The objective of Brussels is to seek to limit the tax optimization of multinationals by setting common rules on taxable profit.
At a time when tax scandals are mounting, the European Commission has brought a legislative proposal back to the government table aimed at promoting fairer tax competition among the twenty-eight states.
The goal of this text, which has been stalled since 2011, is to define a common framework for calculating the tax of large companies established in the European Union.
This is a highly political issue for Brussels, which is going through a crisis of confidence and seeking to regain credibility. Especially since Brexit boosts the race for competitiveness, in which corporate tax is more than ever an essential arsenal.
The Anti-Optimization Arsenal
BEPS. This acronym—”Base Erosion and Profit Shifting”—refers to the OECD and G20 action plan against the excessive tax optimization of multinationals. The goal is to prevent them from locating their profits in tax havens. It includes about fifteen actions, such as the requirement for large companies to report their activity (turnover, profits, etc.) in each subsidiary.
“Tax ruling”. The European Commission also demands more transparency. Tax rulings, in French “rescrits fiscaux”, are these tailored agreements negotiated by multinationals with tax administrations to plan but also to reduce the amount of tax. To avoid abuses, Brussels requires the automatic exchange of information between states on these agreements.
