An outline of the CCCTB (Common Consolidated Corporate Tax ...

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CCCTB regime. Other taxes (non significant revenue, with thus a limited impact on CCCTB) would still be deductible under CCCTB regime. Fixed business assets would be tangibles, intangibles, financial assets and proprietary benefits acquired by the taxpayer where they were capable of being valued and were used for business purposes for more than 12 months. Where the cost of its acquisition, construction or improvement was EUR 1 000 or more, such cost would be depreciable; if not, it would be immediately deductible. (Some assets, such as yachts and hunting and fishing rights are currently the subject of discussion. Such assets are sometimes considered to be inherently nonbusiness assets). Tangible assets not subject to wear and tear and obsolescence, such as land, fine art and antiques or jewellery and intangible assets with an indefinite life and also financial assets would not be depreciated unless the taxpayer demonstrated that such an asset had permanently decreased in value. Financial assets in respect of which any gain would be exempt would not be depreciable in any circumstances. Recognition and timing: Income and expenditure would be recognised on an accruals basis in the tax year to which they related. This reflects the IFRS framework and general accounting practice. Each expense and its amount should be established in order to be accrued. However, when an amount arising from a legal obligation (the Member States are satisfied that these provisions would be confined to legal or equivalent obligations) could be reliably estimated, the expense would be deductible in the current tax year. Obligations that had accrued during the current tax year or in previous tax years in respect of future pension payments would be deductible. (It is most certainly desirable to arrive at uniform treatment of the various pension schemes, but some Member States take a narrower view!) However, it is obvious that at the time the CCCTB come into force, the future pension payments should be deductible, except any recapture for the past. All of these amounts would be reviewed and adjusted on an annual basis. It has been suggested that a general correspondence principle be adopted (“matching”), whereby all costs would be assigned to the same tax year as the income to which they related. The total amount of deductible expenses for a tax year would be increased by the value of inventories at the beginning of the tax year and reduced by the value of inventories at the end of the tax year. For long-term contracts, the principle laid down in IAS 11 would be followed, whereby the percentage of the income and expenditure assignable to each tax year is determined by the progress towards completion of the contract work. Provision for bad debt would not be deductible unless an amount corresponding to the receivable had previously been included in the tax base and the taxpayer had taken all reasonable steps to pursue the payment. 12
(Consultation with the Member States and Business Europe has been focusing on criteria relating to recovery costs, the position of related parties, inclusion in the tax base of claims recovered or bad debts, etc). Income and expenditure are measured (in euros or converted into euros;) by reference to: - the monetary consideration for the relevant transaction, such as the price of goods or services, - the market price where the consideration for the transaction is wholly or partly non-monetary, and - the arm’s-length price in the case of transactions between related parties (defined below). In the case of loan transactions, both the amount of interest and the amount of the loan must be arm’s length. (Business Europe is opposed to this extension of transfer pricing.) Inventories would be valued on the last day of the tax year at cost or net realisable value, whichever was the lower. Items that were not interchangeable would be valued on an individual basis, while other inventories would be valued on the basis of the first-in-first-out (FIFO) or weighted-average method. The important thing is to adhere to a continuous and consistent method. (Business Europe would like a last-in-first-out (LIFO) option; when a group elected to adopt the CCCTB regime, it would have to choose whether to use the FIFO or LIFO method throughout the option period.) Depreciation: Long-term assets such as buildings, ships or planes would be depreciated on an individual basis, whereas short-term to medium-term assets would be pooled for depreciation purposes; in other words, categories of goods would be written down. (There were numerous comments from Member States opposed to pooling, although the arguments advanced were none too convincing; some wonder whether it does actually simplify matters; Business Europe seems strongly in favour of this simplification. Nevertheless, the Commission could enlarge to other cases the scope of assets depreciated on an individual basis). The depreciation base would comprise the cost of acquiring, constructing or improving a fixed business asset plus directly linked ancillary costs, less the value of any subsidies. (As regards the depreciation of improvements, Business Europe would prefer to start the clock again for improvement costs and treat them as a new asset for the purposes of depreciation. This solution would be compatible with pooling). 13
Page 1 and 2: An outline of the CCCTB (Common Con
Page 3 and 4: - the common consolidated corporate
Page 5 and 6: • Consolidation: in accordance wi
Page 7 and 8: 5. a group of related companies whi
Page 9 and 10: The following would be exempted inc
Page 11: Taxes other than corporate income t
Page 15 and 16: the depreciation figure were a posi
Page 17 and 18: When a group ceased to exist, unrel
Page 19 and 20: a group company and that company le
Page 21 and 22: the view that, since the exemption
Page 23 and 24: - limit manipulation of the tax-bas
Page 25 and 26: to tangible fixed assets to the exc
Page 27 and 28: company of an EU subgroup chosen by
Page 29 and 30: Where a new decision was taken, it
Page 31: At this stage, then, it is difficul

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