On the proposal for a Council Directive on Business in Europe: Framework for Income Taxation (BEFIT)

PA_LegEvaluation

BUDGETARY ASSESSMENT

for the Committee on Economic and Monetary Affairs on the proposal for a Council Directive on Business in Europe: Framework for Income Taxation (BEFIT)

((COM(2023)0532 – C9-0341/2023 -2023/0321(CNS))

The Committee on Budgets has carried out a budgetary assessment of the proposal under Rule 58 of the Rules of Procedure and has reached the following conclusions:

The Committee on Budgets,

1. Recalls that businesses benefit from the Union single market, harmonized policies and regulatory framework, which enhance their international competitiveness; considers it fair that a share of their profits contributes to, or is deemed to contribute to, the Union budget accordingly; notes that the BEFIT framework could reduce revenue leakage, as it would allow the EU to count on more transparent rules on corporate taxation;

2. Recalls that Parliament has repeatedly, and over the years, supported Commission initiatives for tax-based own resources such as the Common Consolidated Corporate Tax Base (CCCTB), the Digital Services Tax or the OECD Pillar One approach; regrets that none of these initiatives has so far mustered the necessary support in Council to bring them into force;

3. Underlines that the Roadmap for the introduction of new Own Resources spelled out in the Interinstitutional Agreement explicitly mentions a new own resource linked to corporate taxation as part of a basket of new revenue sources; notes that without the introduction of the BEFIT framework it will be complicated to define and adopt any practicable tax base for a new own resource;

4. Determines that the proposal for the BEFIT framework is fully compatible with a genuine corporate tax-based own resource as well as with a statistics-based national contribution as proposed by the Commission in the amended proposal for Own Resources Decision (COM(2023)0331) and as endorsed by Parliament in its legislative resolution of 9 November 2023;

5. Highlights, moreover, that the BEFIT initiative, by establishing a harmonised framework for Income Taxation, constitutes a viable starting point for the introduction of a new own resource as foreseen in the IIA roadmap; affirms that the introduction of a new own resource based on BEFIT could provide one of the most stable revenue streams for the EU budget, which is under significant strain, particularly due to debt repayment commitments and increasing spending needs; observes, furthermore, that the modifications of the tax base allocation have been modelled in line with the OECD Pillar One approach, which has equally been proposed as a starting point for the calculation of a corporate tax-based own resource;

6. Notes, nevertheless, that the timeline envisaged for the establishment of BEFIT, including time for Council negotiations, entry into application, transitional period and review would stretch far into the 2030s and would thus be difficult to reconcile with the roadmap and the temporal profile of the Next Generation EU (NGEU) repayment needs;

7. Recalls, in this context, that Parliament has recently endorsed the Commission proposal for an own resource conceived as a national contribution based on statistics about the gross operational surplus of companies in the financial and non-financial sectors (CPOR); holds that such an own resource, coherently conceived, would go hand in hand with the establishment of a more harmonised calculation base which would be considered by Member States as an equitable foundation of an EU revenue source; underscores that a statistics-based contribution would not depend on any underlying tax directive and could draw directly on the annual aggregate Eurostat figures of gross profits which would constitute a proxy for a harmonised tax base; considers that such a transitional arrangement might even serve to incentivise Member States to accelerate negotiations and reach a swifter agreement on BEFIT;

8. Underlines that neither an Own Resource based on BEFIT nor a statistics-based national contribution must result in any additional burden for companies or lead indirectly to excessive taxation of citizens; recalls in this regard that the main objective of the BEFIT proposal is to ensure more tax harmonisation in the EU while strengthening the Single market, cross-border trade and the competitiveness of European companies;

9. Reiterates its call on the Council to adopt without further delay the new own resources meant to cover the repayment of NGEU borrowing costs and to sufficiently fund the Union’s policies and priorities; calls on the Commission to go beyond the current proposal on new own resources and to adapt the existing basket to reflect changes in the geopolitical situation, as well as to seek far-reaching political compromises on new own resources proposals; underlines the fact that, without new sources of revenue, up to almost 20 % of the annual EU budget might be sacrificed to cover the repayment costs of NGEU.

As part of its budgetary assessment, the Committee on Budgets also submits the following amendments to the proposal:

Amendment 1

Proposal for a regulation

Recital [10] a (new)

Text proposed by the Commission

Amendment

([10a) This Directive has implications for the Union budget. Accordingly, the European Parliament’s Committee on Budgets adopted a budgetary assessment, which forms an integral part of Parliament’s mandate for negotiations.

Or. en