CELEX: 51984PC0404
Language: en
Date: 1984-09-06
Title: PROPOSAL FOR A DIRECTIVE OF THE COUNCIL ON THE HARMONIZATION OF THE LAWS OF THE MEMBER STATES RELATING TO TAX ARRANGEMENTS FOR THE CARRY-OVER OF LOSSES OF UNDERTAKINGS

20.9.84                               Official Journal of the European Communities                            N o C 253/5
                                                              II
                                                      (Preparatory Acts)
                                                COMMISSION
              Proposal for a Council Directive on the harmonization of the laws of the Member States
                        relating to tax arrangements for the carry-over of losses of undertakings
                                                     COM(84) 404 final
                          (Submitted by the Commission to the Council, on 11 September 1984)
                                                       (84/C 253/05)
 THE COUNCIL OF THE EUROPEAN                                       for budgetary reasons carry-back of losses to earlier
 COMMUNITIES,                                                     years should be limited to the two preceding years;
 Having regard to the Treaty establishing the                     Whereas, in the case of a corporation tax system
 European Economic Community, and in particular                   allowing a tax credit on distributed profits, the refund
 Article 100 thereof,                                             of taxation, in the case of the offsetting of losses
                                                                  against such profits, should be reduced by an amount
 Having regard to the proposal from the Commission,
                                                                  corresponding to the credit granted so as to place an
                                                                  obligation on a State to refund a higher amount of
 Having regard to the opinion of the European
                                                                  taxation than it has actually collected;
 Parliament,
 Having regard to the opinion of the Economic and                 Whereas it is necessary to leave undertakings free to
 Social Committee,                                                choose the order in which losses are carried over;
                                                                  whereas it is, moreover, necessary to permit them in
Whereas as regards taxation, the approximation of                 the case of carry-back to previous years to limit that
tax burdens on undertakings constitutes, principally              carry-back to non-distributed profits and to permit
for reasons of competition, one of the fundamental                them to exclude from the set-off profis exempted
 objectives of the Community; whereas that approxi-               from taxation or taxed at a reduced rate;
mation implies, in addition to the harmonization of
systems of company taxation and of the rates of such              Whereas, when different rates are applied to different
taxation, the harmonization of the rules governing                categories of profits, it is necessary to leave to
the tax base, that is to say the rules for the determi-           Member States the power to provide for the offsetting
nation of the taxable profits of undertakings;                    of losses category by category, on condition that such
                                                                  a rule does not lead to undue delay in the offsetting
Whereas in the matter of the rules governing the tax              of a loss against a later profit;
base, those relating to the carry-over of losses are of
special importance because they affect the investment
                                                                 Whereas provisions regarding the carry-over of losses
capacity and competitiveness of undertakings;
                                                                  must not lead to fraud or abuse on the part of under-
whereas the improvement of the position of
                                                                  takings,
Community undertakings in this regard is a high-
priority objective in the present economic situation;
Whereas, from the technical point of view, har-                   HAS ADOPTED THIS DIRECTTVE:
monization of the rules governing the carry-over of
losses can be achieved immediately and independently
                                                                                           Article 1
of those governing other aspects of the tax base;
Whereas, to attain the desired objective, the rules               1.    The Member States shall adopt, in accordance
governing the carry-over of losses must be as liberal            with the following articles, the tax arrangements for
as possible; whereas in this spirit, the carry-over of           the carry-over of the losses of undertakings which are
losses from one financial year must be possible not              subject to one of the taxes listed in paragraph 2, in so
only to later but also to earlier years in such a way as         far as they draw up for tax purposes, in accordance
to allow undertakings to obtain a refund of tax;                 with conditions laid down by national law, annual
whereas no time limit would appear to be justified in            accounts consisting of a balance sheet and a profit
the case of carry-forward of losses to later years but           and loss account.
 ---pagebreak--- N o C 253/6                         Official Journal of the European Communities                                20.9.84
2.    The taxes referred to in paragraph 1 are the             possible set-off against other income in accordance
following:                                                     with the tax rules of the State in which it is subject to
— for Belgium:                                                 tax, no account being taken of results recorded
                                                               abroad by permanent establishments or subsidiaries of
    — Impot des personnes physiques —               Perso-
                                                               the undertaking.
       nenbelasting,
    — Impot des societes — Vennootschapsbelasting,
                                                                                        Article 3
    — Impot des non-residents — Belasting der niet-
       verblijfhouders;                                        1.    Where the result of a given financial year for an
                                                               undertaking shows a loss, that loss shall be offset at
— for    Denmark:
                                                               the choice of the undertaking
    —  Indkomstskatten til staten,
    —   Selsskabsskat,                                         — either against the profits of one or of the two
                                                                   preceding financial years, or against the non-
    —  Den kommunale indkomstskat,
                                                                   distributed     portion      of    those      profits,
    —  Den amtskommunale indkomstskat;                             notwithstanding the definitive nature of the
— for    Germany:                                                  taxation of those financial years; then, if need be,
    —   Einkommensteuer,                                           against the profits of the following financial years
                                                                   in chronological order;
    —    Korperschaftsteuer;
— for France:                                                  — or against the profits of the following financial
    — Impot sur le revenu                                          years in chronological order.
    — Impot sur les societes;                                  However, the undertaking may choose not to offset
— for Greece:                                                  losses against profits which have not been taxed in the
                                                               State where it is subject to tax or which have been
    — 06poc, EiaoSfinctTOc, (puaiKov jtpoacbitcflv,
                                                               taxed at a reduced rate.
    — 06poc, 6ioo8f)|i,axo5 VOHIK©V flpoari>7t(Dv,
    — 06poc;£7UTcov£Taip£i(&v;                                 2.    Where, under the provisions of paragraph 1, a
— for   Ireland:                                               loss has been set off against profits which have been
                                                               distributed and which at the time of their distribution
    —   Income tax,                                            carried entitlement to a tax credit, the resulting
    —   Corporation profits tax,                               repayment of tax shall be reduced by the amount of
    —   Capital gains tax;                                     that tax credit to the extent to which it has not been
— for    Italy:                                                covered by a compensatory tax.
    —   Imposta sul reddito delle persone fisiche,             3.    When a Member State, which applies different
    —   Imposta sul reddito delle persone giuridiche,          rates of taxation to different categories of profit,
    —   Imposta locale sui redditi;                            provides that losses must be set off category by
— for Luxembourg:                                              category, it shall refrain from applying that provision
                                                               where a loss could not be set off against profits of the
    — Impot sur le revenu des personnes physiques,
                                                               same category at the end of the fifth financial year
    — Impot sur le revenu des collectivites;                   following that in which it arose.
— for the Netherlands:
    — Indkomstenbelasting,                                                              Article 4
    — Vennootschapsbelasting;                                  The provisions of this Directive shall not preclude the
— for   the United Kingdom:                                    application of national laws for the prevention of
    —   Income tax,                                            fraud or abuse.
    —   Corporation tax,
                                                                                        Article 5
    —   Capital gains tax;
or any other identical or substantially similar taxes           Member States shall take the measures necessary to
which are imposed in addition to, or in place of,              comply with this Directive not later than 1 January
those taxes.                                                    1986.
                                                               They shall forthwith inform the Commission thereof.
                         Article 2
For the purposes of this Directive, profit or loss of a                                 Article 6
financial year shall mean the positive or negative
results of an undertaking ascertained, after any               This Directive is addressed to the Member States.