On 27 May 2015 the European Commission moved to re-launch the idea of a Common Consolidated Corporate Tax Base (CCCTB) in the European Union (EU). This was announced after the College of Commissioners held an orientation debate on measures aimed to make corporate taxation fairer. This latest move by the European Commission comes against a background of national and international efforts to restrict corporate tax avoidance.

An action plan is to be launched in June 2015 containing measures to reintroduce the proposal for a CCCTB; to implement measures against tax avoidance currently being developed by the OECD; and to implement further measures to strengthen tax transparency.

The European Commission has already put forward a Tax Transparency Package, announced in March 2015, to promote tax transparency through measures such as the automatic exchange of information on tax rulings. That package is currently under discussion and agreement on the technical proposals is expected to be reached by the end of 2015.

The common tax base would allocate the total EU profits of a multinational enterprise between the EU countries in which it operates, based on a formula that would reflect the size of the group’s presence in each EU member state. Factors likely to be used in the formula could include assets, employee numbers or payroll. The use of a set formula based on presence and economic substance in a member state would in the view of the European Commission reduce opportunities for profit shifting within the EU.

The proposal for a CCCTB was previously discussed at length within the EU and detailed proposals would be needed to deal with the different accounting and tax rules in the 28 EU member states and to consider the formula on which group profits would be allocated among the member states for tax purposes.

The CCCTB would aim to harmonize the tax base on which corporate tax is calculated but would not harmonize corporate tax rates. The agreement of all member states would be required to implement the common tax base and some states such as the UK and Ireland are likely to be opposed.

Further details of the latest proposals for a CCCTB are likely to be announced on 17 June 2015.