Tax compliance in the EU will become less expensive for big businesses

the European Commission has introduced a vital set of initiatives aimed at halving compliance costs for major cross-border enterprises within the European Union.

The proposal, named “Business in Europe: Foundations of Income Taxation” (BEFIT), seeks to simplify compliance for both businesses and tax authorities by introducing a new unified set of rules for determining the tax base of corporate groups. This move is expected to reduce compliance costs for large enterprises operating across multiple member states and streamline the identification of taxes due under the law for national tax authorities. The new, more straightforward rules could cut compliance costs for EU-based enterprises by up to 65%.

BEFIT implies that:

• Companies within the same group will calculate their tax base according to a common set of rules;
• The tax bases of all group participants will be consolidated into a single unified tax base;
• Each member of the BEFIT group will hold a percentage of the overall tax base calculated based on the average taxable results over the previous three financial years.

Dealing with 27 different national tax systems, each with its specific rules, comes at a high cost for companies in terms of tax compliance. This hampers cross-border investments within the EU, placing European businesses at a competitive disadvantage compared to companies in other parts of the world.

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