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Business in Europe: Framework for Income Taxation (BEFIT)

TA-10-2025-0268 · P10_TA(2025)0268 · PE773.162

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✦ In short · AI summary of this text, generated 10 Sept 2026

Written by a language model from the full text only; every figure comes from the text. The paragraph links open the paragraph a statement rests on — check the text itself before relying on it.

Parliament's amended version of the Commission proposal for a Council directive on Business in Europe: Framework for Income Taxation (BEFIT) sets common rules for computing a single corporate tax base for groups operating in the internal market. It adds a significant economic presence test for permanent establishments, a royalties limitation rule, controlled foreign company rules and an accelerated depreciation regime for certain assets. It changes the transition allocation period to end by 30 June 2033 and requires the Commission to propose a permanent allocation method based on sales, labour, assets and digital presence. It sets minimum penalties of 0,1 % of group turnover for filing failures and deliberate misreporting, and extends filing and error-notification deadlines.

Key points

  1. Parliament approves the Commission proposal as amended and calls on the Commission to alter its proposal accordingly.
  2. The amended text adds a significant economic presence test: a permanent establishment exists if a BEFIT group's total revenues from a Member State exceed EUR 1 000 000.
  3. It lowers the ownership threshold for group membership from 75 % to 50 % of ownership or profit rights.
  4. It introduces a royalties limitation rule: royalty and licence fee costs are included in income where the recipient's income is taxed below 9 %, unless substantive economic activity is carried out.
  5. It introduces controlled foreign company rules covering categories such as interest, royalties, dividends, financial leasing and insurance income, with an exception for substantive economic activity.
  6. It adds an accelerated depreciation regime for assets contributing to climate and social goals, UN 2030 Sustainable Development Goals and Union defence, with the Commission to set criteria by implementing act.
  7. It changes depreciation rules: industrial buildings and structures over 25 years, other buildings 30 years, and other fixed tangible assets over their useful life with a minimum of 10 years.
  8. It shortens the transition allocation period to end by 30 June 2033 and requires the Commission to propose a permanent allocation method using sales, labour, assets and digital presence.
  9. It allows Member States to apply post-allocation adjustments, including input-based incentives, but bars output-based incentives such as patent boxes.
  10. It sets minimum penalties of 0,1 % of BEFIT group turnover for failure to file the information return and for deliberate misreporting.
  11. It extends the deadline for submitting the BEFIT information return to six months after the fiscal year and for notifying errors to three months.
  12. It requires Member States to keep supporting documentation for 10 years and to attribute adequate human resources to BEFIT teams.

Who is affected

  • BEFIT groups and their members operating in the internal market, which must apply the common tax base rules and file a single information return.
  • Member States, which must transpose the rules, set penalties and provide resources to BEFIT teams.
  • Smaller groups with annual combined revenues below EUR 750 000 000, which may opt into the framework.
  • Digital businesses, which may be taxed where they have a significant economic presence even without physical presence.

Figures and deadlines

  • EUR 1 000 000: revenue threshold for a significant economic presence in a Member State.
  • 9 %: effective tax rate below which royalty costs are included in income.
  • 50 %: ownership or profit rights threshold for group membership.
  • 30 June 2033: end of the transition allocation period.
  • 0,1 %: minimum penalty rate of BEFIT group turnover for filing failures and deliberate misreporting.
  • Six months: deadline for submitting the BEFIT information return after the fiscal year.
  • 10 years: period for keeping supporting documentation for the BEFIT tax base.
  • EUR 750 000 000: annual combined revenue threshold below which groups may opt into the framework.

Legal basis: Article 115 of the Treaty on the Functioning of the European Union.