EU countries generally hold the competence to design their own business tax systems and decide who, what and when to tax, at what rate, and how.
However, there are specific instances in which EU countries have legislated on common rules at EU level, by way of EU Directives. These instances relate to cross-border situations and are aimed at preventing double taxation and tax avoidance and promoting administrative cooperation.
Initiatives
Business in Europe: Framework for Income Taxation (BEFIT)
BEFIT is a proposal for a new legislative framework for corporate taxation in the EU. It introduces common rules for computing the taxable results of group members which operate in the internal market.
Business in Europe: Framework for Income Taxation (BEFIT)
Head Office Tax System for SMEs (HOT)
The Head Office Taxation System proposal allows SMEs operating cross-border by way of permanent establishments the option to interact with only one tax administration: that of its Head Office.
Head Office Tax System for SMEs (HOT)
Transfer Pricing
In the EU, transfer pricing rules among EU countries are currently not harmonised through legislative acts. The European Commission has thus proposed new rules to harmonise transfer pricing and ensure a common approach when tackling transfer pricing problems.
Harmonised transfer pricing rules in the EU (Proposal)
Debt-Equity Bias Reduction Allowance (DEBRA)
DEBRA is a proposal to help businesses become more resilient and access the financing they need. It will support businesses by introducing an allowance that will grant the same tax treatment to equity as debt.
Debt-Equity Bias Reduction Allowance (DEBRA)
Unshell Proposal
The Unshell proposal aims to ensure that entities in the European Union that have minimal to no economic activity are unable to benefit from any tax advantages and do not place any financial burden on taxpayers.
Directives
FASTER
The FASTER Directive makes withholding tax procedures in the EU more efficient and secure for investors, financial intermediaries and national tax administrations.
Minimum Corporate Taxation
Minimum Corporate Taxation is an EU directive ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union. It brings greater fairness and stability to the tax landscape in the EU and globally, while making it more modern and better adapted to today's globalised, digital world.
Anti-Tax Avoidance Directive
The Anti-Tax Avoidance Directive contains legally binding anti-abuse measures which all EU countries are obliged to apply to counter common forms of aggressive tax planning.
The Anti-Tax Avoidance Directive
Dispute Resolution Mechanism
The Dispute Resolution Mechanism (DRM) is an EU directive that lays down rules for swiftly and effectively resolving disputes related to the interpretation and application of tax treaties for both businesses and citizens.
Parent-Subsidiary Directive
The Parent-Subsidiary Directive is an EU directive designed to facilitate smooth functioning in the taxation of groups of companies across the EU.
Merger Directive
The Merger Directive is an EU directive that regulates the common system of taxation applicable to mergers, divisions, partial divisions, transfers of assets and exchanges of shares. Its objective is to remove fiscal obstacles to cross-border reorganisations involving companies situated in two or more EU countries.
Interest & Royalty Directive
The Interest & Royalty Directive is an EU directive that ensures that cross-border intra-group interest and royalty payments are treated as purely domestic payments when the conditions of the directive are met. Its main objectives are the avoidance of double taxation and the reduction of compliance costs.