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

parties took place (the place of ultimate physical delivery, if known; the VAT rules
could help here). In the case of services, the general practice would be to attribute
them to the place where customers actually used or enjoyed them. For immovable
property and related services, the location of the asset would be the determinant
factor.
The criterion of geographical connection (‘nexus’) makes it possible to deal
with sales that take place in a Member State where the group has no taxable
physical presence in the form of a subsidiary or permanent establishment.
Although the principle of a mere economic presence would be more in tune with
current economic trends, it was deemed preferable to rely on apportionment
concepts derived from OECD principles, and for this reason a physical presence
would remain an essential prerequisite for a share in the apportioned tax base.
Consequently, sales made in a Member State where the group had no presence in
the form of a subsidiary or permanent establishment would be attributed to the
sales factors of the entities in the group on the basis of their proportionate share of
the other two factors, i.e. labour and assets. 26
On the whole, the proposed choices are also designed to allow recourse to existing
corporate data as far as possible in order to minimise the cost of applying the
distribution formula. Moreover, the Commission services stress the need for close
monitoring of results, proposing that a review take place once the formula has
been operating for five years and suggesting that an escape clause might be
needed to cover the eventuality that the outcome of the apportionment process
was manifestly unfair on a particular company. Of all the elements of the CCCTB
system, the sharing mechanism certainly has the potential to trigger the most
heated political discussions.
6. The administrative framework
Administration of the CCCTB would be based on three key concepts, namely the
one-stop shop, the principal taxpayer and the principal tax authority. These three
concepts are the cornerstones of an affordable, competitive and effective CCCTB
regime.
Nevertheless, such an approach would require a level of administrative
cooperation and mutual assistance never experienced in the past.
The group of companies applying the CCCTB, and especially the principal
taxpayer, would be in contact with only one tax administration at all stages of the
fiscal procedure (opting arrangements, filing of tax returns, etc.).
The principal taxpayer would normally be the parent company if the latter were
resident in a Member State. Otherwise the role would devolve on the parent
26 This method, known as ‘spread throw-back’, is derived from the US nexus system.
26