Business in Europe: Framework for Income Taxation (BEFIT)

The European Economic and Social Committee's ECO section has reviewed the Commission proposal for a new legislative framework on corporate taxation, BEFIT, including its proposal for Transfer Pricing (TP). While generally supportive, ECO recommends improvements to ensure it effectively simplifies EU corporate taxation. These include aligning BEFIT/TP with the OECD's Pillar Two minimum tax rules, clarifying compatibility with national tax incentives, and minimizing data collection. Additionally, ECO emphasizes the need to address the complexity arising from overlapping tax systems and to carefully assess the impact on businesses. This opinion will be discussed and potentially adopted by the entire EESC organisation during its April 2024 plenary session.

Key points

In the opinion, the EESC

• emphasises the need for alignment with the OECD's Pillar Two minimum tax rules. This would ensure consistency and avoid confusion for businesses operating across borders;
• raises concerns about potential complexity due to the existence of multiple tax systems running concurrently (BEFIT/TP, Pillar Two, and national rules). The EESC suggests clarifying how these systems interact to avoid additional burdens for businesses;
• underscores careful assessment of BEFIT's impact on compliance costs, data minimization practices, and the compatibility of national innovation incentives with BEFIT;

• recommends for the EC to improve the mechanisms of Directive on tax dispute resolution and stresses that it would be helpful to re-establish the Joint Transfer Pricing Forum in order to discuss how to better handle transfer pricing disputes within the EU;

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Additional information

- EESC section: Economic and Monetary Union and Economic and Social Cohesion (ECO)

- Opinion type: Mandatory opinion

- Rapporteur: Petru Sorin DANDEA (Workers - GR II Romania)

- Reference: ECO/629-EESC-04143

- Date of adoption by section: 10/04/2024

- Date of adoption in plenary: 24-25/04/2024

Contact

- Thomas KERSTEN

Press Officer

Tel.: +32 (0) 2 546 8931

Email: thomas.kersten@eesc.europa.eu

- Jüri SOOSAAR

Policy Officer

Tel.: +32 (0) 2 546 9628

Email: eco@eesc.europa.eu