An easy way of publishing your relevant EU press releases.

ACCA welcomes the publication of the ‘C(C)CTB revival’ proposals but warns for caution


27 Oct 2016


Euro & Finance

The global accountancy body welcomes the overarching aims of the proposals but warns against the danger of non-consolidation and calls for consistency.

ACCA (the Association of Chartered Certified Accountants) has been  a strong supporter of the CCCTB proposal since its inception. Under the current situation, the coexistence of 28  tax systems - offering sometimes very diverse tax exemptions and deductions - makes it difficult to calculate the tax base of companies operating on a cross border basis.

The new Commission proposals keep the same aim as the initial  2011 CCCTB proposal: subjecting companies groups with a taxable presence in at least one Member State to a single set of rules for calculating their tax base across the EU, and ultimately making them accountable to a single tax administration, the so called 'one-stop-shop'. What has changed however is the two-staged approach, leaving consolidation for once the elements of the first stage” CCTB” will be politically agreed. The CCTB lays down the rules for computing the tax base of companies and permanent establishments in the EU, as well as rules against debt versus equity bias and deduction for research and development (R&D).

Chas Roy Roy-Chowdhury says: We are of course supportive of the two main overarching objectives of the new proposals, which are curbing tax avoidance and ensuring fairer and more effective taxation on the one hand, and facilitating  cross-border trade and investment in the internal market on the other.  That said, we note that, to define large groups, the Commission proposes to align the 750 million in consolidated annual turnover threshold with the OECD’s and its country-by-country reports to tax administrations, as well as with the public Country by Country reporting currently under the EU co-legislators scrutiny. The CCTB will be mandatory for these company, and only optional for the others. Whereas €750m turnover is a comparatively simple limit to operate, it will however not have a very consistent impact. Some low margin businesses deriving little benefit and posing little tax risk will be caught, while other more complex high margin businesses will escape”.

In addition, the chosen approach –for political reasons- leaves the consolidation element  to  the second stage approach, described in a  separate directive. We would warn however, that without consolidation, and against a backdrop of inconsistent loss relief rules across the union, the early introduction of the common base will do little more than disrupt businesses’ efforts to comply with local tax rules”.

Regarding the tax base, all revenues will be taxable unless expressly exempted, namely to prevent the double taxation of foreign direct investment. To support innovation in the economy, a super-deduction for R&D costs is also added to the already generous R&D regime of the 2011proposal. On the issue of permanent establishment, the revised definition covers only permanent establishments within the EU and belonging to a taxpayer who is resident for tax purposes within the EU, to ensure common understanding from all concerned taxpayers and to exclude mismatch possibilities due to divergent definitions.

Chas Roy-Chowdhury comments: “The technical details around these exemptions and derogations need to be carefully considered. If the aim is to encourage smaller groups and startups to consider the regime where they have high research and development costs then the interaction with aspects such as the Permanent Establishment definition and the interest restrictions will need to be fully analysed and reflected in the final design”.

“Also, regarding anti-abuse rules, through which the Commission intends to address the debt/equity bias, which is  a notoriously complex issue. While we welcome the fat that the Commission has recognised the difficulties, we are still concerned that introducing any novel features into the regime will  run the risk of creating unintended loopholes, especially given the sums of taxpayers’ money at stake. This could quickly degenerate into unwieldy and counterproductive detail in the rules”, Chas Roy-Chowdhury adds.

The new CCTB proposal also retains the 2011 provision that the companies may carry over their losses indefinitely  from one year to the next, meaning that only real income is taxed. ACCA  welcomes the clarification that losses can be carried forward in perpetuity, which will simplify the position for groups within the CCTB.

The stage-two proposal, for its part, deals with the cross-border consolidation of the tax results amongst members of the same group. It proposes that there would be just one taxable result within a single group. This taxable result would then be divided between the countries in which the company operates on the basis of a mathematical formula giving equal weight to factors such as turnover, labour force and assets held in the country where the group operates.

Chas Roy-Chowdhury points out: “The design of the allocation formula will be fundamental to the reasonableness of the final outcome. We would expect there to be protracted and energetic negotiation around the calculation and weighting of factors, with particular emphasis on issues such as whether to have one formula or many - attuned to the needs of specific sectors - and the treatment of intangible assets”.

The ball is now in the Member States’ court. They  will have to back the proposals unanimously for it to become legislation.

It will certainly be a huge accomplishment if we can engineer a CCCTB system to which all Member States can sign up to. We need however to make sure it is a full consolidated system. Should that element be left out, we consider that the value of the proposal would be diminished”, Chas Roy-Chowdhury concludes.


For media enquiries, contact:

Cecile Bonino, tel: +32 (0) 2 286 11 37 or

Notes to Editors

About ACCA

ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. It offers business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management

ACCA supports its 188,000 members and 480,000 students in 181 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 95 offices and centres and more than 7,110 Approved Employers worldwide, who provide high standards of employee learning and development. Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence.

Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. It believes that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. ACCA’s core values are aligned to the needs of employers in all sectors and it ensures that through its range of qualifications, it prepares accountants for business. ACCA seeks to open up the profession to people of all backgrounds and remove artificial barriers, innovating its qualifications and delivery to meet the diverse needs of trainee professionals and their employers. More information is here: