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EU Parliament approves amended CCCTB directives

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MEPs have voted to approve directives to establish the common corporate tax base (CCTB) and the common consolidated corporate tax base (CCCTB) across the EU from 2020. The draft directives also introduce criteria for defining a ‘digital permanent establishment’, to ensure that companies with a significant digital presence receive similar tax treatment to those with physical permanent establishments.

MEPs voted in the March plenary session of the EU Parliament to approve the CCCTB ( by 438 votes to 145 votes (with 69 abstentions). The CCTB ( was approved by 451 votes to 141 (with 59 abstentions).

While the European Commission’s original proposal presented in October 2016 put forward a two-step approach, involving establishment of rules for calculating the CCTB followed by consolidation, parliament has amended the text to stress that both the CCTB and CCCTB should be implemented at the same time, on 1 January 2020. With consolidation taking place immediately, the Commission’s proposal to allow companies a temporary deduction for losses of subsidiaries in other member states will drop out. Carry-forward of a company’s own losses will be limited to a maximum of five years.

In a significant addition to the Commission’s original proposal, MEPs have included new rules for ‘digital permanent establishments’, based on a company’s digital presence in a country, even where it has no physical permanent establishment.

‘Digital permanent establishment’ is defined in the draft directives as: ‘a significant digital presence of a taxpayer that provides services in a jurisdiction directed towards consumers or businesses in that jurisdiction’. A taxpayer will have a digital presence where its business involves ‘a digital platform or any other business model based on the collection and exploitation of data for a commercial purpose’.

This will amount to a digital permanent establishment where the platform generates revenue in excess of €5m from remote transactions in the non-resident jurisdiction and any of the following conditions is met:

  • the platform has at least 1000 registered users outside the jurisdiction in which the business is resident for tax purposes; or
  • at least 1000 digital contracts per month have been concluded with customers in the non-resident jurisdiction in a taxable year; or
  • the volume of digital content collected by the taxpayer in a taxable year exceeds 10% of the group’s overall stored digital content.

The CCCTB will apply to groups with revenues exceeding €750m, although this threshold would be lowered to zero over a period of seven years.

The amended proposal introduces a fourth factor to the formula for distributing taxable profits between member states within the consolidated tax base: collection and use of personal data of online platforms and services users. The other three factors, as contained in the original proposal, were: labour; assets; and sales by destination.

As a taxation measure, the directives will require unanimous agreement by the Council. The text of the resolution notes that Denmark, Ireland, Luxembourg, the Netherlands and Sweden oppose the directives on grounds that it goes against the principle of subsidiarity.

The parliament’s amendments will now be passed on to the Council and Commission for their consideration.