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

5. a group of related companies which, though more than 50% owned, are not
consolidated for tax purposes (commonly owned voting rights greater than
50% but less than 75%); 13
6. a group of companies that are consolidated for tax purposes (commonly
owned voting rights of 75% or more).
Application and optional character: It is essential to note that the Commission,
with the support of business community, intends to propose an optional
arrangement, whereby eligible groups of enterprises could opt into the CCCTB or
could choose not to. This freedom of choice would enhance the incentive effect of
the CCCTB by encouraging Member States to make it competitive and uniform. On
the other hand, the coexistence of two systems could impose a heavy
administrative burden on the Member States.
A majority of Member States is not favourable to an optional arrangement. Some of
them have indicated that they would favour a mandatory common basis with an
option for consolidation.
Corporate tax liability as such would remain subject to national legislation,
reflecting the principles underlying each Member State’s own fiscal policies. The
directive, for its part, would specify which of the companies liable for national
corporation tax could opt to use the CCCTB. Its provisions would apply to the types
of company listed in an annex which were subject to corporate income tax or an
equivalent form of taxation in a Member State (the relevant forms of taxation would
also be listed in an annex) as well as companies not resident in the EU which had
a similar form to EU companies and which were subject to one of the taxes that
applied in the EU. Companies in these categories would be known as eligible
companies.
Eligible EU-resident companies could opt to use the CCCTB, while eligible
companies based outside the EU could opt in on behalf of their permanent
establishments in the EU. The option would be valid for five years and be
automatically renewed for successive three-year periods thereafter, unless notice
were given to the contrary. The companies in a group in which at least 75% of
each company was in common ownership would have to opt in en masse or all
remain outside the CCCTB scheme (‘all-in or all-out’ principle) for the duration of
a validity period. In the event of company or group that had opted in being taken
over by a group that had not, the option would remain in operation until the end of
the current period, after which the new enlarged group would have to opt in or else
withdraw its newly acquired company or group.
Companies that opt in are referred to in the present paper as ‘taxpayers'. EUresident
taxpayers would be liable to corporate tax on their worldwide income,
without prejudice to the provisions of double-taxation agreements. Non-resident
taxpayers would be liable for tax on business income attributable to a permanent
establishment in the EU (the definition of a permanent establishment would be
13 Subject to the thresholds debate referred to above.
7