⎟
∗⎟
⎠

 dCon'

Tax 

Base

2. 

3. 

4. 

The consolidated tax base of a group shall be shared only when it is positive. 

The calculations for sharing the consolidated tax base shall be done at the end of the 
tax year of the group. 

A  period  of  15  days  or  more  in  a  calendar  month  shall  be  considered  as  a  whole 
month. 

Article 87 
Safeguard clause 

As  an  exception  to  the  rule  set  out  in  Article  86,  if  the  principle  taxpayer  or  a  competent 
authority considers that the outcome of the apportionment to a group member does not fairly 
represent the extent of the business activity of that group member, the principal taxpayer or 
the  authority  concerned  may  request  the  use  of  an  alternative  method.  If,  following 
consultations  among  the  competent  authorities  and,  where  applicable,  discussions  held  in 
accordance with Article 132, all these authorities agree to the alternative method, it shall be 
used. The Member State of the principal tax authority shall inform the Commission about the 
alternative method used. 

EN 

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Article 88 
Entering and leaving the group 

Where a company enters or leaves a group during a tax year, its apportioned share shall be 
computed proportionately having regard to the number of calendar months during which the 
company belonged to the group in the tax year. 

Article 89 
Transparent entities 

Where a taxpayer holds an interest in a transparent entity, the factors used in calculating its 
apportioned  share  shall  include  the  sales,  payroll  and  assets  of  the  transparent  entity,  in 
proportion to the taxpayer's participation in its profits and losses. 

1. 

2. 

3. 

1. 

2. 

Article 90 
Composition of the labour factor 

The labour factor shall consist, as to one half, of the total amount of the payroll of a 
group member as its numerator and the total amount of the payroll of the group as its 
denominator,  and  as  to  the  other  half,  of  the  number  of  employees  of  a  group 
member  as  its  numerator  and  the  number  of  employees  of  the  group  as  its 
denominator.  Where  an  individual  employee  is  included  in  the  labour  factor  of  a 
group  member,  the  amount  of  payroll  relating  to  that  employee  shall  also  be 
allocated to the labour factor of that group member. 

The number of employees shall be measured at the end of the tax year. 

The  definition  of  an  employee  shall  be  determined  by  the  national  law  of  the 
Member State where the employment is exercised. 

Article 91 
Allocation of employees and payroll 

Employees  shall  be  included  in  the  labour factor  of  the  group  member  from  which 
they receive remuneration. 

their 
Notwithstanding  paragraph  1,  where  employees  physically  exercise 
employment under the control and responsibility of a group member other than that 
from  which  they  receive  remuneration,  those  employees  and  the  amount  of  payroll 
relating to them shall be included in the labour factor of the former. 

This rule shall only apply where the following conditions are met: 

(a) 

this employment lasts for an uninterrupted period of at least three months; 

(b) 

such  employees  represent  at  least  5%  of  the  overall  number  of  employees  of 
the group member from which they receive remuneration. 

EN 

50 

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3. 

4. 

5. 

1. 

2. 

1. 

2. 

3. 

1. 

2. 

Notwithstanding  paragraph  1,  employees  shall  include  persons  who,  though  not 
employed directly by a group member, perform tasks similar to those performed by 
employees. 

The  term  “payroll”  shall  include  the  cost  of  salaries,  wages,  bonuses  and  all  other 
employee compensation, including related pension and social security costs borne by 
the employer. 

Payroll  costs  shall  be  valued  at  the  amount  of  such  expenses  which  are  treated  as 
deductible by the employer in a tax year. 

Article 92 
Composition of the asset factor 

The asset factor shall consist of the average value of all fixed tangible assets owned, 
rented  or  leased  by  a  group  member  as  its  numerator  and  the  average  value  of  all 
fixed tangible assets owned, rented or leased by the group as its denominator.  

In the five years that follow a taxpayer's entry into an existing or new group, its asset 
factor shall also include the total amount of costs incurred for research, development, 
marketing and advertising by the taxpayer over the six years that preceded its entry 
into the group. 

Article 93 
Allocation of assets 

An asset shall be included in the asset factor of its economic owner. If the economic 
owner cannot be identified, the asset shall be included in the asset factor of the legal 
owner. 

Notwithstanding  paragraph  1,  if  an  asset  is  not  effectively  used  by  its  economic 
owner, the asset shall be included in the factor of the group member that effectively 
uses the asset. However, this rule shall only apply to assets that represent more than 
5% of the value for tax purposes of all fixed tangible assets of the group member that 
effectively uses the asset. 

Except in the case of leases between group members, leased assets shall be included 
in the asset factor of the group member which is the lessor or the lessee of the asset. 
The same shall apply to rented assets. 

Article 94 
Valuation 

Land and other non-depreciable fixed tangible assets shall be valued at their original 
cost. 

An individually depreciable fixed tangible asset shall be valued at the average of its 
value for tax purposes at the beginning and at the end of a tax year. 

EN 

51 

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3. 

4. 

5. 

1. 

2. 

Where,  as  a  result  of  one  or  more  intra-group  transactions,  an  individually 
depreciable fixed tangible asset is included in the asset factor of a group member for 
less  than  a  tax  year,  the  value  to  be  taken  into  account  shall  be  calculated  having 
regard to the whole number of months. 

The pool of fixed assets shall be valued at the average of its value for tax purposes at 
the beginning and at the end of a tax year. 

Where the renter or lessee of an asset is not its economic owner, it shall value rented 
or  leased  assets  at  eight  times  the  net  annual  rental  or  lease  payment  due,  less  any 
amounts receivable from sub-rentals or sub-leases. 

Where a group member rents out or leases an asset but is not its economic owner, it 
shall  value  the  rented  or  leased  assets  at  eight  times  the  net  annual  rental  or  lease 
payment due. 

Where,  following  an  intra-group  transfer  in  the  same  or  the  previous  tax  year,  a 
group member sells an asset outside the group, the asset shall be included in the asset 
factor  of  the  transferring  group  member  for  the  period  between  the  intra-group 
transfer  and  the  sale  outside  the  group.  This  rule  shall  not  apply  where  the  group 
members concerned demonstrate that the intra-group transfer was made for genuine 
commercial reasons. 

Article 95 
Composition of the sales factor 

The  sales  factor  shall  consist  of  the  total  sales  of  a  group  member  (including  a 
permanent  establishment  which  is  deemed  to  exist  by  virtue  of  the  second 
subparagraph of Article 70(2) as its numerator and the total sales of the group as its 
denominator. 

Sales  shall  mean  the  proceeds  of  all  sales  of  goods  and  supplies  of  services  after 
discounts  and  returns,  excluding  value  added  tax,  other  taxes  and  duties.  Exempt 
revenues, interest, dividends, royalties and proceeds from the disposal of fixed assets 
shall  not  be  included  in  the  sales  factor,  unless  they  are  revenues  earned  in  the 
ordinary  course  of  trade  or  business.  Intra-group  sales  of  goods  and  supplies  of 
services shall not be included. 

3. 

Sales shall be valued according to Article 22. 

Article 96 
Sales by destination 

1. 

Sales of goods shall be included in the sales factor of the group member located in 
the  Member  State  where  dispatch  or  transport  of  the  goods  to  the  person  acquiring 
them ends. If this place is not identifiable, the sales of goods shall be attributed to the 
group  member  located  in  the  Member  State  of  the  last  identifiable  location  of  the 
goods. 

EN 

52 

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2. 

3. 

4. 

5. 

Supplies of services shall be included in the sales factor of the group member located 
in the Member State where the services are physically carried out. 

Where exempt revenues, interest, dividends and royalties and the proceeds from the 
disposal  of  assets  are  included  in  the  sales  factor,  they  shall  be  attributed  to  the 
beneficiary. 

If  there  is  no  group  member  in  the  Member  State  where  goods  are  delivered  or 
services are carried out, or if goods are delivered or services are carried out in a third 
country,  the  sales  shall  be  included  in  the  sales  factor  of  all  group  members  in 
proportion to their labour and asset factors. 

If  there  is  more  than  one  group  member  in  the  Member  State  where  goods  are 
delivered or services are carried out, the sales shall be included in the sales factor of 
all  group  members  located  in  that  Member  State  in  proportion  to  their  labour  and 
asset factors. 

Article 97 
Rules on calculation of factors 

The Commission may adopt acts laying down detailed rules on the calculation of the labour, 
asset  and  sales  factors,  the  allocation  of  employees  and  payroll,  assets  and  sales  to  the 
respective  factor  and  the  valuation  of  assets.  Those  implementing  acts  shall  be  adopted  in 
accordance with the examination procedure referred to in Article 131(2).  

Article 98 
Financial institutions 

1. 

The following entities shall be regarded as financial institutions: 

(a) 

(b) 

credit  institutions  authorised  to  operate  in  the  Union  in  accordance  with 
Directive 2006/48/EC of the European Parliament and of the Council20; 

entities, except for insurance undertakings as defined in Article 99, which hold 
financial assets amounting to 80% or more of all their fixed assets, as valued in 
accordance with the rules of this Directive. 

The asset factor of a financial institution shall include 10% of the value of financial 
assets,  except  for  participating  interests  and  own  shares.  Financial  assets  shall  be 
included  in  the  asset  factor  of  the  group  member  in  the  books  of  which  they  were 
recorded when it became a member of the group. 

The  sales  factor  of  a  financial  institution  shall  include  10%  of  its  revenues  in  the 
form  of  interest,  fees,  commissions  and  revenues  from  securities,  excluding  value 
added tax, other taxes and duties. For the purposes of Article 96(2), financial services 
shall be deemed to be carried out, in the case of a secured loan, in the Member State 
in  which  the  security  is  situated  or,  if  this  Member  State  cannot  be  identified,  the 
Member  State  in  which  the  security  is  registered.  Other  financial  services  shall  be 

2. 

3. 

20 

OJ L 177, 30.06.2006, p. 1. 

EN 

53 

   EN 

                                                 
deemed to be carried out in the Member State of the borrower or of the person who 
pays  fees,  commissions  or  other  revenue.  If  the  borrower  or  the  person  who  pays 
fees,  commissions  or  other  revenue  cannot  be  identified  or  if  the  Member  State  in 
which  the  security  is  situated  or  registered  cannot  be  identified,  the  sales  shall  be 
attributed to all group members in proportion to their labour and asset factors. 

Article 99 
Insurance Undertakings 

1. 

2. 

3. 

The  term  "insurance  undertakings"  shall  mean  those  undertakings  authorised  to 
operate in the Member States in accordance with Directive 73/239/EEC for non-life 
insurance, 2002/83/EC for life insurance and Directive 2005/68/EC for reinsurance. 

The asset factor of insurance undertakings shall include 10% of the value of financial 
assets as provided for in Article 98(2). 

The sales factor of insurance undertakings shall include 10% of all earned premiums, 
net  of  reinsurance,  allocated  investment  returns  transferred  from  the  non-technical 
account, other technical revenues, net of reinsurance, and investment revenues, fees 
and commissions, excluding value added tax, other taxes and duties. For the purposes 
of Article 96(2), insurance services shall be deemed to be carried out in the Member 
State  of  the  policy  holder.  Other  sales  shall  be  attributed  to  all  group  members  in 
proportion to their labour and asset factors. 

Article 100 
Oil and gas 

Notwithstanding Article 96(1), (2) and (3), sales of a group member conducting its principal 
business  in  the  field  of  the  exploration  or  production  of  oil  or  gas  shall  be  attributed  to  the 
group member in the Member State where the oil or gas is to be extracted or produced. 

Notwithstanding Article 96(4) and  (5), if there is no group member in  the Member State of 
exploration or production of oil and gas or the exploration or production takes place in a third 
country where the group member which carries on the exploration or production of oil and gas 
does  not  maintain  a  permanent  establishment,  the  sales  shall  be  attributed  to  that  group 
member. 

Article 101 
Shipping, inland waterways transport and air transport 

The  revenues,  expenses  and  other  deductible  items  of  a  group  member  whose  principal 
business is the operation of ships or aircraft in international traffic or the operation of boats 
engaged  in  inland  waterways  transport  shall  not  be  apportioned  according  to  the  formula 
referred to in Article 86 but shall be attributed to that group member. Such a group member 
shall be excluded from the calculation of the apportionment formula. 

EN 

54 

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Article 102 
Items deductible against the apportioned share 

The apportioned share shall be adjusted by the following items: 

(a) 

(b) 

(c) 

(d) 

unrelieved losses incurred by a taxpayer before entering the system provided for by 
this Directive, as provided for in Article 64; 

unrelieved losses incurred at the level of the group, as provided for in Article 64 in 
conjunction with Article 66(b) and in Article 71; 

the  amounts  relating  to  the  disposal  of  fixed  assets  as  provided  for  in  Article  61, 
revenues  and  expenses  related  to  long-term  contracts  as  provided  for  in  Article  62 
and future expenses as provided for in Article 63; 

In the case of insurance undertakings, optional technical provisions as provided for in 
Article 30(c); 

(e) 

the taxes listed in Annex III where a deduction is provided for under national rules. 

Article 103 
Tax liability 

The tax liability of each group member shall be the outcome of the application of the national 
tax rate to the apportioned share, adjusted according to Article 102, and further reduced by the 
deductions provided for in Articles 76. 

CHAPTER XVII 

ADMINISTRATION AND PROCEDURES 

Article 104 
Notice to opt 

1. 

2. 

3. 

A  single  taxpayer  shall  opt  for  the  system  provided  for  by  this  Directive  by  giving 
notice to the competent authority of the Member State in which it is resident or, in 
respect of a permanent establishment of a non-resident taxpayer, that establishment is 
situated. In the case of a group, the principal taxpayer shall give notice, on behalf of 
the group, to the principal tax authority. 

Such notice shall be given at least three months before the beginning of the tax year 
in which the taxpayer or the group wishes to begin applying the system. 

The  notice  to  opt  shall  cover  all  group  members.  However,  shipping  companies 
subject to a special taxation regime may be excluded from the group. 

The  principal  tax  authority  shall  transmit  the  notice  to  opt  immediately  to  the 
competent authorities of all Member States in which group members are resident or 
established. Those authorities may submit to the principal tax authority, within one 

EN 

55 

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month of the transmission, their views and any relevant information on the validity 
and scope of the notice to opt. 

Article 105 
Term of a Group 

1. 

2. 

3. 

When the notice to opt has been accepted, a single taxpayer or a group, as the case 
may  be,  shall  apply  the  system  provided  for  by  this  Directive  for  five  tax  years. 
Following  the  expiry  of  that  initial  term,  the  single  taxpayer  or  the  group  shall 
continue to apply the system  for successive terms  of three tax years unless  it  gives 
notice  of  termination.  A  notice  of  termination  may  be  given  by  a  taxpayer  to  its 
competent  authority  or,  in  the  case  of  a  group,  by  the  principal  taxpayer  to  the 
principal tax authority in the three months preceding the end of the initial term or of 
a subsequent term. 

Where a taxpayer or a non-taxpayer joins a group, the term of the group shall not be 
affected.  Where  a  group  joins  another  group  or  two  or  more  groups  merge,  the 
enlarged group shall continue to apply the system until the later of the expiry dates of 
the terms of the groups, unless exceptional circumstances make it more appropriate 
to apply a shorter period. 

Where  a  taxpayer  leaves  a  group  or  a  group  terminates,  the  taxpayer  or  taxpayers 
shall continue to apply the system for the remainder of the current term of the group. 

Article 106 
Information in the notice to opt 

The following information shall be included in the notice to opt: 

(a) 

(b) 

(c) 

(d) 

(e) 

the identification of the taxpayer or of the members of the group; 

in respect of a group, proof of fulfilment of the criteria laid down in Articles 54 and 
55; 

identification of any associated enterprises as referred to in Articles 78; 

the legal form, statutory seat and place of effective management of the taxpayers; 

the tax year to be applied. 

The  Commission  may  adopt  an  act  establishing  a  standard  form  of  the  notice  to  opt.  That 
implementing act shall be adopted in accordance with the examination procedure referred to 
in Article 131(2). 

Article 107 
Control of the notice to opt 

1. 

The competent authority to which the notice to opt is validly submitted shall examine 
whether, on the basis of the information contained in the notice, the group fulfils the 

EN 

56 

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requirements of this Directive. Unless the notice is rejected within three months of its 
receipt, it shall be deemed to have been accepted. 

Provided that the taxpayer has fully disclosed all relevant information in accordance 
with  Article  106,  any  subsequent  determination  that  the  disclosed  list  of  group 
members  is  incorrect  shall  not  invalidate  the  notice  to  opt.  The  notice  shall  be 
corrected, and all other necessary measures shall be taken, from the beginning of the 
tax year when the discovery is made. Where there has not been full disclosure, the 
principal tax authority, in agreement with the other competent authorities concerned, 
may invalidate the original notice to opt. 

Article 108 
Tax year 

All members of a group shall have the same tax year. 

In the year in which it joins an existing group, a taxpayer shall bring its tax year into 
line  with  that  of  the  group.  The  apportioned  share  of  the  taxpayer  for  that  tax  year 
shall be calculated proportionately having regard to the number of calendar months 
during which the company belonged to the group. 

The apportioned share of a taxpayer for the year in which it leaves a group shall be 
calculated  proportionately  having  regard  to  the  number  of  calendar  months  during 
which the company belonged to the group. 

Where  a  single  taxpayer  joins  a  group,  it  shall  be  treated  as  though  its  tax  year 
terminated on the day before joining. 

2. 

1. 

2. 

3. 

4. 

Article 109 
Filing a tax return 

1. 

A single taxpayer shall file its tax return with the competent authority. 

2. 

3. 

In the case of a group, the principal taxpayer shall file the consolidated tax return of 
the group with the principal tax authority. 

The  return  shall  be  treated  as  an  assessment  of  the  tax  liability  of  each  group 
member.  Where  the  law  of  a  Member  State  provides that a tax return has the legal 
status  of  a  tax  assessment  and  is  to  be  treated  as  an  instrument  permitting  the 
enforcement  of  tax  debts,  the  consolidated  tax  return  shall  have  the  same  effect  in 
relation to a group member liable for tax in that Member State. 

Where the consolidated tax return does not have the legal status of a tax assessment 
for the purposes of enforcing a tax debt, the competent authority of a Member State 
may,  in  respect  of  a  group  member  which  is  resident  or  situated  there,  issue  an 
instrument  of  national  law  authorising  enforcement  in  the  Member  State.  That 
instrument  shall  incorporate  the  data  in  the  consolidated  tax  return  concerning  the 
group  member.  Appeals  shall  be  permitted  against  the  instrument  exclusively  on 
grounds  of  form  and  not  to  the  underlying  assessment.  The  procedure  shall  be 
governed by the national law of the relevant Member State. 

EN 

57 

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4. 

5. 

Where a permanent establishment is deemed to exist pursuant to the third paragraph 
of  Article  61,  the  principal  taxpayer  shall  be  responsible  for  all  procedural 
obligations relating to the taxation of such a permanent establishment. 

The tax return of a single taxpayer shall be filed within the period provided for in the 
law  of  the  Member  State  in  which  it  is  resident  or  in  which  it  has  a  permanent 
establishment.  The  consolidated  tax  return  shall  be  filed  in  the  nine  months  that 
follow the end of the tax year. 

Article 110 
Content of tax return 

1. 

The tax return of a single taxpayer shall include the following information: 

(a) 

the identification of the taxpayer; 

(b) 

the tax year to which the tax return relates; 

(c) 

the calculation of the tax base; 

(d) 

identification of any associated enterprises as referred to in Article 78. 

2. 

The consolidated tax return shall include the following information: 

(a) 

the identification of the principal taxpayer;  

(b) 

the identification of all group members; 

(c) 

identification of any associated enterprises as referred to in Article 78; 

(d) 

the tax year to which the tax return relates; 

(e) 

the calculation of the tax base of each group member; 

(f) 

the calculation of the consolidated tax base; 

(g) 

the calculation of the apportioned share of each group member; 

(h) 

the calculation of the tax liability of each group member. 

Article 111 
Notification of errors in the tax return 

The principal taxpayer shall notify the principal tax authority of errors in the consolidated tax 
return.  The  principal  tax  authority  shall,  where  appropriate,  issue  an  amended  assessment 
according to Article 114(3). 

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Article 112 
Failure to file a tax return 

Where the principal taxpayer fails to file a consolidated tax return, the principal tax authority 
shall issue an assessment within three months based on an estimate, taking into account such 
information as is available. The principal taxpayer may appeal against such an assessment. 

Article 113 
Rules on electronic filing, tax returns and supporting documentation 

The Commission may adopt acts laying down rules on electronic filing, on the form of the tax 
return,  on  the  form  of  the  consolidated  tax  return,  and  on  the  supporting  documentation 
required.  Those  implementing  acts  shall  be  adopted  in  accordance  with  the  examination 
procedure referred to in Article 131(2). 

Article 114 
Amended assessments 

1. 

2. 

3. 

4. 

5. 

In relation to a single taxpayer, audits and assessments shall be governed by the law 
of  the  Member  State  in  which  it  is  resident  or  in  which  it  has  a  permanent 
establishment. 

The principal tax authority shall verify that the consolidated tax return complies with 
Article 110(2). 

The  principal  tax  authority  may  issue  an  amended  assessment  not  later  than  three 
years after the final date for filing the consolidated tax return or, where no return was 
filed before that date, not later than three years following issuance of an assessment 
pursuant to Article 112. 

An  amended  assessment  may  not  be  issued  more  than  once  in  any  period  of  12 
months. 

Paragraph  3  shall  not  apply  where  an  amended  assessment  is  issued  in  compliance 
with  a  decision  of  the  courts  of  the  Member  State  of  the  principal  tax  authority 
according  to  Article  123  or  with  the  result  of  a  mutual  agreement  or  arbitration 
procedure with a third country. Such amended assessments shall be issued within 12 
months of the decision of the courts of the principal tax authority or the completion 
of the procedure. 

Notwithstanding paragraph 3, an amended assessment may be issued within six years 
of  the  final  date  for  filing  the  consolidated  tax  return  where  it  is  justified  by  a 
deliberate  or  grossly  negligent  misstatement  on  the  part  of  a  taxpayer,  or  within 
12 years of that date where the misstatement is the subject of criminal proceedings. 
Such  an  amended  assessment  shall  be  issued  within  12  months  of  the  discovery  of 
the  misstatement,  unless  a  longer  period  is  objectively  justified  by  the  need  for 
further inquiries or investigations. Any such amended assessment shall relate solely 
to the subject-matter of the misstatement. 

EN 

59 

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6. 

7. 

Prior to issuing an amended assessment, the principal tax authority shall consult the 
competent authorities of the Member States in which a group member is resident or 
established.  Those  authorities  may  express  their  views  within  one  month  of 
consultation. 

The competent authority of a Member State in which a group member is resident or 
established may call on the principal tax authority to issue an amended assessment. 
Failure  to  issue  such  an  assessment  within  three  months  shall  be  deemed  to  be  a 
refusal to do so. 

No amended assessment shall be issued in order to adjust the consolidated tax base 
where  the  difference  between  the  declared  base  and  the  corrected  base  does  not 
exceed the lower of EUR 5,000 or 1% of the consolidated tax base. 

No  amended  assessment  shall  be  issued  in  order  to  adjust  the  calculation  of  the 
apportioned shares where the total of the apportioned shares of the group members 
resident or established in a Member State would be adjusted by less than 0.5%. 

Article 115 
Central data base 

The consolidated tax return and supporting documents filed by the principal taxpayer shall be 
stored  on  a  central  data  base  to  which  all  the  competent  authorities  shall  have  access.  The 
central data base shall be regularly updated with all further information and documents and all 
decisions and notices issued by the principal tax authority. 

Article 116 
Designation of the principal taxpayer 

The  principal  taxpayer  designated  in  accordance  with  Article  4(6)  may  not  subsequently  be 
changed. However, where the principal taxpayer ceases to meet the criteria in Article 4(6) a 
new principal taxpayer shall be designated by the group. 

In exceptional circumstances the competent tax authorities of the Member States in which the 
members of a group are resident or in which they have a permanent establishment may, within 
six months of the notice to opt or within six months of a reorganisation involving the principal 
taxpayer, decide by common agreement that a taxpayer other than the taxpayer designated by 
the group shall be the principal taxpayer. 

Article 117 
Record-keeping 

A  single  taxpayer  and,  in  the  case  of  a  group,  each  group  member  shall  keep  records  and 
supporting  documents  in  sufficient  detail  to  ensure  the  proper  implementation  of  this 
Directive and to allow audits to be carried out. 

EN 

60 

   EN 

Article 118 
Provision of information to the competent authorities 

On a request from the competent authority of the Member State in which it is resident or in 
which  its  permanent  establishment  is  situated,  a  taxpayer  shall  provide  all  information 
relevant to the determination of its tax liability. On a request from the principal tax authority, 
the  principal  taxpayer  shall  provide  all  information  relevant  to  the  determination  of  the 
consolidated tax base or of the tax liability of any group member. 

1. 

2. 

1. 

2. 

1. 

Article 119 
Request for an opinion by the competent authority 

A  taxpayer  may  request  an  opinion  from  the  competent  authority  of  the  Member 
State  in  which  it  is  resident  or  in  which  it  has  a  permanent  establishment  on  the 
implementation  of  this  Directive  to  a  specific  transaction  or  series  of  transactions 
planned  to  be  carried  out.  A  taxpayer  may  also  request  an  opinion  regarding  the 
proposed  composition  of  a  group.  The  competent  authority  shall  take  all  possible 
steps to respond to the request within a reasonable time. 

Provided that all relevant information concerning the planned transaction or series of 
transactions  is  disclosed,  the  opinion  issued  by  the  competent  authority  shall  be 
binding  on  it,  unless  the  courts  of  the  Member  State  of  the  principal  tax  authority 
subsequently decide otherwise pursuant to Article 123. If the taxpayer disagrees with 
the  opinion,  it  may  act  in  accordance  with  its  own  interpretation  but  must  draw 
attention to that fact in its tax return or consolidated tax return. 

Where two or more group members in different Member States are directly involved 
in a specific transaction or a series of transactions, or where the request concerns the 
proposed composition of a group, the competent authorities of those Member States 
shall agree on a common opinion. 

Article 120 
Communication between competent authorities 

Information communicated pursuant to this Directive shall, to the extent possible, be 
provided  by  electronic  means,  through  making  use  of  the  common  communication 
network/common system interface (CCN/CSI). 

When  a  competent  authority  receives  a  request  for  cooperation  or  exchange  of 
information  concerning  a  group  member  pursuant  to  Directive  2011/16/EU,  it  shall 
respond no later than in three months following the date of receipt of the request. 

Article 121 
Secrecy clause 

All  information  made  known  to  a  Member  State  under  this  Directive  shall  be  kept 
secret  in  that  Member  State  in  the  same  manner  as  information  received  under  its 
domestic legislation. In any case, such information: 

EN 

61 

   EN 

(a)  may be made available only to the persons directly involved in the assessment 

of the tax or in the administrative control of this assessment; 

(b)  may in addition be made known only in connection with judicial proceedings 
or  administrative  proceedings  involving  sanctions  undertaken  with  a  view  to, 
or relating to, the making or reviewing the tax assessment and only to persons 
who  are  directly  involved  in  such  proceedings;  such  information  may, 
however, be disclosed during public hearings or in judgements if the competent 
authority of the Member State supplying the information raises no objection; 

(c) 

shall  in  no  circumstances  be  used  other  than  for  taxation  purposes  or  in 
connection  with  judicial  proceedings  or  administrative  proceedings  involving 
sanctions undertaken with a view to, or in relation to, the making or reviewing 
the tax assessment. 

In  addition,  Member  States  may  provide  for  the  information  referred  to  in  the  first 
subparagraph to be used for assessment of other levies, duties and taxes covered by 
Article 2 of Council Directive 2008/55/EC21. 

2. 

Notwithstanding paragraph 1, the competent authority of the Member State providing 
the information may permit it to be used for other purposes in the requesting State, if, 
under  the  legislation  of  the  informing  State,  the  information  could,  in  similar 
circumstances, be used in the informing State for similar purposes. 

Article 122 
Audits 

1. 

The principal tax authority may initiate and coordinate audits of group members. An 
audit may also be initiated on the request of a competent authority. 

The  principal  tax  authority  and  the  other  competent  authorities  concerned  shall 
jointly  determine  the  scope  and  content  of  an  audit  and  the  group  members  to  be 
audited. 

2. 

An  audit  shall  be  conducted  in  accordance  with  the  national  legislation  of  the 
Member State in which it is carried out, subject to such adjustments as are necessary 
in order to ensure proper implementation of this Directive. 

3. 

The principal tax authority shall compile the results of all audits. 

Article 123 
Disagreement between Member States 

1. 

Where  the  competent  authority  of  the  Member  State  in  which  a  group  member  is 
resident or established disagrees with a decision of the principal tax authority made 
pursuant  to  Articles  107  or  Article  114  paragraphs  (3),  (5)  or  (6)  second 
subparagraph, it may challenge that decision before the courts of the Member State 
of the principal tax authority within a period of three months. 

21 

OJ L 150, 10.6.2008, p. 28. 

EN 

62 

   EN 

                                                 
2. 

The competent authority shall have at least the same procedural rights as a taxpayer 
enjoys under the law of that Member State in proceedings against a decision of the 
principal tax authority. 

Article 124 
Appeals 

1. 

A principal taxpayer may appeal against the following acts:  

(a) 

a decision rejecting a notice to opt; 

(b) 

a notice requesting the disclosure of documents or information; 

(c) 

an amended assessment; 

(d) 

an assessment on the failure to file a consolidated tax return. 

2. 

3. 

1. 

2. 

3. 

4. 

5. 

The appeal shall be lodged within 60 days of the receipt of the act appealed against. 

An appeal shall not have any suspensory effect on the tax liability of a taxpayer.  

Notwithstanding Article 114(3), an amended assessment may be issued to give effect 
to the result of an appeal. 

Article 125 
Administrative appeals 

Appeals against amended assessments or assessments made pursuant to Article 112 
shall be heard by an administrative body which is competent to hear appeals at first 
instance according to the law of the Member State of the principal tax authority. If, in 
that  Member  State,  there  is  no  such  competent  administrative  body,  the  principal 
taxpayer may lodge directly a judicial appeal. 

In  making  submissions  to  the  administrative  body,  the  principal  tax  authority  shall 
act in close consultation with the other competent authorities. 

An  administrative  body  may,  where  appropriate,  order  evidence  to  be  provided  by 
the principal taxpayer and the principal tax authority on the fiscal affairs of the group 
members and other associated enterprises and on the law and practices of the other 
Member  States  concerned.  The  competent  authorities  of  the  other  Member  States 
concerned shall provide all necessary assistance to the principal tax authority. 

Where the administrative body varies the decision of the principal tax authority, the 
varied decision shall take the place of the latter and shall be treated as the decision of 
the principal tax authority. 

The administrative body shall decide the appeal within six months. If no decision is 
received by the principal taxpayer within that period, the decision of the principal tax 
authority shall be deemed to have been confirmed. 

EN 

63 

   EN 

6. 

7. 

1. 

2. 

3. 

1. 

2. 

3. 

Where the decision is confirmed or varied, the principal taxpayer shall have the right 
to  appeal  directly  to  the  courts  of  the  Member  State  of  the  principal  tax  authority 
within 60 days of the receipt of the decision of the administrative appeals body. 

Where the decision is annulled, the administrative body shall remit the matter to the 
principal tax authority, which shall take a new decision within 60 days of the date on 
which the decision of the administrative body is notified to it. The principal taxpayer 
may appeal against any such new decision either pursuant to paragraph 1 or directly 
to  the  courts  of  the  Member  State  of  the  principal  tax  authority  within  60  days  of 
receipt  of  the  decision.  If  the  principal  tax  authority  does  not  take  a  new  decision 
within 60 days, the principal taxpayer may appeal against the original decision of the 
principal  tax  authority  before  the  courts  of  the  Member  State  of  the  principal  tax 
authority. 

Article 126 
Judicial appeals 

A judicial appeal against a decision of the principal tax authority shall be governed 
by the law of the Member State of that principal tax authority, subject to paragraph 3. 

In  making  submissions  to  the  courts,  the  principal  tax  authority  shall  act  in  close 
consultation with the other competent authorities. 

A  national  court  may,  where  appropriate,  order  evidence  to  be  provided  by  the 
principal  taxpayer  and  the  principal  tax  authority  on  the  fiscal  affairs  of  the  group 
members and other associated enterprises and on the law and practices of the other 
Member  States  concerned.  The  competent  authorities  of  the  other  Member  States 
concerned shall provide all necessary assistance to the principal tax authority. 

CHAPTER XVIII 

FINAL PROVISIONS 

Article 127 
Exercise of the delegation 

The  power  to  adopt  delegated  acts  referred  to  in  Articles  2, 14,  34  and  42  shall  be 
conferred on the Commission for an indeterminate period of time. 

As soon as the Commission adopts a delegated act, it shall notify it to the Council. 

The  power  to  adopt  delegated  acts  is  conferred  on  the  Commission  subject  to  the 
conditions laid down in Articles 128, 129 and 130. 

EN 

64 

   EN 

 
1. 

2. 

1. 

2. 

Article 128 
Revocation of the delegation 

The delegation of powers referred to in Articles 2, 14, 34 and 42 may be revoked at 
any time by the Council. 

The decision of revocation shall put an end to the delegation of the powers specified 
in that decision. It shall take effect immediately or at a later date specified therein. It 
shall  not  affect  the  validity  of  the  delegated  acts  already  in  force.  It  shall  be 
published in the Official Journal of the European Union. 

Article 129 
Objection to delegated acts 

The Council may object to a delegated act within a period of three months from the 
date of notification.  

If, on the expiry of this period, the Council has not objected to the delegated act, it 
shall be published in the Official Journal of the European Union and shall enter into 
force on the date stated therein.  

The  delegated act may be  published  in the Official Journal  of the  European  Union 
and enter into force before the expiry of that period if the Council has informed the 
Commission of its intention not to raise objections. 

3. 

If  the  Council  objects  to  a  delegated  act,  it  shall  not  enter  into  force.  The  Council 
shall state the reasons for objecting to the delegated act. 

Article 130 
Informing the European Parliament 

The  European  Parliament  shall  be  informed  of  the  adoption  of  delegated  acts  by  the 
Commission  of  any  objection  formulated  to  them,  or  the  revocation  of  the  delegation  of 
powers by the Council. 

Article 131 
Committee 

1. 

2. 

The  Commission  shall  be  assisted  by  a  Committee.  That  committee  shall  be  a 
committee within the meaning of Regulation (EU) No 182/201122. 

Where  reference  is  made  to  this  paragraph,  Article  5  of  Regulation  (EU)  No 
182/2011 shall apply. 

22 

OJ L 55, 28.2.2011, p. 13. 

EN 

65 

   EN 

                                                 
Article 132 
Consultations on Article 87 

The Committee established by Article 131 may also discuss the application of Article 87 in a 
given case. 

Article 133 
Review 

The  Commission  shall,  five  years  after  the  entry  into  force  of  this  Directive,  review  its 
application  and  report  to  the  Council  on  the  operation  of  this  Directive.  The  report  shall  in 
particular include an analysis of the impact of the mechanism set up in Chapter XVI of this 
Directive on the distribution of the tax bases between the Member States. 

Article 134 
Transposition 

1. 

Member States shall adopt and publish, by [date] at the latest, the laws, regulations 
and  administrative  provisions  necessary  to  comply  with  this  Directive.  They  shall 
forthwith  communicate  to  the  Commission  the  text  of  those  provisions  and  a 
correlation table between those provisions and this Directive. 

They shall apply those provisions from […]. 

When  Member  States  adopt  those  provisions,  they  shall  contain  a  reference  to  this 
Directive  or  shall  be  accompanied  by  such  a  reference  on  the  occasion  of  their 
official publication. 

2. 

Member  States  shall  communicate  to  the  Commission  the  text  of  the  provisions  of 
national law which they adopt in the field covered by this Directive. 

Article 135 
Entry into force 

This  Directive  shall  enter  into  force  on  the  […]  day  following  that  of  its  publication  in  the 
Official Journal of the European Union. 

Article 136 
Addressees 

This Directive is addressed to the Member States. 

Done at Brussels, 

EN 

For the Council 
The President 

66 

   EN 

 
 
ANNEXES 

ANNEX I 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

The  European  company  or  Societas  Europaea  (SE),  as  established  in  Council 
Regulation  (EC)  No  2157/2001  of  8  October  2001  on  the  Statute  for  a  European 
(SE)23  and  Council  Directive  2001/86/EC  of  8  October  2001 
company 
supplementing the Statute for a European company with regard to the involvement of 
employees,24  

The European Cooperative Society (SCE), as established in Council Regulation (EC) 
No  1435/2003  of  22  July  2003  on  the  European  Cooperative  Society  (SCE)25  and 
Council  Directive  2003/72/EC  of  22  July  2003  supplementing  the  Statute  for  a 
European Cooperative Society with regard to the involvement of employees,26. 

aansprakelijkheid” 

law  known  as  “société  anonyme”/“naamloze 
companies  under  Belgian 
vennootschap”,  “société  en  commandite  par  actions”/“commanditaire  vennootschap 
op  aandelen”,  “société  privée  à  responsabilité  limitée”/“besloten  vennootschap  met 
responsabilité 
beperkte 
limitée”/“coöperatieve  vennootschap  met  beperkte  aansprakelijkheid”,  “société 
coopérative  à  responsabilité  illimitée”/“coöperatieve  vennootschap  met  onbeperkte 
aansprakelijkheid”, “société en nom collectif”/“vennootschap onder firma”, “société 
simple”/  “gewone  commanditaire  vennootschap”,  public 
en  commandite 
undertakings which have adopted one of the abovementioned legal forms, and other 
companies constituted under Belgian law subject to the Belgian Corporate Tax; 

coopérative 

“société 

à 

law  known  as:  “събирателното  дружество”, 
companies  under  Bulgarian 
“командитното  дружество”,  “дружеството  с  ограничена  отговорност”, 
“акционерното 
акции”, 
“кооперации”,“кооперативни  съюзи”,  “държавни  предприятия”  constituted 
under Bulgarian law and carrying on commercial activities; 

“командитното 

дружество”, 

дружество 

с 

companies under Czech law known as: “akciová společnost”, “společnost s ručením 
omezeným”, “veřejná obchodní společnost”, “komanditní společnost”, “družstvo”; 

companies  under  Danish  law  known  as  “aktieselskab”  and  “anpartsselskab”.  Other 
companies  subject  to  tax  under  the  Corporation  Tax  Act,  in  so  far  as  their  taxable 
income  is  calculated  and  taxed  in  accordance  with  the  general  tax  legislation  rules 
applicable to “aktieselskaber”;  

under 

German 

companies 
“Aktiengesellschaft”, 
“Kommanditgesellschaft  auf  Aktien”,  “Gesellschaft  mit  beschränkter  Haftung”, 
“Versicherungsverein 
und 
Wirtschaftsgenossenschaft”,  “Betriebe  gewerblicher  Art  von  juristischen  Personen 

Gegenseitigkeit”, 

“Erwerbs- 

known 

law 

auf 

as 

23 
24 
25 
26 

OJ L 294, 10.11.2001, p. 1. 
OJ L 294, 10.11.2001, p. 22. 
OJ L 207, 18.8.2003, p. 1. 
OJ L 207, 18.8.2003, p. 25. 

EN 

67 

   EN 

                                                 
(h) 

(i) 

(j) 

(k) 

(l) 

(m) 

(n) 

(o) 

(p) 

(q) 

des öffentlichen Rechts”, and other companies constituted under German law subject 
to German corporate tax; 

companies  under  Estonian  law  known  as:  “täisühing”,  “usaldusühing”,  “osaühing”, 
“aktsiaselts”, “tulundusühistu”; 

companies under Greek law known as "αvώvυµη εταιρεία", "εταιρεία περιωρισµέvης 
ευθύvης (Ε.Π.Ε.)"; 

companies under Spanish law known as “sociedad anónima”, “sociedad comanditaria 
por  acciones”,  “sociedad  de  responsabilidad  limitada”,  and  those  public  law  bodies 
which operate under private law; 

companies under French law known as “société anonyme”, “société en commandite 
par  actions”,  “société  à  responsabilité  limitée”,  “sociétés  par  actions  simplifiées”, 
“sociétés  d’assurances  mutuelles”,  “caisses  d’épargne  et  de  prévoyance”,  “sociétés 
civiles” which are automatically subject to corporation tax, “coopératives”, “unions 
de coopératives”, industrial and commercial public establishments and undertakings, 
and  other  companies  constituted  under  French  law  subject  to  the  French  Corporate 
Tax; 

companies  incorporated  or  existing  under  Irish  laws,  bodies  registered  under  the 
Industrial  and  Provident  Societies  Act,  building  societies  incorporated  under  the 
Building Societies Acts and trustee savings banks within the meaning of the Trustee 
Savings Banks Act, 1989; 

companies under Italian law known as “società per azioni”, “società in accomandita 
per  azioni”,  “società  a  responsabilità  limitata”,  “società  cooperative”,  “società  di 
mutua  assicurazione”,  and  private  and  public  entities  whose  activity  is  wholly  or 
principally commercial; 

under Cypriot law: “εταιρείες” as defined in the Income Tax laws;  

companies  under  Latvian  law  known  as:  “akciju  sabiedrība”,  “sabiedrība  ar 
ierobežotu atbildību”; 

companies incorporated under the law of Lithuania; 

companies  under  Luxembourg  law  known  as  “société  anonyme”,  “société  en 
commandite  par  actions”,  “société  à  responsabilité  limitée”,  “société  coopérative”, 
“société  coopérative  organisée  comme  une  société  anonyme”,  “association 
d’assurances  mutuelles”,  “association  d’épargne-pension”,  “entreprise  de  nature 
commerciale,  industrielle  ou  minière  de  l’État,  des  communes,  des  syndicats  de 
communes,  des  établissements  publics  et  des  autres  personnes  morales  de  droit 
public”,  and  other  companies  constituted  under  Luxembourg  law  subject  to  the 
Luxembourg Corporate Tax; 

(r) 

companies under Hungarian law known as: “közkereseti társaság”, “betéti társaság”, 
“közös  vállalat”,  “korlátolt  felelősségű  társaság”,  “részvénytársaság”,  “egyesülés”, 
“közhasznú társaság”, “szövetkezet”; 

EN 

68 

   EN 

(s) 

(t) 

(u) 

(v) 

(w) 

(x) 

(y) 

(z) 

(aa) 

companies  under  Maltese  law  known  as:  “Kumpaniji  ta’  Responsabilita  Limitata”, 
“Soċjetajiet en commandite li l-kapital tagħhom maqsum f’azzjonijiet”; 

beperkte 

companies  under  Dutch  law  known  as  “naamloze  vennootschap”,  “besloten 
vennootschap  met 
commanditaire 
vennootschap”,  “Coöperatie”,  “onderlinge  waarborgmaatschappij”,  “Fonds  voor 
gemene  rekening”,  “vereniging  op  coöperatieve  grondslag”  and  “vereniging  welke 
op  onderlinge  grondslag  als  verzekeraar  of  kredietinstelling  optreedt”,  and  other 
companies constituted under Dutch law subject to the Dutch Corporate Tax; 

aansprakelijkheid”, 

“Open 

companies  under  Austrian  law  known  as  "Aktiengesellschaft",  "Gesellschaft  mit 
beschränkter  Haftung",  "Versicherungsvereine  auf  Gegenseitigkeit",  "Erwerbs  und 
Wirtschaftsgenossenschaften",  "Betriebe  gewerblicher  Art  von  Körperschaften  des 
öffentlichen Rechts", "Sparkassen", and other companies constituted under Austrian 
law subject to Austrian corporate tax; 

companies  under  Polish  law  known  as:  “spółka  akcyjna”,  “spółka  z  ograniczoną 
odpowiedzialnością”, “spółdzielnia“, “przedsiębiorstwo państwowe“; 

commercial  companies  or  civil  law  companies  having  a  commercial  form, 
cooperatives  and  public  undertakings  incorporated  in  accordance  with  Portuguese 
law; 

companies  under  Romanian  law  known  as:  “societăţi  pe  acţiuni”,  “societăţi  în 
comandită pe acţiuni”, “societăţi cu răspundere limitată; 

companies under Slovenian law known as: "delniška družba", "komanditna delniška 
družba",  "komanditna  družba",  "družba  z  omejeno  odgovornostjo",  "družba  z 
neomejeno odgovornostjo"; 

companies  under  Slovak  law  known  as:  “akciová  spoločnosť  ”,  “spoločnosť  s 
ručením obmedzeným”, “komanditná spoločnosť ”, “verejná obchodná spoločnosť“, 
“družstvo“; 

under 

companies 
“osuuskunta”/“andelslag”, 
“vakuutusyhtiö”/“försäkringsbolag”; 

Finnish 

law 

known 

as 
“säästöpankki”/“sparbank” 

“osakeyhtiö”/“aktiebolag”, 
and 

(bb) 

companies  under  Swedish  law  known  as  “aktiebolag”,  “försäkringsaktiebolag”, 
“ekonomiska föreningar”, “sparbanker”, “ömsesidiga försäkringsbolag”; 

(cc) 

companies incorporated under the law of the United Kingdom. 

EN 

69 

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ANNEX II 

Belgien / Belgique 

impôt des sociétés/vennootschapsbelasting 

България 

корпоративен данък 

Česká republika 

Daň z příjmů právnických osob 

Danmark 

selskabsskat 

Deutschland 

Körperschaftsteuer 

Eesti 

Tulumaks 

Éire/Ireland 

Corporation Tax 

Ελλάδα 

Φόρος εισοδήµατος νοµικών προσώπων κερδοσκοπικού χαρακτήρα 

España 

Impuesto sobre sociedades 

France 

Ιmpôt sur les sociétés 

Italia 

Imposta sul reddito delle società 

Κύπρος 

Φόρος Εισοδήµατος 

Latvija 

uzņēmumu ienākuma nodoklis 

Lietuva 

pelno mokestis 

EN 

70 

   EN 

Luxembourg 

impôt sur le revenu des collectivités 

Magyarország 

Társasági adó 

Malta 

Taxxa fuq l-income 

Nederland 

vennootschapsbelasting 

Österreich 

Körperschaftsteuer 

Polska 

Podatek dochodowy od osób prawnych 

Portugal 

imposto sobre o rendimento das pessoas colectivas 

România 

impozit pe profit 

Slovenija 

Davek od dobička pravnih oseb 

Slovensko 

Daň z príjmov právnických osôb 

Suomi/Finland 

yhteisöjen tulovero/inkomstskatten för samfund 

Sverige 

statlig inkomstskatt 

United Kingdom 

Corporation Tax 

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ANNEX III 

List of non-deductible taxes under Article 14 

Belgien/Belgique 

Droits d'enregistrement – Registratierechten 

България 

None 

Česká republika 

None 

Danmark 

Registreringsafgift af motorkøretøjer 

Kommunal grundskyld 

Kulbrinteskat 

Deutschland 

Grunderwerbsteuer 

Grundsteuer B 

Gewerbesteuerumlage 

Versicherungsteuer 

Eesti 

None 

Éire/Ireland 

Stamp Duties 

Vehicle Registration Tax 

Residential Property Tax 

Ελλάδα 

Φόρος Μεταβίβασης Ακινήτων 

EN 

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España 

Impuesto sobre Bienes Inmuebles (IBI) / Recargo sobre el IBI 

Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados 

France 

Foncier bati 

Taxe professionnelle 

Taxe sur les salaires 

Taxe d'habitation 

Italia 

Imposta comunale sugli immobili (ICI) - Fabbricati 

Imposta regionale sulle attività produttive (IRAP) – (employers' split) 

Κύπρος 

Taxes on Holding Gains 

Latvija 

None 

Lietuva 

None 

Luxembourg 

Taxe d'abonnement sur les titres de société 

Impôt commercial communal 

Magyarország 

Különadó 

Helyi iparűzésiadó 

Malta 

Taxes on Holding Gains 

EN 

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Nederland 

Overdrachtsbelasting 

Overige productgebonden belastingen neg - (energy split) 

Österreich 

Kommunalsteuer 

Polska 

Podatek od nieruchomości 

Portugal 

None 

România 

None 

Slovenija 

Davek na izplačane plače 

Slovensko 

None 

Suomi/Finland 

None 

Sverige 

Fastighetsskatt 

Allmän löneavgift 

Särskild löneskatt 

United Kingdom 

National Non-Domestic Rates from Businesses 

Capital Levies 

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LEGISLATIVE FINANCIAL STATEMENT FOR PROPOSALS 

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1.  Title of the proposal/initiative  

1.2.  Policy area(s) concerned in the ABM/ABB structure 

1.3.  Nature of the proposal/initiative  

1.4.  Objective(s)  

1.5.  Grounds for the proposal/initiative  

1.6.  Duration and financial impact  

1.7.  Management method(s) envisaged  

2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

2.2.  Management and control system  

2.3.  Measures to prevent fraud and irregularities  

3. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

3.1.  Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget  line(s) 
affected  

3.2.  Estimated impact on expenditure  

3.2.1. Summary of estimated impact on expenditure  

3.2.2. Estimated impact on operational appropriations  

3.2.3. Estimated impact on appropriations of an administrative nature 

3.2.4. Compatibility with the current multiannual financial framework 

3.2.5. Third-party participation in financing  

3.3.  Estimated impact on revenue

EN 

75 

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LEGISLATIVE FINANCIAL STATEMENT FOR PROPOSALS 

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1. 

Title of the proposal/initiative  

Legislative proposal for a Common Consolidated Corporate Tax Base (CCCTB) 

1.2. 

Policy area(s) concerned in the ABM/ABB structure27  

Taxation Policy (ABB05) 

1.3. 

Nature of the proposal/initiative  

X The proposal/initiative relates to a new action  

(cid:133) The proposal/initiative relates to a new action following a pilot project/preparatory action28  

(cid:133) The proposal/initiative relates to the extension of an existing action  

(cid:133) The proposal/initiative relates to an action redirected towards a new action  

1.4. 

Objectives 

1.4.1.  The Commission's multiannual strategic objective(s) targeted by the proposal/initiative  

The  CCCTB  will  contribute  to  the  re-launching  of  the  single  market  and  the  Europe  2020 
flagship  initiative  on  the  Industrial  Policy  and  contributes  to  the  achievement  of  the  broad 
objectives for the Union's industrial policy, as set out in Europe 2020'. 

The  CCCTB  is  a  tax  policy  measure  at  the  simplification  of  tax  rules,  the  reduction  of 
compliance cost and the removal of tax obstacles for companies operating cross-border. 

1.4.2. 

Specific objective(s) and ABM/ABB activity(ies) concerned  

Specific objective No. 

Objective 2: To reduce administrative cost and to tackle tax obstacles in the Internal Market 

ABM/ABB activities concerned 

Tax Policy (ABB05) 

27 
28 

ABM: Activity-Based Management – ABB: Activity-Based Budgeting. 
As referred to in Article 49(6)(a) or (b) of the Financial Regulation. 

EN 

76 

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1.4.3.  Expected result(s) and impact 

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted. 

To provide companies with the option to apply a common system for taxation in the union (a 
common and consolidated tax base for the determination of the corporate profits) 

Introduce a one-stop shop approach for tax declarations and assessment 

Allow cross-border loss-offset 

Reduce transfer pricing compliance obligations 

Reduce occurrences of double or over taxation 

Reduce  undue  or  unintended  tax  planning  opportunities  for  companies  by  the  parallel 
application of 27 corporate tax systems in the Union 

1.4.4. 

Indicators of results and impact  

Specify the indicators for monitoring implementation of the proposal/initiative. 

Complete and appropriate implementation of the CCCTB Directive by the Member States 

Proper application of the CCCTB provisions in practice 

1.5. 

Grounds for the proposal/initiative  

1.5.1.  Requirement(s) to be met in the short or long term  

Adoption  of  the  CCCTB  as  included  in  the  Commission  work  plan  for  2011  (as  a  flagship 
initiative) and according to the timeline in the published roadmap by 31.3.2011 

1.5.2.  Added value of EU involvement 

The introduction of a common consolidated corporate tax base in 27 Member States cannot be 
achieved by unilateral (domestic) or bilateral (cross-border) measures and agreements between 
Member States. 

1.5.3.  Lessons learned from similar experiences in the past 

The  introduction  of  a  comprehensive  and  complex  set  of  rules  and  provisions  to  facilitate 
cross-border trade and investments and abolish tax obstacles (e.g. over taxation or lack of loss-
offset) in the internal market is difficult task due to the unanimity requirement for legislative 
proposals in direct taxation. Similar proposals in the past which mainly proposed mandatory 
implementation  and  application  by  Member  State  did  not  meet  willingness  for  a  political 
discussion or were found acceptable in Council. 

The  CCCTB  proposal  is  built  upon  an  optional  and  well  prepared  approach  (studies,  expert 
working group meetings, public consultations) over a period of nearly nine years. 

EN 

77 

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1.5.4.  Coherence and possible synergy with other relevant instruments 

It is a secondary legislative proposal which can stand alone, but there are close links to other 
tax policy initiatives in the company tax area such as the work of the Code of Conduct Group 
and  more  specific  measures  (e.  g.  corporate  tax  Directives  targeted  to  deal  with  specific 
matters and coordination initiatives). 

1.6. 

Duration and financial impact  

(cid:133) Proposal/initiative of limited duration  

–  (cid:133)  Proposal/initiative in effect from [DD/MM]YYYY to [DD/MM]YYYY  

–  (cid:133)  Financial impact from YYYY to YYYY  

X Proposal/initiative of unlimited duration 

–  Implementation with a start-up period from 2011 to 2015, 

–  followed by full-scale operation. 

1.7.  Management mode(s) envisaged29  

(cid:133) Centralised direct management by the Commission  

(cid:133) Centralised indirect management with the delegation of implementation tasks to: 

–  (cid:133)  executive agencies  

–  (cid:133)  bodies set up by the Communities30  

–  (cid:133)  national public-sector bodies/bodies with public-service mission  

–  (cid:133)  persons entrusted with the implementation of specific actions pursuant to Title V of the 
Treaty  on  European  Union  and  identified  in  the  relevant  basic  act  within  the  meaning  of 
Article 49 of the Financial Regulation  

X Shared management with the Member States  

(cid:133) Decentralised management with third countries  

(cid:133) Joint management with international organisations (to be specified) 

If more than one management mode is indicated, please provide details in the "Comments" section. 

Comments  

29 

30 

Details  of  management  modes  and  references  to  the  Financial  Regulation  may  be  found  on  the  BudgWeb  site: 
http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html 
As referred to in Article 185 of the Financial Regulation. 

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After adoption in Council it is the responsibility of the Member States to properly implement and apply 
the rules and provisions of the CCCTB Directive. 

The Commission services have to monitor and closely follow the developments in the area of corporate 
taxation and any possible problems encountered in the field of the CCCTB. 

EN 

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2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

Specify frequency and conditions. 

It is the general approach in tax legislation to demand correlation tables from Member States. 

Member  States  have  to  communicate  to  the  Commission  the  text  of  the  main  provisions  of 
national law which they adopt in the field covered by this Directive. 

2.2.  Management and control system  

2.2.1.  Risk(s) identified  

An  implementation  risk  plan  for  the  CCCTB  Directive  has  been  prepared  and  is  attached  to 
the CIS-Net Consultation. 

2.2.2.  Control method(s) envisaged  

General approach for legislation proposals in the tax area. 

2.3.  Measures to prevent fraud and irregularities  

Specify existing or envisaged prevention and protection measures. 

Not applicable at EU level for this proposal. 

EN 

80 

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3. 

3.1. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget 
line(s) affected  

NONE 

3.2. 

Estimated impact on expenditure 

3.2.1. 

Summary of estimated impact on expenditure  

NONE 

3.2.2.  Estimated impact on operational appropriations  

–  X  The proposal/initiative does not require the use of operational appropriations  

–  (cid:133)  The  proposal/initiative  requires  the  use  of  operational  appropriations,  as 

explained below: 

3.2.3.  Estimated impact on appropriations of an administrative nature 

3.2.3.1.  Summary  

–  (cid:133)  The  proposal/initiative  does  not 

require 

the  use  of  administrative 

appropriations  

–  X  The  proposal/initiative  requires  the  use  of  administrative  appropriations,  as 

explained below: 

EUR million (to 3 decimal places) 

Year 
2016 

Year 
2017 

Year 
2018 

Year 
2019 

2020 to 2022 

TOTAL 

HEADING 5 
of the multiannual 
financial framework 

Human resources  

Other  administrative 
expenditure  

Subtotal HEADING 5 
of the multiannual 
financial framework  

0.250 

0.250 

0.250 

0.250 

0.250 

0.250 

0.250 

1.75 

0.250 

0.250 

0.250 

0.250 

0.250 

0.250 

0.250 

1.75 

EN 

81 

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Outside HEADING 531 
of the multiannual 
financial framework  

Human resources  

expenditure  
Other 
of  an  administrative 
nature 

Subtotal  
outside HEADING 5 
of the multiannual 
financial framework  

TOTAL 

0.250 

0.250 

0.250 

0.250 

0.250 

0.250 

0.250 

1.75

3.2.3.2.  Estimated requirements of human resources  

–  X  The proposal/initiative does not require the use of human resources  

–  (cid:133)  The  proposal/initiative  requires  the  use  of  human  resources,  as  explained 

below: 

Estimate to be expressed in full amounts (or at most to one decimal place) 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

… enter as many years as 
necessary to show the 
duration of the impact 
(see point 1.6) 

(cid:121) Establishment plan posts (officials and temporary agents) 

XX 01 01 01 (Headquarters and Commission’s 
Representation Offices) 

XX 01 01 02 (Delegations) 

XX 01 05 01 (Indirect research) 

10 01 05 01 (Direct research) 

(cid:121) External personnel (in Full Time Equivalent unit: FTE)32 

XX 01 02 01 (CA, INT, SNE from the "global 
envelope") 

XX 01 02 02 (CA, INT, JED, LA and SNE in 
the delegations) 

XX 01 04 yy 33 

- at Headquarters34 

- in delegations  

31 

32 

33 
34 

Technical  and/or  administrative  assistance  and  expenditure  in  support  of  the  implementation  of  EU 
programmes and/or actions (former "BA" lines), indirect research, direct research. 
CA= Contract Agent; INT= agency staff ("Intérimaire"); JED= "Jeune Expert en Délégation" (Young 
Experts in Delegations); LA= Local Agent; SNE= Seconded National Expert. 
Under the ceiling for external personnel from operational appropriations (former "BA" lines). 
Essentially  for  Structural  Funds,  European  Agricultural  Fund  for  Rural  Development  (EAFRD)  and 
European Fisheries Fund (EFF). 

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XX 01 05 02 (CA, INT, SNE - Indirect 
research) 

10 01 05 02 (CA, INT, SNE - Direct research) 

Other budget lines (specify) 

TOTAL 

XX is the policy area or budget title concerned. 

The human resources required will be met by staff from the DG who are already assigned to 
management of the action and/or have been redeployed within the DG, together if necessary 
with any additional allocation which may be granted to the managing DG under the annual 
allocation procedure and in the light of budgetary constraints. 

Description of tasks to be carried out: 

Officials and temporary agents 

The  staff  currently  assigned  to  the  Unit  TAXUD  D1  will  be  charge  of  the  proposal 
until adoption in Council in line with the tasks described in the mission statement for 
the unit.  

External personnel 

As for officials and temporary agents 

3.2.4.  Compatibility with the current multiannual financial framework 

–  X  Proposal/initiative is compatible the current multiannual financial framework. 

–  (cid:133)  Proposal/initiative  will  entail  reprogramming  of  the  relevant  heading  in  the 

multiannual financial framework. 

Explain what reprogramming is required, specifying the budget lines concerned and the corresponding 
amounts. 

–  (cid:133)  Proposal/initiative requires application of the flexibility instrument or revision 

of the multiannual financial framework35. 

Explain what is required, specifying the headings and budget lines concerned and the corresponding 
amounts. 

3.2.5.  Third-party contributions  

–  X The proposal/initiative does not provide for co-financing by third parties  

–  The proposal/initiative provides for the co-financing estimated below: 

Appropriations in EUR million (to 3 decimal places) 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

… enter as many years as 
necessary to show the duration 
of the impact (see point 1.6) 

Total 

Specify  the  co-financing 
body  

35 

See points 19 and 24 of the Interinstitutional Agreement. 

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TOTAL appropriations 
cofinanced  

3.3. 

Estimated impact on revenue  

–  X  Proposal/initiative has no financial impact on revenue. 

–  (cid:133)  Proposal/initiative has the following financial impact: 

– 

– 

(cid:133) 

(cid:133) 

on own resources 

on miscellaneous revenue 

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