European Commission launches BEFIT: framework for an EU corporate tax system
On 12 September 2023, the European Commission (EC) proposed a Council Directive on Business in Europe: Framework for Income Taxation (BEFIT). The BEFIT proposal was announced earlier and contains a common corporate income tax framework for groups active in the EU. BEFIT lays down rules for calculating an aggregated tax base for members of a BEFIT group and the allocation of the tax base between (eligible) BEFIT group members.
European Commission proposes harmonized TP rules and 'fast-track' procedure
As part of the BEFIT package, the EC presented, on 12 September 2023, a legislative proposal for a Council Directive that integrates key Transfer Pricing (TP) principles into EU law. Based on the proposal, all Member States must apply the arm’s length principle for corporate income tax purposes in accordance with the OECD TP Guidelines and are bound to specific provisions in respect of corresponding or compensating adjustments, including a ‘fast-track’ procedure to resolve double taxation. The proposal also includes the obligation to apply the most appropriate TP method and the burden of proof in relation to the application of other non-prescribed methods.
European Commission proposes Directive for Head Office Tax system for micro, small and medium-sized enterprises
As part of the BEFIT package, the EC presented, on 12 September 2023, a legislative proposal for a Council Directive establishing a ‘Head Office Tax system’ for micro, small and medium-sized enterprises and amending Directive 2011/16/EU (DAC). The proposed Directive provides micro, small and medium-sized enterprises (SMEs) at the initial stages of expansion with an option to compute the taxable result of their permanent establishments (PEs) in other Member States, on the basis of the rules of the Member State where the Head Office (i.e., headquarters of the SME) is resident for tax purposes.
AG Kokott’s Opinion on VAT position of Board of Director activities (TP, C-288/22)
On 13 July 2023, AG Kokott of the CJ issued her opinion in the case TP (C-288/22) regarding the VAT treatment of activities carried out by a member of a board of directors of a legal person. In her opinion, AG Kokott assesses whether TP might be considered as an independent taxable person based on his activity as member of a board of directors.
General Court’s judgment on Belgian Excess Profit rulings (‘EPRs’) (T-131/16)
On 20 September 2023, the General Court confirmed that the tax exemptions granted by Belgium to companies forming part of multinational groups constitute an unlawful State aid.