Under an EU Common Corporate Tax regime, withholding taxes need to be addressed in three different scenarios affecting companies or groups that have opted for such a tax regime. First, regarding deduction of tax at source on the occasion of intra-group transactions: the levy of withholding taxes would be in conflict with the consolidation of such intra-group transactions, to be effected through their elimination for the purposes of calculating the taxable base, as provided for in Article 59 of the Commission’s proposal for a CCCTB Directive. Second, income from investments made by group members may be subject to withholding taxes in a Member State or in a third country. As regards Member States, it is necessary to decide whether the fundamental concept of revenue- sharing by way of formulary apportionment, which is one of the cornerstones of the draft CCCTB Directive, is compatible with the simultaneous levy of withholding taxes based on the notion of “source country entitlement”. Moreover, and in particular vis-à-vis withholding taxes imposed by third countries, the sharing formula might have to be applied to the revenue cost of the credit method, in so far as the latter is chosen to avoid international double taxation of group companies. Finally, withholding taxes also raise certain questions in the inverse situation of dealings between CCCTB group members and other (external) entities: Should outbound dividend, interest, and other payments made by the group be subject to a uniform withholding tax as established by a common system for all Member States?
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