COMMISSION STAFF WORKING DOCUMENT IMPLEMENTATION PLAN Accompanying the document Proposal for a Council Directive amending Directive 2011/96/EU on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States
Date: 2013-11-25
Institutions: European Commission
Subjects: EU Member State, corporation tax, cross-border cooperation, parent company, tax on profits of self-employment, tax system













EUR-Lex - 52013SC0475 - EN











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52013SC0475

COMMISSION STAFF WORKING DOCUMENT IMPLEMENTATION PLAN Accompanying the document Proposal for a Council Directive amending Directive 2011/96/EU on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States /* SWD/2013/0475 final */









COMMISSION STAFF WORKING DOCUMENT
IMPLEMENTATION PLAN
Accompanying the document
Proposal for a Council Directive
amending Directive 2011/96/EU on
the common system of taxation applicable in the case of parent companies and
subsidiaries of different Member States
1.  Contact point:  
Uwe Ihli
Telephone +32 229 67829
Email: Uwe.Ihli@ec.europa.eu
Claudia Barsotti
Telephone + 32 229 66803
Email: Claudia.Barsotti@ec.europa.eu
2.  Deliverables and implementation
challenges
The original Directive was due to be
implemented by 31 December 1991 and the latest changes were due for
implementation by 1 January 2007. In principle, the amendments should not give
rise to significant difficulties as the Member States are already applying its
benefits. The amendments are only minor. Firstly, the benefits of the tax
exemption for parent companies should be denied to distributions of profits
that are deductible in the source Member State and the profits should be taxed
at the level of the parent company in order to tackle hybrid financial
mismatches. Secondly, all Member States should implement a common anti-abuse
provision.
Technical
challenges 
a.    Risk for
the Member States of not being in a position to implement timely and correctly the amendments to the Directive.
This risk is associated with the process that Member
States have to follow for the purpose of properly transposing the amendments
into national law.
b.    Risks relating to business involve insufficiently informing companies and business organisations about the discussions on the proposal in Council and the final
agreed text.
At first glance it might appear that in
the first few years after the adoption of the proposal by the Commission
businesses will be less involved and less concerned than tax administrations.
However, businesses need to be informed about how the proposal is progressing
(future rules, approaches accepted, solutions discussed and agreed upon) to allow
them to prepare properly for the eventual transition from the application of
domestic and treaty based provisions to an EU wide system. 
Compliance
challenges: 
a.    Risk for
the Member States of
not being in a position to administer properly the amendments to the tax
directive.
Ensuring that the amendments are properly
applied requires experienced national tax administrations. Knowledge of the
provisions and supporting guidelines relating to cross-border exemptions are
the prerequisites for a proper application of the Directive by tax authorities.
All actors are well aware of these
requirements and it is also commonly understood that the main responsibilities
for and tasks associated with the proper preparation of the tax inspectors and
officials involved rest with the Member States. The amendments will not change
existing administrative structures or impose common administrative systems on
the Member States. The supporting efforts required by the amendments can
therefore be only be minor.
The main administrative issue seems to be
whether Member States are sufficiently able to identity whether the 'profit
distributions' are deducted in the source state.
Policy
challenges:
a.    Internal risks - Risk of not taking into consideration other tax policies
Over the past 18 months, taxation of
international companies has been in the public and political spotlight. The
general public no longer accepts that some internationally active businesses do
not proportionally contribute to the need for fiscal consolidation. They escape
their perceived - and sometimes legal - duties by exploiting cross-border
mismatches, by choosing to locate activities and functions where taxes are
lowest and by benefitting from the fact that international rules have not kept
pace with the modern way of doing business and by the arising of new digital
business models.
Many of the present problems in
international company tax, however, concern deficiencies in international tax
rules and global standards. They therefore require solutions that go beyond the
borders of the EU. On request of the G20, the OECD on 19 July 2013 presented an
Action Plan on Base Erosion and Profit Shifting (BEPS) which was prepared and
agreed also with all non-OECD G20 countries. It addresses several deficiencies
in the existing international tax rules and standards, which are exploited to
erode the tax base in high tax countries and to shift the tax base to reduce
the overall tax bill. 
The amendments proposed are fully in line
with the developments in the international tax world. However, there is a need
to follow the BEPS project closely in order to ensure coherence between the
developments in the EU and on a global level.
3. 
Support Actions
Possible
Commission Actions:
Technical
challenges 
a.    Risk
relating to Member States - Risk of not being in a position to implement timely
and correctly the amendments to the Directive.
With only two new provisions, it does not seem
necessary to take any particular action. In any case, the Commission
departments will have to check that Member States transpose the amendments into
their national tax systems and that they apply its rules.
b.    Risk relating to business - Risk relating to
business involves insufficiently informing companies and business organisations
about the discussions on the proposal in Council and the final agreed text.
To neutralise the above risk, the Commission
departments intend to be as transparent as possible on any developments
throughout the discussion and negotiation period in Council.
Compliance challenges: 
a.    Risk for the Member States of not
being in a position to administer properly the amendments to the tax directive.
To neutralise the above risk, the Commission
departments may consider:
-      supporting initiatives to identify
where mismatches occur (development of best practices, Fiscalis training,
working group meeting (WPIV) and implementation studies);
-      actively participating in bilateral
or multilateral meetings, seminars, conferences and other fora with
representatives of the tax authorities; 
-      supporting training initiatives in
the Member States (under Fiscalis, participation in conferences, through the
drafting and publication of guidance notes).
Policy challenges:
a.    Internal risks - Risk of not taking into
consideration other tax policies
To neutralise the above risk, the Commission
departments will continue to monitor – and if possible influence - the tax
framework in the area of International taxation (OECD/G20s BEPS project). 
Possible Member State Actions:
Technical
challenges 
a.    Risk
relating to Member States - Risk of not being in a position to implement timely
and correctly the amendments to the Directive.
·        
Ensuring there is a
network responsible for the implementation phase in Member States
·        
Informing  the
Commission about any potential problems related to implementation as soon as
they are identified
Compliance challenges: 
a.    Risk for the Member States of not
being in a position to administer properly the amendments to the tax directive.
·        
Sharing information
related to administration of amendments
·        
Awareness-raising
among the target groups