SME Chamber

Common Consolidated Corporate Tax Base, A Decisive Step In the European Single Market

At its 475th Plenary Session on 26 October 2011, the EESC adopted a favourable opinion on a proposed Council Directive on a Common Consolidated Corporate Tax Base (CCCTB). The EESC supports the Commission proposal, because the CCCTB reduces tax obstacles and costs associated with cross-border activities, promoting fair, sustainable competition. Consequently, this legislative act will have, even in the medium term, a beneficial effect on growth and jobs.


The EU has been making progress towards the single market since its inception, taking gradual steps, some of them contentious, to turn 27 different markets into one. In March 2011 the Commission adopted a Proposal on a CCCTB with one main purpose: to reduce the obstacles to cross-border activity within the EU that are hindering the completion of the single market. Currently, businesses with cross-border activities have to calculate their tax base in accordance with the rules of up to 27 different national systems, leading to significant administrative costs and distortions to competition within the single market.

"According to the Commission's estimates, the CCCTB will enable businesses in the EU to save 700 million EUR a year in compliance costs, a further 1.3 billion through consolidation and up to one billion in cross-border activities. In addition, the CCCTB is intended to make the EU more attractive to foreign investors," said Mr Wuermeling, rapporteur for the opinion.

However, the draft directive does require a few changes, and further clarification of certain details. First of all, the EESC recognises that there is a concern that the CCCTB would entail a loss of national sovereignty. In this sense, Mr Pater, president of the study group on a CCCTB, declared: "We cannot underestimate the fact that nine parliaments of Member States believe the proposal does not comply with the principle of subsidiarity, limiting tax policy choices". That is why Member States will remain free to set the tax rate on their share of the tax base.

Moreover, there is a danger that, in the rapidly changing competitive global economy, a CCCTB system for 27 Member States could mean that the EU is not able to respond quickly to global tax changes or incentive packages, which could result in a loss of foreign direct investment.

The EESC endorsed the Commission's proposal by a large majority, agreeing with its general positive impact and highlighting four direct consequences of the CCCTB. First, the complex question of transfer pricing within a business would become obsolete, as tax treatment would be identical everywhere and cross-border losses could be offset. In addition, and of particular relevance to small and medium-sized enterprises, the administrative costs for computing taxes (tax compliance cost) would be reduced and the problem of double taxation would be avoided across Europe.

Following a vivid debate focusing on the mandatory versus optional character of the CCCTB and on the question for which companies it would be applicable, the Committee is not calling for the immediate mandatory application of the CCCTB, but would rather endorse an optional arrangement during the introductory phase. In the long term, the CCCTB should be mandatory, at least above a certain threshold, for businesses operating across borders.

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