Corporate Income Taxation in Europe
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Corporate Income Taxation in Europe

The Common Consolidated Corporate Tax Base (CCCTB) and Third Countries

Edited by Michael Lang, Pasquale Pistone, Josef Schuch, Claus Staringer and Alfred Storck

This topical book is the first publication that focuses on the impact of the CCCTB project on relations between the European Union and third countries. Although the CCCTB system will only be applicable within the European Union, it will also have wide-ranging impacts for non-resident companies.
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Christoph Spengel


Article 81 of the proposal for a CCCTB Directive (hereafter: CCCTB Directive) introduces special provisions for the deductibility of interest paid by a member of a CCCTB group to an associated enterprise resident in a third country. Ignoring the scope and consequences of Article 81 for the moment, the necessity of harmonized provisions for interest deductibility at the borderline of the EU has to be pointed out first. The main reason for such a provision is to secure Member States’ tax revenues with regard to debt-financing. Since not all Member States have implemented thin capitalization rules or fat capitalization rules or earnings stripping rules, as the case may be, members of a CCCTB group could avoid domestic limitations of interest deductibility by rearranging financing arrangements within their group. An example is provided in Figure 8.1. X-GmbH (Germany), Z-GmbH (Austria) and Y-Corp. (third country) are members of the same group of companies. First suppose that X-GmbH and Z-GmbH do not form a CCCTB group. If X-GmbH has been granted a loan from Y-Corp., the deductibility of interest payments would be considered under German fat capitalization rules. From this it follows, broadly speaking, that interest is only deductible up to an amount of 30 per cent of the EBITDA of X-GmbH. Now suppose that X-GmbH and Z-GmbH opt for a CCCTB group and rearrange intra- group financing in a way that Z-GmbH takes the loan from Y-Corp and forwards the loan to X-GmbH.

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