Changes between two versions

What changed between the draft committee report and the plenary report

From · draft committee report· 12 May 2025

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

To · plenary report· 16 Oct 2025

A-10-2025-0194

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

AI:What changed, in short

Introduces significant economic presence as a taxable nexus with a EUR 1 million revenue threshold, extending permanent establishment rules.7 8 10 Adds new anti-abuse rules: royalties limitation, controlled foreign company rules, and stricter interest limitation.10 11 Replaces the transitional allocation with a permanent formula based on sales, labour, assets, and digital presence, and adds accelerated depreciation.12 20 27 Removes the optional scope for smaller groups and the individual tax return system, simplifying procedures.5 22 23 Other changes are formal or wording: updated references, changed numbers, and rephrased recitals.1 3 4 6

21 changes of substance · 5 formal · 2 of wording only

Written by AI from the two texts only · read the changes before relying on it · 4 Sept 2026 · Report a problem

Changes to the text itself, in document order. Cover page, citations and punctuation-only edits are left out; they are under “Every difference”.

Changes of substance · 21

Change 2 Substance

AI summary:Rewrites recitals: adds new recitals on revenue losses, coherence with OECD, significant economic presence, royalties limitation, CFC rules, accelerated depreciation, and one-stop-shop; removes recitals on optional scope for SMEs and own resources.

Show the text change (32 lines)

Removed:Recital 2: (2) The existence of 27 different corporate income tax systems in the Union gives rise to complexity in tax compliance and leads to unfair competition for businesses, and can lead to cross-border aggressive tax planning as well as double taxation and double non-taxation. That has become more evident as globalisation and digitalisation of the economy have significantly altered the perception of land borders and business models. As governments have tried to adapt to that new reality, a fragmented response among Member States has led to further distortions in the internal market. The various legal frameworks inevitably lead to different tax administration practices across the Member States as well. This often entails long procedures characterised by unpredictability and inconsistency along with high compliance costs, which can impact cross-border investments. That complexity can hinder businesses’ expansion in the internal market, with a negative impact on innovation, competitiveness and jobs. Companies need a workable single tax framework in order to be able to develop their commercial activity across the internal market.

Added:Recital 1: (1) Within the Union there is currently no common approach to the computation of the taxable base for businesses. Therefore, Union businesses are obliged to comply with a different corporate tax system in each Member State in which they operate. For example, in 2023, according to the 2024 Annual Report on Taxation, statutory corporate tax rates varied between Member States from 10 % to 31,5 % (and from 9 % to 29 %, taking into account the tax support schemes put in place by governments).

Removed:Recital 3: (3) Albeit different in their design, the fundamental features of corporate income tax systems are similar as they lay down rules aiming towards the same objective, i.e., to arrive at a taxable base for businesses. In this vein, to support the proper functioning of the internal market, the corporate tax environment in the Union should be shaped according to the principle that companies pay their fair share of tax in the jurisdictions where their profits are generated. Therefore, it would be important for businesses which operate on the internal market that Member States introduce a common legal framework to harmonise the fundamental features of corporate income tax systems with a view to simplifying tax rules, fighting against tax avoidance, reducing administrative burden and ensuring a fair competition. Provisions regarding the corporate income tax rate should, however, remain at the discretion of Member States within the framework of Council Directive (EU) 2022/2523 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union.

Added:Recital 2: (2) The existence of 27 different corporate income tax systems in the Union gives rise to complexity in tax compliance and leads to unfair competition for businesses, and can lead to double taxation, tax avoidance and double non-taxation. According to the 2024 Annual Report on Taxation, revenue losses due to corporate profit shifting were estimated at 20 % of all corporate tax revenues collected in 2022 in the Union, which would amount to around EUR 100 billion in nominal value. Those phenomena have become more evident as globalisation and digitalisation of the economy have significantly altered the perception of land borders and business models. As governments have tried to adapt to that new reality, a fragmented response among Member States has led to further distortions in the internal market. The various legal frameworks inevitably lead to different tax administration practices across the Member States as well. This often entails long procedures characterised by unpredictability and inconsistency along with high compliance costs, which can impact cross-border investments. Such complexity can hinder businesses’ expansion in the internal market, with further negative impacts on innovation, competitiveness and jobs. Therefore, a common approach is necessary, not only to ensure fair and effective taxation, but also to strengthen the integrity and competitiveness of the companies that are active on the internal market.

Removed:Recital 5: (5) The environment for doing business in the internal market should be made more attractive with the aim to stimulate growth and investment in the Union. For this purpose, the enactment of a common framework of corporate tax rules should be prioritised, in order to make it easier for businesses to comply with such rules when they operate across borders and also to encourage those who wish to further expand abroad to do so. A single set of corporate tax rules for international activity is expected to result in enhanced tax certainty and less tax disputes, as it would tackle distortions and decrease the number of cases of double and over-taxation. Furthermore, as tax revenue sustainability is key to Member States’ budgets, including to invest in infrastructure, research and development and green and social transitions and to deliver public services, it is essential to design profit determination rules in the Union that will not result in lower revenues for Member States. In addition, it would be critical to ensure for the future that the allocation of revenues is performed in accordance with a tool based on solid parameters that cannot be abused.

Added:Recital 3: (3) Albeit different in their design, the fundamental features of corporate income tax systems are similar as they lay down rules aiming towards the same objective, i.e., to arrive at a taxable base for businesses. In this vein, to support the proper functioning of the internal market, the corporate tax environment in the Union should be shaped according to the principle that companies pay their fair share of tax in the jurisdiction(s) where their profits are generated. Therefore, it would be important for businesses which operate on the internal market that Member States introduce a common legal framework to harmonise the fundamental features of corporate income tax systems with a view to simplifying tax rules, reducing administrative burden, ensuring a fair competition, enhancing legal certainty for companies operating across borders, and fighting tax avoidance. The scope of such harmonisation should be strictly limited to the criteria and entities referred to in this Directive, while the tax rate and enforcement policies remain with Member States, within the framework of Council Directive (EU) 2022/25231a. / 1a. Council Directive (EU) 2022/2523 of 14 December 2022 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union (OJ L 328, 22.12.2022, p. 1, ELI: http://data.europa.eu/eli/dir/2022/2523/oj).

Removed:Recital 6: (6) It is indeed critical to create a system that achieves a degree of uniformity across the Union, at least amongst the taxpayers that it is chiefly addressed to. Accordingly, and considering the efforts that both tax administrations and businesses have made in order to implement the framework of a global minimum level of taxation, it would be important to capitalise on this achievement and design rules that remain as close as possible to the OECD/G20 Model Rules and Directive (EU) 2022/2523. On this basis, the common framework of rules should be mandatory for groups with a taxable presence in the Union provided that they have annual combined revenues of more than EUR 750 000 000 based on their consolidated financial statements. In this way, the scope would thus be targeted at businesses that are most likely to have cross-border activities and, thereby, can benefit from the simplification which a common legal framework would offer. The threshold would also provide alignment with Directive (EU) 2022/2523 for a consistent approach in the Union. An enlargement of the scope of this Directive should be assessed a few years after the BEFIT framework has entered into force.

Added:Recital 3 a (new): (3a) Harmonising the corporate tax base through a common set of rules improves transparency, thereby fostering a fairer and healthier tax environment within the Union, which is underpinned in particular by the entry into force of Directive (EU) 2022/2523 on a global minimum level of taxation, and contributes to strengthening the Union’s overall competitiveness as well as the Union's commitment to internationally agreed standards.

Removed:Recital 7: (7) Although the threshold would be determined on the basis of the combined revenues of the group on a global basis, the remit of the provisions should be limited to members of the group operating on the internal market as Union law only applies within the Union and does not bind non-Member States. Only the Union sub-set of such a group should therefore be captured. This would include companies which are resident for tax purposes in a Member State and their permanent establishments, including any significant economic presence, operating in a Member State as well as the permanent establishments in the Union of third country companies of the same group. Considering that the concept of a permanent establishment is dealt with within bilateral tax treaties and national law and although the definition features some common principles, there is still a degree of divergence worldwide.

Added:Recital 4 a (new): (4a) To ensure legal certainty and avoid excessive administrative burdens on multinational enterprise groups, this Directive should aim for coherence with international tax developments, in particular those pursued by the OECD/G20 Inclusive Framework, including Pillar One and Pillar Two, while also taking into account the positions adopted by key international partners and Member States, including decisions to uphold or exempt themselves from agreed commitments. The Union should in any case retain sufficient flexibility to determine its own allocation mechanism, where necessary, in order to reduce compliance burdens and mitigate the risk of double or multiple taxation.

Removed:Recital 7 a (new): (7a) The Union should lead international discussions on making international corporate taxation fit for the future including by promoting a form of harmonisation of rules and an allocation of the taxable base for large multinationals.

Added:Recital 4 b (new): (4b) The Commission and the Member States should ensure the coherence and alignment of this Directive with the OECD/G20 Model Rules and with Directive (EU) 2022/2523. Wherever possible, the Commission and Member States should interpret concepts in this Directive in light of the principles and rules set out in Directive (EU) 2022/2523.

Removed:Recital 8 a (new): (8a) This Directive should lay down rules extending the concept of a permanent establishment so as to include a significant economic presence through which a business is wholly or partly carried on. The underlying objective is to improve the resilience of the internal market as a whole in order to address the challenges of taxation of the digital economy. The increased importance of services, accelerated by the digitalisation of the economy, has led to recent proposals, as embedded in the OECD/G20 Pillar One proposal, to define significant economic presence as a taxable nexus based on a purely quantitative threshold of sales in any given country in order to capture all sectors and ensure simplicity. That objective cannot be sufficiently achieved by the Member States acting individually because digital businesses are able to operate cross-border without having any physical presence in a jurisdiction and rules are therefore needed to ensure that digital businesses pay taxes in the jurisdictions where they make profits, whether by providing services or selling products ( ‘sales’).

Added:Recital 5: (5) The environment for doing business in the internal market should be made more attractive with the aim to stimulate growth and investment in the Union. For this purpose, the enactment of a common framework of corporate tax rules should be prioritised, in order to make it easier for businesses to comply with such rules when they operate across borders and also to encourage those who wish to further expand abroad to do so and encourage entrepreneurship in the internal market. A single set of corporate tax rules for international activity is expected to result in enhanced tax certainty and less tax disputes, as it would tackle distortions and decrease the number of cases of double taxation and non-taxation. This further implies less opportunities to abuse some specific national tax provisions in a pan-European context. Furthermore, as tax revenue sustainability is key to Member States’ budgets, including to invest in infrastructure, research and development, security and defence, and the green and social transitions and to deliver public services, especially for the most vulnerable households, it is essential to design profit determination rules in the Union that will not result in lower revenues for Member States. In addition, it would be critical to ensure for the future that the allocation of revenues is performed in accordance with a tool based on solid parameters that cannot be abused.

Removed:Recital 8 b (new): (8b) In order to provide for a robust definition of a taxable nexus of a business in a Member State, whether or not the business is digital, it is necessary that such a definition is based on the revenues from any sales, including from the supplied digital services. The definition included in this Directive is identical to the definition agreed upon in the framework of the OECD/G20 Pillar One proposal, in order to ensure coherence between this Directive and that international framework. The Union should lead by example in the international tax reform discourse, in order to provide certainty to taxpayers.

Added:Recital 7: (7) Although the threshold would be determined on the basis of the combined revenues of the group on a global basis, the remit of the provisions should be limited to members of the group operating on the internal market as Union law only applies within the Union and does not bind non-Member States. Only the Union sub-set of such a group should therefore be captured. This would include companies which are resident for tax purposes in a Member State and their permanent establishments, including any significant economic presence, operating in a Member State as well as the permanent establishments in the Union of third country companies of the same group.

Removed:Recital 9: (9) The objective of simplifying the current rules underscores the envisaged initiative, improving the efficiency and competitiveness of the internal market. Therefore, the rules on the computation of the tax base should be built by applying a limited series of tax adjustments to the financial statements of each group member. These limited adjustments would represent common adjustments that are necessary to convert the financial accounting statements into a tax base. Considering the need for alignment with Directive (EU) 2022/2523, the adjustments should resonate with that framework, which should also facilitate implementation for Member States and businesses that would already be familiar with the general principles. In that framework, the payment of top-up tax due in accordance with Directive (EU) 2022/2523 or in application of a qualified domestic top-up tax as referred to in that Directive, or any other alternative minimum taxes recognised in an international forum such as the OECD or the United Nations, should be taken into consideration.

Added:Recital 7 a (new): (7a) The Union should lead and actively participate in international discussions on making international corporate taxation fit for the future, including by promoting a form of harmonisation of rules and an allocation of the taxable base for large multinationals.

Removed:Recital 10 a (new): (10a) In order to achieve the objective of a simplified tax framework and in order for this Directive to adequately complement Directive (EU) 20XX/XX1a on laying down rules on a debt-equity bias reduction allowance and on limiting the deductibility of interest for corporate income tax purposes, the rules laid down in this Directive on the deductibility of interest should align with the ones provided for in Directive (EU) 20XX/XX, where applicable. / 1a OJ L , , p. .

Added:Recital 8 a (new): (8a) This Directive should lay down rules extending the concept of a permanent establishment so as to include a significant economic presence through which a business is wholly or partly carried on. The underlying objective is to improve the resilience of the internal market as a whole in order to address the challenges of taxation of the digital economy. The increased importance of services, accelerated by the digitalisation of the economy, has led to recent proposals, as embedded in the OECD/G20 Pillar One proposal, to define significant economic presence as a taxable nexus based on a purely quantitative threshold of sales in any given country in order to capture all sectors and ensure simplicity. That objective cannot be sufficiently achieved by the Member States acting individually, because digital businesses are able to operate cross-border without having any physical presence in a jurisdiction and rules are therefore needed to ensure that digital businesses pay taxes in the jurisdictions where they make profits, whether by providing services or selling products (‘sales’).

Removed:Recital 11 a (new): (11a) In order to spur investment and achieve a sustainable transition, Member States should be incentivised to adopt targeted accelerated depreciation rules. Such temporary rules should stimulate sustainable economic growth, create jobs, guarantee energy security and foster innovation in sustainable technologies. To operationalise those incentives, the Commission should be mandated to adopt implementing acts.

Added:Recital 8 b (new): (8b) In order to provide for a robust definition of a taxable nexus of a business in a Member State, irrespective of whether the business is digital, it is necessary that such a definition is based on the revenues from any sales, including from the supplied digital services. The definition included in this Directive is identical to the definition agreed upon in the framework of the OECD/G20 Pillar One proposal, in order to ensure coherence between this Directive and that international framework. The Union should lead by example in the international tax reform discourse, in order to provide certainty to taxpayers. Furthermore, in order to ensure consistency, the Commission may issue recommendations to support adaptations to the double tax conventions of Member States with non-Union jurisdictions, so as to ensure that the concept of a permanent establishment, including a significant economic presence, and the related profit attribution rules are applied in a manner consistent with internationally agreed standards.

Removed:Recital 12: (12) To achieve the key objective of creating a simplified corporate tax framework, the preliminary tax results for each group member should be aggregated into one single common tax base, in order to subsequently allocate this base to eligible group members. The tax adjustments to the financial statements would produce preliminary tax results for each group member. These results would then be aggregated, which would allow for a capped cross-border loss relief between BEFIT group members, and subsequently, the aggregated tax base would be allocated to group members based on a transition allocation rule; this would pave the way towards a permanent mechanism. The permanent mechanism should be based on a formulary apportionment including, but not limited to, three sets of tangible factors: labour, assets and sales. It would render the need for intra-BEFIT group transactions to be consistent with the arm’s length principle redundant. It would have the advantage of using more recent country-by-country reporting (‘CbCR’) data and the information gathered during the transition period. This will also allow for a more thorough assessment of the impact that the implementation of the two-pillar approach is expected to have on national tax bases and the BEFIT group tax bases, and therefore, reduce tax compliance costs for companies. In this way, it would still become possible to materialise the key objective of tax neutrality in the internal market, which would reduce instances of double …

Added:Recital 9: (9) The objective of simplifying the current rules underscores the envisaged initiative, improving the efficiency and competitiveness of the internal market. Therefore, the rules on the computation of the tax base should be built by applying a limited series of tax adjustments to the financial statements of each group member. These limited adjustments would represent common adjustments that are necessary to convert the financial accounting statements into a tax base. Considering the need for alignment with Directive (EU) 2022/2523, the adjustments should resonate with that framework, which should also facilitate implementation for Member States and businesses that would already be familiar with the general principles. In that framework, the payment of top-up tax due in accordance with Directive (EU) 2022/2523 or in application of a qualified domestic top-up tax as referred to in that Directive, or any other alternative minimum tax recognised in an international forum such as the OECD, should be taken into consideration.

Removed:Recital 14: (14) To provide space for growth and investment, Member States would also be allowed to individually apply additional post-allocation adjustments (e.g. tax treatment of pension contributions) in areas not covered by the common framework. Member States would also be free to further adjust their allocated share without a ceiling in order to ensure that Member States can make their national policy choices in this area. The post-allocation adjustment should, however, focus on input-based tax incentives. Member States should refrain from offering output-based tax incentives such as patent boxes and other intellectual property regimes.

Added:Recital 10: (10) Given that, with the aim to bring simplification, the financial accounts will be used as a starting point for computing the tax base of each group member, it is necessary to draft tax rules in such a way that they stay as close as possible to financial accounting. In the cases where this is possible, the financial accounting treatment of an asset or liability would not change for the purpose of taxation and consequently, no adjustments would be required. Accordingly, it is also necessary that in line with the rationale of taxation, other elements of the tax base be treated for tax purposes in a different way compared to how they are qualified under financial accounting. In order to ensure consistency with international tax practices such as those under the Pillar Two framework, this Directive should allow greater flexibility in the choice of financial accounting standards used to determine the preliminary tax result.

Added:Recital 10 a (new): (10a) In order to achieve the objective of a simplified tax framework and in order for this Directive to adequately complement Council Directive (EU) .../...1a+, the rules laid down in this Directive on the deductibility of interest should align with the ones provided for in Directive (EU) .../...++, where applicable. / 1a Council Directive (EU) .../... of ... on laying down rules on a debt-equity bias reduction allowance and on limiting the deductibility of interest for corporate income tax purposes (OJ L , ..., ELI: ...). / + OJ: Please insert in the text the number of the Directive contained in document 2022/0154(CNS) and insert the number, name, date and OJ reference of that Directive in the footnote. / ++ OJ: Please insert in the text the number of the Directive contained in document 2022/0154(CNS).

Added:Recital 10 b (new): (10b) To guarantee a minimal level of taxation of royalties, a royalties limitation rule for BEFIT group members should be introduced in accordance with the Subject to Tax Rule1a as proposed by the OECD/G20 Inclusive Framework in Pillar Two. / 1a OECD (2023). Tax Challenges Arising from the Digitalisation of the Economy – Subject to Tax Rule (Pillar Two): Inclusive Framework on BEPS, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris, https://doi.org/10.1787/9afd6856-en.

Added:Recital 10 c (new): (10c) A fairer taxation of passive income also requires robust Controlled Foreign Company (CFC) rules for BEFIT group members in order to make them more resilient against profit shifting.

Added:Recital 11 a (new): (11a) In order to encourage investment, achieve a sustainable transition and enhance the Union's ability to prevent and respond to emerging threats and crises, Member States should adopt a targeted accelerated depreciation regime to incentivise companies to make the necessary investments to deliver on the twin transition and foster their resilience. That temporary regime should stimulate sustainable economic growth, create jobs, enhance the Union’s security, including in the digital and energy sectors, and foster innovation in sustainable technologies. To operationalise those incentives and ensure a uniform approach across the internal market, the Commission should be mandated to adopt implementing acts.

Added:Recital 12: (12) To achieve the key objective of creating a simplified corporate tax framework, the preliminary tax results for each group member should be aggregated into one single common tax base, in order to subsequently allocate this base to eligible group members. Such a framework should be simple for businesses and should avoid imposing any new burden on them. The tax adjustments to the financial statements would produce preliminary tax results for each group member. These results would then be aggregated, which would allow for a capped cross-border loss relief between BEFIT group members, and subsequently, the aggregated tax base would be allocated to group members based on a transition allocation rule; this would pave the way towards a permanent mechanism. The permanent mechanism should be based on a formulary apportionment, including, but not limited to, four sets of tangible factors: labour, assets, sales and digital presence. It would render the need for intra-BEFIT group transactions to be consistent with the arm’s length principle redundant. It would have the advantage of using more recent country-by-country reporting (‘CbCR’) data and the information gathered during the transition period. This will also allow for a more thorough assessment of the impact that the implementation of the two-pillar approach is expected to have on national tax bases and the BEFIT group tax bases, and therefore, reduce tax compliance costs for companies. In this way, it would still become possib…

Added:Recital 14: (14) To provide space for growth and investment, Member States would also be allowed to individually apply additional post-allocation adjustments (e.g. tax treatment of pension contributions) in areas not covered by the common framework. Member States would also be free to further adjust their allocated share without a ceiling in order to ensure that Member States can make their national policy choices in this area, for example to generate resource efficiency, stimulate investment and create jobs. Such additional adjustments may include deductions, allowances, tax credits or other national corporate income tax measures, including those promoting research and development or other policy objectives, provided that such measures apply only to the allocated share of the tax base and do not affect the consolidated tax base or the allocation mechanism under this Directive. The post-allocation adjustment should, however, focus on input-based tax incentives. Member States should refrain from offering output-based tax incentives such as patent boxes and other intellectual property regimes.

Change 5 Substance

AI summary:Removes recital 19's optional scope for groups with revenues below EUR 40 million from 2035; adds recitals on one-stop-shop, resources for BEFIT teams, and taxpayer ID.

Show the text change (8 lines)

Removed:Recital 19: (19) To optimise the benefits of having a common legal framework for computing the corporate tax base in the internal market, the application of the rules should be optional for groups, including SME groups, who earn annual combined revenues of less than EUR 750 000 000, and, as of 1 July 2035, of less than EUR 40 000 000, as long as they prepare consolidated financial statements and have a taxable presence in the Union. By keeping the application of the rules open to groups of a smaller size, more groups with cross-border structures and activities may benefit from the simplification that the common framework offers. Companies choosing to be covered by this Directive should benefit from Member States' and the Commission's technical assistance to comply with the new rules and therefore foster their cross-border activities.

Added:Recital 18 a (new): (18a) A key pillar for improving corporate tax compliance is the establishment of a comprehensive one-stop-shop system that enables businesses to fulfil their tax obligations across Member States through a single, streamlined interface, thereby reducing administrative burdens, ensuring consistent enforcement, and enhancing legal certainty in the internal market.

Removed:Recital 21 a (new): (21a) Each BEFIT group should have a filing entity, which should determine the country of the filing authority and the competent authority which will lead the BEFIT team. As a matter of principle, the filing authority should be based in the Member State where the parent company of the BEFIT group is resident for tax purposes. Where the BEFIT group is owned by a firm headquartered in a third country, the filing entity should be the Union intermediate parent entity, where there is one.

Added:Recital 19: (19) To optimise the benefits of having a common legal framework for computing the corporate tax base in the internal market, the application of the rules should be optional for groups, including SME groups, who earn annual combined revenues of less than EUR 750 000 000 as long as they prepare consolidated financial statements and have a taxable presence in the Union. By keeping the application of the rules open to groups of a smaller size, more groups with cross-border structures and activities may benefit from the simplification that the common framework offers. Companies choosing to be covered by this Directive should benefit from Member State and Commission technical assistance to comply with the new rules and thereby foster their cross-border activities.

Removed:Recital 21 b (new): (21b) Before this Directive enters into force, the Commission should, where appropriate, submit a legislative proposal for a harmonised, common European taxpayer identification number. This would not only facilitate the communication between the representatives of Member States and the BEFIT team, but also increase the efficiency of tax information exchange within the Union.

Added:Recital 21 a (new): (21a) To guarantee efficient cooperation among BEFIT teams, Member States should dedicate adequate human resources to the BEFIT team, including by providing content and language training to the BEFIT team representatives and by relying on the FISCALIS programme.

Removed:~~Recital 23: (23) The retention period of at least 10 years is justified in order to allow Member States to comply with most statute of limitations.~~

Added:Recital 21 b (new): (21b) The Commission should, where appropriate, submit a legislative proposal for a harmonised, common European taxpayer identification number. This would not only facilitate the communication between the representatives of Member States and the BEFIT team, but also increase the efficiency of tax information exchange within the Union.

Change 7 Substance

AI summary:Extends the definition of permanent establishment to include significant economic presence.

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Changed:Article 1 – paragraph 2 – point e a (new): (ea) extending the concept of a permanent ~~establishment.~~establishment, to include a significant economic presence through which a business is wholly or partly carried on.

Change 8 Substance

AI summary:Adds new Article 3a on significant economic presence with revenue threshold of EUR 1 million; removes Article 2 paragraphs on scope thresholds and derogations; adds new Article 5 points on ownership.

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Removed:Article 1 – paragraph 3: 3. A company or a permanent establishment which is subject to this Directive shall cease to be subject to the national corporate tax law establishing a corporate income tax base in all Member States where it is established in respect of all matters regulated by this Directive, unless otherwise stated in this Directive.

Added:Article 2 – paragraph 8: 8. The Commission shall be empowered to adopt delegated acts in accordance with Article 74 to amend Annexes I and II strictly to reflect changes to the laws of the Member States concerning company forms and corporate taxes.

Removed:Article 2 – paragraph 1 – point a: (a) they belong to a domestic group or to a multinational enterprise group (‘MNE group’) which prepares consolidated financial statements and had annual combined revenues amounting to: / - from 1 July 2028 to 30 June 2035: EUR 750 000 000 or more in at least two of the last four fiscal years; / - from 1 July 2035: EUR 40 000 000 or more in at least two of the last four fiscal years.

Added:Article 3 a (new): Article 3a / Significant economic presence / 1. For the purposes of corporate tax, a permanent establishment shall be deemed to exist if a significant economic presence exists through which a business is wholly or partly carried on. / 2. Paragraph 1 shall be in addition to, and shall not affect or limit the application of, any other test under Union or national law for determining the existence of a permanent establishment in a Member State for the purposes of corporate tax, whether specifically in relation to the supply of digital services or otherwise. / 3. A significant economic presence shall be considered to exist in a Member State in a tax period if total revenues derived by a BEFIT group from that Member State exceed EUR 1 000 000. / 4. The Commission shall, by means of implementing acts, lay down a detailed methodology for the sourcing rules to define the revenues. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 73. / 5. The Commission may issue recommendations to support adaptations to the double tax conventions of Member States with non-Union jurisdictions, in order to ensure that the concept of a permanent establishment, including a significant economic presence, and the related profit attribution rules are applied in a manner consistent with internationally agreed standards.

Removed:Article 2 – paragraph 2: 2. By way of derogation from paragraph 1, this Directive shall not apply to companies or permanent establishments with an ultimate parent entity outside the Union where the combined revenues of the group in the Union either do not exceed 3% of the total revenues for the group based on its consolidated financial statements or the amount of EUR 40 million in at least two of the last four fiscal years. This shall be without prejudice to the right of opting in under paragraph 7.

Added:Article 5 – paragraph 1 – point a: (a) the company is either the ultimate parent entity of the group or any other company of the group in which the ultimate parent entity holds, directly or indirectly, at least 50% of the ownership rights or of the rights giving entitlement to profit;

Removed:Article 2 – paragraph 3: 3. Where two or more groups merge to form a single group, the threshold of EUR 750 000 000 referred to in paragraph 1, point (a), first indent, shall be deemed to be met for any fiscal year prior to the merger if the sum of the combined revenues of the merging groups for that fiscal year, as included in each of their consolidated financial statements, is EUR 750 000 000 or more. The companies and permanent establishments members of that newly formed group shall become subject to this Directive if that threshold was met in at least two of the last four fiscal years. As from 1 July 2035, the threshold of reference is EUR 40 000 000 as referred to in paragraph 1, point (a), second indent.

Added:Article 5 – paragraph 1 – point b: (b) the head office of the permanent establishment is either the ultimate parent entity of the group or any other member (company or entity) of the group in which the ultimate parent entity holds, directly or indirectly, at least 50% of the ownership rights or of the rights giving entitlement to profit.

17 more changes of substance

Change 9 Substance

AI summary:Replaces Article 2(4) on mergers with new Article 7(4a) on financial accounting standards, changing the threshold and conditions.

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Changed:Article 27 – paragraph 4:4 4.a ~~Where~~(new): a4a. ~~company~~Where ~~that~~it is not ~~a member~~reasonably ofpracticable ato ~~group~~determine ~~(the~~the ~~‘target’)~~financial isaccounting ~~acquired~~net byincome ~~another~~or ~~company~~loss orof a ~~group~~constituent ~~(the~~entity ~~‘acquiring~~based ~~entity’)~~on ~~and~~the ~~either~~acceptable ~~the~~financial ~~target~~accounting standard or ~~the~~authorised ~~acquiring~~financial ~~entity~~accounting ~~did~~standard ~~not~~used ~~have~~in the preparation of the consolidated financial statements ~~in any~~ of the ~~four~~ultimate ~~fiscal~~parent ~~years~~entity, ~~immediately~~the ~~preceding~~financial ~~the~~accounting ~~fiscal~~net ~~year~~income ofor ~~the~~loss ~~acquisition,~~of the ~~threshold~~constituent ofentity ~~annual~~for ~~combined~~the ~~revenues~~fiscal ofyear ~~EUR~~may ~~750~~be ~~000~~determined ~~000~~using ~~referred~~another toacceptable infinancial ~~paragraph~~accounting 1standard ~~shall~~or bean ~~deemed~~authorised tofinancial beaccounting ~~met~~standard, ~~for~~provided ~~that~~that: ~~year~~/ if(a) the ~~sum~~financial accounts of the ~~revenues~~constituent ~~included~~entity inare maintained on the ~~financial~~basis ~~statements~~of orthat ~~consolidated~~accounting ~~financial~~standard; ~~statements~~/ of(b) the ~~target~~information ~~and~~contained in the ~~acquiring~~financial ~~entity~~accounts ~~for~~is ~~that~~reliable; ~~fiscal~~and ~~year~~/ is(c) permanent differences in excess of EUR ~~750~~1 000 000 ~~or more.~~that ~~The~~arise ~~acquiring~~from ~~entity~~the ~~shall~~application ~~become~~of ~~subject~~a toparticular ~~this~~principle ~~Directive~~or ifstandard ~~that~~to ~~threshold~~items ~~was~~of ~~met~~income inor atexpense ~~least~~or ~~two~~transactions, ofwhere ~~the~~that ~~four~~principle ~~fiscal~~or ~~years~~standard ~~immediately~~differs ~~preceding~~from the ~~fiscal~~financial ~~year~~standard used in ~~which~~the ~~this~~preparation ~~Directive~~of ~~started~~the toconsolidated ~~apply~~financial tostatements of the ~~acquiring~~ultimate ~~entity.~~parent Asentity, ~~from~~are 1adjusted ~~July~~to ~~2035,~~comply ~~the~~with ~~threshold~~the oftreatment ~~reference~~required isfor ~~EUR~~that 40item ~~000~~under ~~000~~the asaccounting ~~referred~~standard toused in ~~paragraph~~the 1,preparation ~~point~~of ~~(a),~~the ~~second~~consolidated ~~indent.~~financial statements.

Change 10 Substance

AI summary:Adds Article 13a on royalties limitation rule; removes Article 2(5) and (7) on demergers and opt-in; removes Article 3(10)(b) and (15); adds Article 4a on significant economic presence; modifies Article 5 points; removes Article 8(1) on dividends; modifies Article 13 on interest limitation.

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Removed:Article 2 – paragraph 5 – introductory part: 5. Where there is a demerger of a group into two or more groups (the ‘demerged groups’), the threshold of EUR 750 000 000 referred to in paragraph 1, point (a), shall be deemed to be met by each of the demerged groups where:

Added:Article 13 a (new): Article 13a / Royalties limitation rule / The financial accounting net income or loss of a BEFIT group member shall be adjusted to include any amounts of royalty costs and licence fee payments for which the corresponding income derived by the recipient BEFIT group member is subject to an effective tax rate below 9%, unless the recipient entity carries out substantive economic activity supported by staff, equipment, assets and premises, as evidenced by relevant facts and circumstances.

Removed:Article 2 – paragraph 5 – point b: (b) in the second to fourth fiscal years ending after the demerger, each of the demerged groups has annual combined revenues of EUR 750 000 000 or more in at least two of those fiscal years. From 1 July 2035, the threshold of reference is EUR 40 000 000 as referred to in paragraph 1, point (a), second indent.

Removed:Article 2 – paragraph 7: 7. Member States shall ensure that companies which are resident for tax purposes in a Member State and fulfil the conditions laid down in paragraph 1, point (b), including their permanent establishments located in other Member States, as well as permanent establishments, located in Member States, of third-country entities which fulfil the conditions of paragraph 1, point (c), may choose to be covered by this Directive if they belong to an MNE group or domestic group which prepares consolidated financial statements but does not fulfil the conditions laid down in paragraph 1, point (a), first indent, regarding the threshold of EUR 750 000 000 or paragraph 1, point (a), second indent, regarding the threshold of EUR 40 000 000.

Removed:Article 3 – paragraph 10 – point b: (b) if the ultimate parent entity is not located in a Member State or, in absence of such, the intermediate parent entity located in a Member State that has been appointed by the BEFIT group to fulfil the obligations in relation to the BEFIT group information return set out in Article 57 on behalf of the BEFIT group.

Removed:Article 3 – paragraph 15: (15) ‘economic owner’ means the person who receives substantially the most benefits and bears the most risks attached to a fixed asset, regardless of whether that person is the legal owner. A taxpayer who has the right to possess, use and dispose of a fixed asset and bears the risk of its loss or destruction shall in any event be considered the economic owner;

Removed:Article 4 a (new): Article 4a / Significant economic presence / 1. For the purposes of corporate tax, a permanent establishment shall be deemed to exist if a significant economic presence exists through which a business is wholly or partly carried on. / 2. Paragraph 1 shall be in addition to, and shall not affect or limit the application of, any other test under Union or national law for determining the existence of a permanent establishment in a Member State for the purposes of corporate tax, whether specifically in relation to the supply of digital services or otherwise. / 3. A significant economic presence shall be considered to exist in a Member State in a tax period if total revenues derived by a BEFIT group from that Member State exceed EUR 1 000 000. / 4. The Commission shall, by means of implementing acts, lay down a detailed methodology for the sourcing rules to define the revenues. Those implementing acts shall be adopted in accordance with the examination procedure.

Removed:Article 5 – paragraph 1 – point a: (a) the company is either the ultimate parent entity of the group, the intermediate parent entity of the group located in a Member State or any other company of the group, in which the ultimate parent entity holds, directly or indirectly, at least 50% of the ownership rights or of the rights giving entitlement to profit;

Removed:Article 5 – paragraph 1 – point b: (b) the head office of the permanent establishment is either the ultimate parent entity of the group, the intermediate parent entity of the group located in a Member State or any other member (company or entity) of the group in which the ultimate parent entity holds, directly or indirectly, at least 50% of the ownership rights or of the rights giving entitlement to profit.

Removed:Article 8 – paragraph 1: With the exception of financial assets held for trading, as referred to in Article 11(1), and investments made for the benefit of life insurance policyholders bearing the investment risk in the context of a unit-linked/index-linked life insurance policy, as referred to in Article 14, the financial accounting net income or loss of a BEFIT group member shall be adjusted to exclude 95% of the amount of dividends or other distributions received or accrued during the fiscal year, provided that at the date of distribution, the ownership interest is held by the BEFIT group member for more than one year and this interest carries right to more than 10% of the profits, capital, reserves or voting rights, and the dividends or other distributions have been subject to an effective tax rate not below 9%.

Removed:Article 13 – paragraph 1: 1. A BEFIT group member shall adjust its financial accounting net income or loss to include the amount of exceeding borrowing costs, which is not deductible for tax purposes in accordance with paragraph 1a. / (deleted)

Removed:Article 13 – paragraph 1 a (new): 1a. For the purpose of this Article, ‘exceeding borrowing costs’ means the amount by which the deductible borrowing costs of a taxpayer exceed taxable interest revenues and other economically equivalent taxable revenues that the taxpayer receives pursuant to national law. / Exceeding borrowing costs shall be deductible up to 75 % in the tax period in which they are incurred. If such amount is higher than 20 % of the taxpayer's earnings before interest, tax, depreciation and amortisation (EBITDA), the deduction shall be limited to 20 % of the taxpayer’s EBITDA. / Article 4(2), Article 4(3), Article 4(4), point (b), Article 4(5), Article 4(7) and Article 4(8) of Council Directive (EU) 2016/11641a shall apply to a BEFIT group. / 1a Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market (OJ L 193, 19.7.2016, p. 1).

Removed:Article 13 a (new): Article 13a / Royalties limitation rule / The financial accounting net income or loss of a BEFIT group member shall be adjusted to include any amounts of royalty costs and licence fee payments for which the corresponding income derived by the recipient BEFIT group member is subject to an effective tax rate below 9%.

Change 11 Substance

AI summary:Adds Article 21a on controlled foreign companies; removes Article 20(1) and its points; modifies Article 22 on depreciation thresholds and periods.

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Removed:Article 21 a (new): Article 21a / Controlled foreign companies / 1. The financial accounting net income or loss of a BEFIT group member shall be adjusted to include the non-distributed income of an entity or permanent establishment treated as a controlled foreign company as referred to in Article 7(1) of Council Directive (EU) 2016/1164, which is derived from the following categories: / (i) interest or any other income generated by financial assets; / (ii) royalties or any other income generated from intellectual property; / (iii) dividends and income from the disposal of shares; / (iv) income from financial leasing; / (v) income from insurance, banking and other financial activities; / (vi) income from invoicing companies that earn sales and services income from goods and services purchased from and sold to associated enterprises, and add no or little economic value. / Paragraph 1 shall not apply where the controlled foreign company carries out a substantive economic activity supported by staff, equipment, assets and premises, as evidenced by relevant facts and circumstances. / Where the controlled foreign company is resident or situated in a third country that is not an EEA Member State, Member States may decide to refrain from applying this paragraph. / 2. The income to be included in the tax base shall be calculated in accordance with Article 8 of Council Directive (EU) 2016/1164.

Added:Article 20 – paragraph 1 – introductory part: The financial accounting net income or loss of a BEFIT group member shall be adjusted in accordance with Article 16(1), point (e), of Directive (EU) 2022/2523.

Removed:Article 22 – paragraph 1: 1. The financial accounting net income or loss of a BEFIT group member shall be adjusted to exclude in the fiscal year of acquisition any fixed tangible asset that has a book value before depreciation which is below EUR 1 000.

Added:Article 20 – paragraph 1 – point a: deleted

Removed:Article 22 – paragraph 2 – point a: (a) all buildings as well as any other type of immovable property and structure in use for the business, with the exception of industrial buildings and structures: 40 years;

Added:Article 20 – paragraph 1 – point b: deleted

Added:Article 21 a (new): Article 21a / Controlled foreign companies / 1. The financial accounting net income or loss of a BEFIT group member shall be adjusted to include the non-distributed income of an entity or permanent establishment treated as a controlled foreign company as referred to in Article 7(1) of Directive (EU) 2016/1164, which is derived from the following categories: / (i) interest or any other income generated by financial assets; / (ii) royalties or any other income generated from intellectual property; / (iii) dividends and income from the disposal of shares; / (iv) income from financial leasing; / (v) income from insurance, banking and other financial activities; / (vi) income from invoicing companies that earn sales and services income from goods and services purchased from and sold to associated enterprises, and add no or little economic value. / The first subparagraph shall not apply where the controlled foreign company carries out a substantive economic activity supported by staff, equipment, assets and premises, as evidenced by relevant facts and circumstances. / Where the controlled foreign company is resident or situated in a third country that is not a member of the EEA, Member States may decide to refrain from applying this paragraph. / 2. The income to be included in the tax base shall be calculated in accordance with Article 8 of Directive (EU) 2016/1164.

Added:Article 22 – paragraph 1: 1. The financial accounting net income or loss of a BEFIT group member shall be adjusted to exclude in the fiscal year of acquisition any fixed tangible asset that has a book value before depreciation which is below EUR 7500.

Added:Article 22 – paragraph 2 – point a: (a) all buildings as well as any other type of immovable property and structure in use for the business, with the exception of industrial buildings and structures: 30 years;

Change 12 Substance

AI summary:Adds Article 22a on accelerated depreciation; removes Article 22(5a) on delegated acts for sustainable investment.

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Removed:Article 22 – paragraph 2 – point c: (c) fixed intangible assets, including acquired goodwill: the period for which the asset enjoys legal protection or for which the right has been granted and, where that period cannot be determined, 15 years.

Added:Article 22 a (new): Article 22a / Accelerated depreciation rules / 1. By way of derogation from Article 22, fixed tangible assets acquired by BEFIT group members in the following categories shall be subject to accelerated depreciation by Member States: / a) assets that contribute directly to the Union’s climate and social goals, in particular the enhancement of clean technology, energy efficiency and digitalisation; / b) assets that contribute directly to the attainment of the UN 2030 Sustainable Development Goals; / c) assets that contribute directly to the enhancement of the Union's defence, notably its ability to prevent and respond to emerging threats and crises, in accordance with the Preparedness Union Strategy. / 2. The Commission shall, by means of implementing act, lay down the necessary framework and criteria to operationalise paragraph 1, including the categories of assets eligible for accelerated depreciation. Every 5 years, the Commission shall conduct an assessment of the accelerated depreciation regime in paragraph 1, analysing, in particular whether the measures: / a) are fit for purpose, / b) are a cost-effective way to achieve their policy objectives, / c) have any negative or unexpected implications. / Following the assessment referred to in the first subparagraph, the Commission shall update the implementing act every 5 years, where deemed necessary. Implementing acts under this Article shall be adopted in accordance with the examination procedure referred to in Article 73. /…

Removed:Article 22 – paragraph 5 a (new): 5a. The Commission is empowered to adopt delegated acts to supplement this Directive by laying down temporary rules regarding accelerated depreciation for the cost of eligible assets and improvements to existing assets which qualify as environmentally sustainable within the meaning of Regulation 2020/852 on the establishment of a framework to facilitate sustainable investment1a. Those delegated acts shall be adopted in accordance with the examination procedure referred to in Article 74(2). / 1a Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13; ELI: http://data.europa.eu/eli/reg/2020/852/oj).

Change 14 Substance

AI summary:Adds Article 38 on loss relief for entering groups and Article 41(1) on exit taxation for intra-group asset transfers.

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Added:Article 38: Where a company or a permanent establishment enters a BEFIT group, any unrelieved losses incurred up to five years before the entry date, in accordance with the corporate tax law of the Member State of its tax residence or location respectively, shall be deducted from its share of the BEFIT tax base as determined in accordance with Chapter III.

Added:Article 41 – paragraph 1 – subparagraph 1: Notwithstanding Article 9, where, as a result of a disposition of shares, a BEFIT group member leaves the BEFIT group and during that or the previous fiscal year, this BEFIT group member acquired, in an intra-BEFIT group transaction, one or more fixed assets, the amount corresponding to the gain or loss arising from the intra-BEFIT group disposition of these fixed assets shall be included in the financial accounting net income or loss of the BEFIT group member which owned the assets prior to the intra-BEFIT group disposition.

Change 16 Substance

AI summary:Adds Article 43(1a) on beneficial ownership criteria; removes Article 45(3) points (a) and (b) on risk zones; adds Article 45(1) subparagraph on transition period.

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Removed:Article 45 – paragraph 3 – point a: (a) low-risk zone: where the expense incurred, or the income earned, by a BEFIT group member from intra-BEFIT group transactions increase in a fiscal year by less than 5 % compared to the average expense or income of the previous three fiscal years from intra-BEFIT group transactions;

Added:Article 43 – paragraph 1 a (new): 1a. The Commission shall provide clear and harmonised criteria for determining beneficial ownership. Those criteria shall aim to ensure the consistent application of the exemption system, reduce legal uncertainty, and prevent abuse. The criteria shall be developed in consultation with Member States and aligned, where appropriate, with international standards.

Removed:Article 45 – paragraph 3 – point b: (b) high-risk zone: where the expense incurred, or the income earned, by a BEFIT group member from intra-BEFIT group transactions increase in a fiscal year by 5 % or more compared to the average expense or income of the previous three fiscal years from intra-BEFIT group transactions.

Added:Article 45 – paragraph 1 – subparagraph 1: For each fiscal year between 1 July 2028 and 30 June 2033 at the latest (the ‘transition period’), the BEFIT tax base shall be allocated to the BEFIT group members in accordance with the baseline allocation percentage.

Change 17 Substance

AI summary:Replaces Article 45(3a) on benchmark increase with Article 45(1a) on transition period termination for new groups.

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Changed:Article 45 – paragraph 31 a– ~~(new):~~subparagraph ~~3a.~~2: ~~The~~For 5groups %that ~~benchmark~~become ~~referred~~subject to ~~in paragraph~~this 3Directive isafter ~~raised~~the toend 10of %the ~~for~~first fiscal ~~years during~~year ~~which~~when ~~the~~this ~~indices~~Directive ofstarts ~~consumer~~to ~~prices~~apply, ~~increase~~the bytransition 4%period orreferred ~~more~~to in the ~~Member~~first ~~State~~subparagraph ofshall ~~the~~be ~~BEFIT~~terminated ~~group~~by ~~member.~~30 June 2033 at the latest.

Change 18 Substance

AI summary:Changes low-risk zone threshold from 5% to 15% in Article 45(3)(a).

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Changed:Article 45 – paragraph 43 – point b:a: ~~(b)~~(a) ~~high-risk~~low-risk zone: ~~the competent authorities of~~where the ~~Member States concerned shall~~expense ~~presume~~incurred, ~~that~~or the ~~pricing of intra-BEFIT group~~income ~~transactions~~earned, ofby a ~~specific~~ BEFIT group member ~~does not comply with the arm’s length principle and the~~from ~~part~~intra-BEFIT ofgroup ~~the~~transactions increase ~~which goes beyond 5 %, as referred to~~ in ~~paragraph 3, or 10 %,~~a asfiscal ~~referred~~year toby inless ~~paragraph~~than ~~3a,~~15% ~~shall~~compared ~~not~~to bethe ~~recognized~~average ~~for~~expense ~~the~~or ~~purpose~~income of ~~computing~~ the ~~baseline~~previous ~~allocation~~three ~~percentage~~fiscal ofyears ~~that~~from ~~BEFIT~~intra-BEFIT group ~~member.~~transactions;

Change 19 Substance

AI summary:Changes high-risk zone threshold from 5% to 15% in Article 45(3)(b).

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Changed:Article 45 – paragraph 9:3 9.– ~~The~~point ~~Commission~~b: ~~shall~~(b) ~~carry~~high-risk ~~out~~zone: awhere ~~comprehensive~~the ~~review~~expense ofincurred, or the ~~transition~~income ~~rule~~earned, ~~and~~by ~~shall~~a ~~submit~~BEFIT agroup ~~report~~member tofrom ~~the~~intra-BEFIT ~~European~~group ~~Parliament~~transactions ~~and~~increase toin ~~the~~a ~~Council~~fiscal year by ~~the~~15% ~~end~~or ofmore compared to the ~~third~~average ~~fiscal~~expense ~~year~~or ~~during~~income of the ~~transition~~previous ~~period~~three ~~referred~~fiscal toyears infrom ~~paragraph~~intra-BEFIT 1.group transactions.

Change 20 Substance

AI summary:Adds Articles 45a-45i on permanent allocation formula; removes Article 45(5) and (9); adds Article 45(10) on continuation until amendment.

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Removed:Article 45 a (new): Article 45a / Allocation rule based on tangible factors / 1. As of 1 July 2035, the BEFIT tax base shall be allocated to the BEFIT group member in jurisdiction ‘A’ of a BEFIT group in each tax year on the basis of a formula that gives equal weight to the factors of sales, labour and assets according to Articles 45b to 45i: / 2. The consolidated tax base of a BEFIT group shall be shared only where it is positive. / 3. The calculations for sharing the consolidated tax base shall be done at the end of the tax year of the BEFIT group. / 4. A period of 15 days or more in a calendar month shall be considered a whole month. / 5. When determining the apportioned share of a BEFIT group member, equal weight shall be given to the factors of sales, labour and assets.

Added:Article 45 – paragraph 5: 5. Notwithstanding Article 13(2), the exceeding borrowing costs as referred to in Article 2 of Council Directive (EU) 2016/1164 which arise from a transaction between BEFIT group members shall not be recognized for the purpose of computing the baseline allocation percentage of the BEFIT group member which incurs such costs. Member States shall take appropriate measures to encourage undertakings to reduce those risks.

Removed:Article 45 b (new): Article 45b / Composition of the labour factor / 1. The labour factor shall consist, as to one half, of the total amount of the payroll of a BEFIT group member as its numerator and the total amount of the payroll of the BEFIT group as its denominator, and, as to the other half, of the number of employees of a BEFIT group member as its numerator and the number of employees of the BEFIT group as its denominator. Where an individual employee is included in the labour factor of a BEFIT group member, the payroll relating to that employee shall be allocated to the labour factor of the same BEFIT group member. / 2. The number of employees shall be counted at the end of the tax year. / 3. The definition of an employee shall be determined by the national law of the Member State where the employment is exercised.

Added:Article 45 – paragraph 9: deleted

Removed:Article 45 c (new): Article 45c / Allocation of employees and payroll / 1. Employees shall be included in the labour factor of the group member from which they receive remuneration. / 2. By way of derogation from paragraph 1, where employees physically exercise their employment under the control and responsibility of an entity other than that from which they receive remuneration, those employees as well as the amount of payroll related to them shall be included in the labour factor of the former entity. This rule shall only apply where all of the following conditions are met: / (a) the employment lasts for an uninterrupted period of at least three months; / (b) those employees represent at least 5% of the overall number of employees of the group member from which they receive remuneration. / 3. Employees shall include persons who, although not employed directly by a BEFIT group member, perform tasks similar to those performed by employees. / 4. Payroll shall include all costs of salaries, wages, bonuses and all other employee compensation, including related pension and social security costs borne by the employer. / 5. Payroll costs shall be valued at the amount of expenses that are treated as deductible by the employer in a tax year.

Added:Article 45 – paragraph 10: 10. The rules laid down in paragraphs 1 to 8 shall continue to apply until the entry into force of any amendment proposed pursuant to Article 77(1b).

Removed:Article 45 d (new): Article 45d / Composition of the asset factor / 1. The asset factor shall consist of the average value of all fixed tangible assets owned, rented or leased by a BEFIT group member as its numerator and the average value of all fixed tangible assets owned, rented or leased by the BEFIT group as its denominator. / 2. In the five years that follow a taxpayer joining an existing or new BEFIT group, its asset factor shall also include the total amount of costs incurred for research, development, marketing and advertising by the taxpayer over the six years that preceded its joining the group.

Removed:Article 45 e (new): Article 45e / Allocation of assets / 1. Without prejudice to Article 22(2) and (3), an asset shall be included in the asset factor of its economic owner. Where the economic owner cannot be identified, the asset shall be included in the asset factor of the legal owner. / However, an asset that is not effectively used by its economic owner shall be included in the factor of the BEFIT group member that effectively uses that asset, provided that the asset represents more than 5 % of the value for tax purposes of all fixed tangible assets of the BEFIT group member that effectively uses it. / 2. Except in the case of leases between BEFIT group members, leased assets shall be included in the asset factor of the BEFIT group member that is the lessor or the lessee of the asset. The same shall apply to rented assets.

Removed:Article 45 f (new): Article 45f / Valuation / Regarding valuation, the following rules shall apply: / (a) land and other non-depreciable fixed tangible assets shall be valued at their original cost; / (b) an individually depreciable fixed tangible asset shall be valued at the average of its value for tax purposes at the beginning and at the end of a tax year. Where, as a result of one or more intra-group transactions, an individually depreciable fixed tangible asset is included in the asset factor of a BEFIT group member for less than a tax year, the value to be taken into account shall be calculated having regard to the number of months that the asset was included in the asset factor of that BEFIT group member; / (c) the renter or lessee of an asset of which it is not the economic owner shall value that rented or leased asset at eight times the net annual rental or lease payment due, less any amounts receivable from sub-rentals or sub-leases. A BEFIT group member renting out or leasing an asset of which it is not the economic owner shall value that rented or leased asset at eight times the net annual rental or lease payment due; / (d) an asset sold by a BEFIT group member to a person outside the BEFIT group following an intra-group transfer in the same or the previous tax year shall be included in the asset factor of the transferring BEFIT group member for the period between the intra-group transfer and the sale to the person outside the BEFIT group, except where the BEFIT group members concern…

Removed:Article 45 g (new): Article 45g / Composition of the sales factor / The sales factor shall consist of the total sales allocated to a BEFIT group member, as its numerator, and the total sales of the BEFIT group, as its denominator.

Removed:Article 45 h (new): Article 45h / Sales by destination / 1. Sales of goods shall be included in the sales factor of the BEFIT group member located in the Member State where the dispatch or transport of the goods to the person acquiring them ends. Where that place cannot be determined, the sales of goods shall be attributed to the BEFIT group member located in the Member State of the last identifiable location of the goods. / 2. Supplies of services shall be included in the sales factor of the BEFIT group member located in the Member State where the services are physically carried out or actually supplied. / 3. Where there is no BEFIT group member in the Member State where the goods are delivered or the services are supplied, or where goods are delivered or services are supplied in a third country, the sales of goods and supplies of services shall be included in the sales factor of all BEFIT group members in proportion to their labour and asset factors. / 4. Where there is more than one BEFIT group member in the Member State where the goods are delivered or the services are supplied, the sales shall be included in the sales factor of all BEFIT group members located in that Member State in proportion to their labour and asset factors.

Removed:Article 45 i (new): Article 45i / Detailed rules on the calculation of factors / The Commission is empowered to adopt delegated acts to supplement this Directive by laying down detailed rules on the calculation of the labour, asset and sales factors, the allocation of employees and payroll, assets and sales to the respective factor and the valuation of assets. Those delegated acts shall be adopted in accordance with the examination procedure referred to in Article 74(2).

Removed:Article 46 – paragraph 1: 1. By way of derogation from Articles 42 to 45a, where a BEFIT group member conducts its principal business in the field of extractive activities, its revenues, expenses and other deductible items which stem from such activities shall be attributed to the BEFIT group member located in the Member State where the extraction takes place.

Removed:Article 46 – paragraph 2: 2. By way of derogation from Article 42 to 45a, where there is no BEFIT group member in the Member State of extraction, or where the extraction takes place in a third country jurisdiction, the revenues, expenses and other deductible items which stem from such activities shall be attributed to the BEFIT group member to which they accrued.

Removed:Article 47 – paragraph 1: 1. By way of derogation from Article 42 to 45a and without prejudice to Article 15, the revenues, expenses and other deductible items which stem from the following activities shall be excluded from the BEFIT tax base in any of the following cases:

Change 21 Substance

AI summary:Adds Article 48(2b) on double taxation relief; modifies Article 57 on filing deadlines and documentation retention.

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Removed:Article 57 – paragraph 3 – subparagraph 2 (new): For the purposes of point (d)(ii), all supporting documentation that was used to build the BEFIT tax base referred to in that provision shall be kept for 10 years in order to be made available to the competent authorities of all Member States in which the BEFIT group members are resident for tax purposes or situated in the form of a permanent establishment.

Added:Article 48 – paragraph 2 b (new): 2b. In order to prevent double taxation arising from the interaction between this Directive and bilateral tax treaties with third countries, Member States shall, where applicable, provide corresponding adjustments in accordance with their treaty obligations. The Commission may facilitate coordination and, where appropriate, issue guidelines to promote a consistent application across Member States.

Removed:Article 57 – paragraph 4 a (new): 4a. BEFIT teams shall use all existing procedures and arrangements offered by Directive 2011/16/EU on administrative cooperation in the field of taxation to ensure an efficient cooperation and exchange of information between national tax administrations.

Added:Article 57 – paragraph 2: 2. The BEFIT information return shall be submitted to the filing authority no later than six months after the end of the fiscal year.

Added:Article 57 – paragraph 3 a (new): 3a. For the purposes of paragraph 3, point (d)(ii), all supporting documentation that was used to build the BEFIT tax base referred to in that provision shall be kept for 10 years in order to be made available to the competent authorities of all Member States in which the BEFIT group members are resident for tax purposes or situated in the form of a permanent establishment.

Added:Article 57 – paragraph 4 a (new): 4a. BEFIT teams shall use all existing procedures and arrangements offered by Directive 2011/16/EU1a to ensure an efficient cooperation and exchange of information between national tax administrations. / 1a Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC (OJ L 64, 11.3.2011, p. 1, ELI: http://data.europa.eu/eli/dir/2011/16/oj).

Added:Article 58 – paragraph 1: 1. The filing entity shall notify the filing authority of errors in the BEFIT information return within three months of the timely submission of such return.

Change 22 Substance

AI summary:Changes Article 62 to Article 63: removes individual tax return filing until 2035, now requires notification of errors within three months.

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Changed:Article 6263 – paragraph 1: 1. ~~Until 30 June 2035, each~~A BEFIT group member shall ~~file its individual tax return with~~notify the competent authority of the Member State in which ~~that BEFIT group member~~it is resident for tax purposes or situated in the form of a permanent establishment ~~no later than three months after receipt~~ of ~~the notice from the filing authority pursuant to Article 61(3), (4) or (5), or~~errors in ~~case of a domestic~~the ~~group,~~individual notax ~~later~~return ~~than~~within ~~eight~~three months ~~from~~of the ~~end~~timely ofsubmission ~~the~~of ~~fiscal~~such ~~year.~~return.

Change 23 Substance

AI summary:Removes Articles 63 and 64 on individual tax returns and assessments until 2035.

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Removed:Article 63 – paragraph 1: 1. Until 30 June 2035, a BEFIT group member shall notify the competent authority of the Member State in which it is resident for tax purposes or situated in the form of a permanent establishment of errors in the individual tax return within two months of the timely submission of such return.

Removed:Article 64 – paragraph 1: 1. Until 30 June 2035, the competent authority of the Member State in which a BEFIT group member filed its individual tax return shall issue an individual tax assessment in accordance with the individual tax return. The enforcement of the tax liability shall be governed by the law of that Member State.

Change 24 Substance

AI summary:Changes Article 67(1): removes 'Until 30 June 2035', changes appeal period from two to three months.

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Changed:Article 67 – paragraph 1: 1. ~~Until 30 June 2035, a~~A BEFIT group member may appeal against the content of the individual tax assessment made pursuant to Article 64 before the competent authority of the Member State where that BEFIT group member is resident for tax purposes or situated in the form of a permanent establishment within ~~two~~3 months ~~after~~of the assessment ~~was~~being notified to it. The administrative appeal shall be heard by an administrative body that, in accordance with the law of the Member State of the BEFIT group member, is competent to hear appeals at first instance. The administrative appeal shall be governed by the law of the Member State in which the BEFIT group member is resident for tax purposes or situated in the form of a permanent establishment. Where there is no such administrative body in the Member State where the BEFIT group member is resident for tax purposes or situated in the form of a permanent establishment, the BEFIT group member may lodge a judicial appeal directly.

Change 25 Substance

AI summary:Changes Article 69 to Article 68: removes 'Until 30 June 2035', changes appeal period from two to three months, and changes who has right to appeal.

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Changed:Article 6968 – paragraph 1: 1. ~~Until 30 June 2035, where~~Where the decision pursuant to Article 6766 has been confirmed or varied, ~~a BEFIT~~the ~~group~~filing ~~member~~entity shall have the right to appeal directly to the courts of the Member State where it is resident for tax purposes or situated in the form of a permanent establishment within ~~two~~3 months ~~after~~of the ~~decision~~receipt of the ~~administrative appeals body referred to in Article~~decision 67of ~~was~~the ~~notified~~administrative toappeals ~~it.~~body. ~~The~~A judicial appeal shall be governed by the law of the Member State ~~in which~~where the ~~BEFIT group~~filing ~~member~~entity is resident for tax purposes or situated in the form of a permanent establishment.

Change 26 Substance

AI summary:Adds Article 69(1) on judicial appeal for BEFIT group members within three months.

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Added:Article 69 – paragraph 1: 1. Where the decision pursuant to Article 67 has been confirmed or varied, a BEFIT group member shall have the right to appeal to the courts of the Member State where it is resident for tax purposes or situated in the form of a permanent establishment within 3 months of the decision of the administrative appeals body referred to in Article 67 being notified to it. The judicial appeal shall be governed by the law of the Member State in which the BEFIT group member is resident for tax purposes or situated in the form of a permanent establishment.

Change 27 Substance

AI summary:Adds Article 77(1a) and (1b) on review and legislative proposal for permanent allocation; removes Article 74(2a) and modifies Article 77(2) and (4).

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Removed:~~Article 74 – paragraph 2 a (new): 2a. The power to adopt delegated acts referred to in Article 45i shall be conferred on the Commission for an indeterminate period starting on 1 July 2035.~~

Added:Article 77 – paragraph 1 a (new): 1a. As part of the evaluation of BEFIT referred to in paragraph 1, the Commission shall carry out a comprehensive review of the transition rule and develop a permanent method for the allocation of the BEFIT tax base. The development of the permanent method shall be preceded by a comprehensive impact assessment and appropriate stakeholder consultations, in accordance with the Commission’s Better Regulation principles.

Removed:Article 77 – paragraph 2: 2. Member States shall communicate to the European Parliament and to the Commission relevant information for the evaluation of the Directive in accordance with paragraph 3, including aggregated data on BEFIT group members which are resident for tax purposes in their jurisdiction and permanent establishments thereof operating in their jurisdiction, in order to properly assess: / (i) the impact of the transition allocation rule; / (ii) the link with other legislative acts in the area of corporate taxation, namely Directive (EU) 2022/2523 as well as the situation regarding Pillar One of the Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy agreed by the OECD/G20 Inclusive Framework on BEPS on 8 October 2021; / (iii) the relevance of the scope of this Directive and notably its potential extension to large groups as referred to in Article 3(7) of Directive 2013/34/EU; / (iv) the relevance of removing the exclusion of shipping income from the preliminary tax result; / (v) the impact on double tax treaties; / (vi) the impact of the co-existence of two tax systems, at Union level and at national level, on the administrative burden for entrepreneurs and tax administrations resulting from the application of Section 5 of Chapter II; / (vii) the impact of the allocation of the tax base on the Member States’ revenues; / (viii) the impact of the co-existence of distribution-based tax systems, as referred to in Article 49, with t…

Added:Article 77 – paragraph 1 b (new): 1b. Before the end of the transition period, the Commission shall submit a legislative proposal to amend this Directive and introduce a permanent method for the allocation of the BEFIT tax base that replaces the transitional allocation formula. The permanent method for the allocation of the BEFIT tax base shall take into account the conclusions of the comprehensive impact assessment and shall incorporate the following four factors: sales, labour, assets and digital presence.

Removed:Article 77 – paragraph 2 a (new): 2a. From ... [two years after the date of application of Article 45a], the Commission shall examine and evaluate the relevance of the factors in the allocation formula and their impact on the distribution of corporate income tax revenues in Member States, and report to the European Parliament and to the Council to that effect. The report shall, where appropriate, be accompanied by a legislative proposal to amend this Directive.

Added:Article 77 – paragraph 2: 2. Member States shall communicate to the European Parliament and to the Commission relevant information for the evaluation of the Directive in accordance with paragraph 3, including aggregated data on BEFIT group members which are resident for tax purposes in their jurisdiction and permanent establishments thereof operating in their jurisdiction, in order to properly assess: / (i) the impact of the transition allocation rule; / (ii) the link with other legislative acts in the area of corporate taxation, namely Directive (EU) 2022/2523 as well as the situation regarding Pillar One of the Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy agreed by the OECD/G20 Inclusive Framework on BEPS on 8 October 2021; / (iii) the relevance of the scope of this Directive and notably its potential extension to large groups as referred to in Article 3(7) of Directive 2013/34/EU; / (iv) the relevance of removing the exclusion of shipping income from the preliminary tax result; / (v) the impact on double tax treaties; / (vi) the impact of the co-existence of two tax systems, at Union level and at national level, on the administrative burden for entrepreneurs and tax administrations resulting from the application of Section 5 of Chapter II; / (vii) the impact of the allocation of the tax base on Member State revenues; / (viii) the impact of the co-existence of distribution-based tax systems, as referred to in Article 49, with traditi…

Added:Article 77 – paragraph 4: 4. Information communicated to the European Parliament and to the Commission under paragraph 2 shall be kept confidential by the Commission in accordance with the provisions applicable to Union institutions and Article 76 of this Directive.

5 formal changes: legal basis, citations, references, corrections

Change 1 Formal

AI summary:Updates the report reference from A10-0000/2025 to A10-0194/2025.

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Changed:having regard to the report of the Committee on Economic and Monetary Affairs ~~(A10-0000/2025)~~(A10-0194/2025),

Change 6 Formal

AI summary:Updates recital 25a to reference the Own Resources Decision instead of the Interinstitutional Agreement, with updated citation.

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Changed:Recital 25 a (new): (25a) ~~This~~In ~~Directive~~line iswith ~~also~~the ~~relevant~~legally ~~from~~binding aroadmap ~~Union~~on new own resources ~~perspective, as~~ set out in the ~~legally binding~~Interinstitutional ~~roadmap~~Agreement of ~~2020 on~~16 ~~own~~December ~~resources1a,~~2020 and the 2021 ~~Communication on the next~~Commission ~~generation~~Communication of"An ~~own~~adjusted ~~resources~~package for the ~~Union budget. A BEFIT-based own resource should link the~~next ~~financing~~generation of ~~the Union budget to the benefits enjoyed by companies operating in the internal market and create a strong and stable resource over time. Under a BEFIT-based~~ own ~~resource, Member States should transfer~~resources", part of ~~their corporate income tax revenues to~~ the ~~Union budget. The roadmap provided~~revenues ~~for~~generated inthrough the ~~Interinstitutional Agreement~~application ~~foresees~~of athis ~~new~~Directive ~~own~~may ~~resource~~be ~~linked~~allocated to ~~corporate taxation as part of~~the ageneral ~~basket~~budget of ~~new revenue sources~~the ~~and,~~Union, in ~~that~~accordance ~~respect,~~with the ~~BEFIT initiative constitutes an excellent~~applicable ~~starting~~procedures ~~point~~under ~~for~~Council aDecision ~~new~~(EU, ~~own~~Euratom) ~~resource.~~2020/20531a. / 1a ~~Interinstitutional Agreement between the European Parliament, the~~ Council ~~of the European Union and the European Commission on budgetary~~Decision ~~discipline,~~(EU, onEuratom) ~~cooperation~~2020/2053 inof ~~budgetary~~14 ~~matters~~December ~~and~~2020 on ~~sound financial management, as well as~~the onsystem ~~new~~of own ~~resources, including~~resources aof ~~roadmap~~the ~~towards~~European ~~the~~Union ~~introduction~~and ofrepealing ~~new~~Decision ~~own~~2014/335/EU, ~~resources~~Euratom (OJ L ~~433I,~~424, ~~22.12.2020,~~15.12.2020, p. ~~28,~~1; ELI: ~~http://data.europa.eu/eli/agree_interinstit/2020/1222/oj).~~http://data.europa.eu/eli/dec/2020/2053/oj).

Change 13 Formal

AI summary:Changes 'five' to '5' in Article 25(3) on fixed asset register retention.

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Changed:Article 25 – paragraph 3: 3. The fixed asset register shall be kept in a manner that provides sufficient information, including depreciation data, to calculate the preliminary tax result. A copy of the fixed asset register shall be kept by the BEFIT group for ~~five~~5 years from the date that the depreciation of such asset ceased. The fixed asset register shall include at least the following information:

Change 15 Formal

AI summary:Changes 'five' to '5' in Article 42(2)(b) on loss carryforward.

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Changed:Article 42 – paragraph 2 – point b: (b) a negative amount, the loss shall be set off against the taxable income of the ultimate parent entity and shall be carried forward for a maximum of ~~five~~5 years and ~~shall be~~ set off against the next positive BEFIT tax base. The deduction shall be in proportion to the holding of the ultimate parent entity in its qualifying subsidiaries as referred to in Article 3(1) and in full for permanent establishments. The reduction of the tax base of the resident taxpayer shall not result in a negative amount.

Change 28 Formal under “EXPLANATORY STATEMENT”

AI summary:Adds a budgetary assessment section from the Committee on Budgets.

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Added:BUDGETARY ASSESSMENT OF THE COMMITTEE ON BUDGETS

Added:for the Committee on Economic and Monetary Affairs

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

Added:Rapporteur for budgetary assessment: Danuše Nerudová

Added: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:

Added:The Committee on Budgets,

Added:1. Recalls that businesses benefit from the Union single market, harmonised 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; highlights that the ‘Business in Europe: Framework for Income Taxation’ (BEFIT) framework could reduce revenue leakage, as it would provide the EU with more transparent rules on corporate taxation;

Added:2. Recalls that over the years Parliament has repeatedly 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 achieved the necessary support in the Council to bring them into force; calls on the Commission and the Member States to urgently step up the work towards an agreement on those initiatives;

Added:3. Underlines that the roadmap for the introduction of new own resources spelled out in the legally binding 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 difficult to define and adopt any practicable tax base for a new own resource;

Added: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;

Added: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 consisting of a national contribution 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 the increasing spending needs in the context of the multiple challenges the EU is currently facing, including the new geopolitical context; considers that all new Union policies and challenges must involve new financial means and additional fresh resources; underlines that the development of a harmonised framework for corporate income taxation reinforces the sustainability and predictability of the Union budget, while ensuring the viability of the repayment of the debt incurred under NextGenerationEU (NGEU); observes, furthermore, that the modifications of the tax base allocation have been modelled on the OECD Pillar One approach, which has also been proposed as a starting point for the calculation of a corporate tax-based own resource; calls, therefore, on the Member States to swiftly adopt this directive and on the Commission to update the existing proposal for new own resources accordingly;

Added:6. Regrets, 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 NGEU repayment needs; recalls that according to the legally binding IIA roadmap, such an own resource should enter into force by 1 January 2026;

Added: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 national 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;

Added:8. Underlines that neither an own resource based on BEFIT nor a statistics-based national contribution should result in any additional burden for companies or lead indirectly to additional taxation of citizens; recalls in this regard that the main objective of the BEFIT proposal is to simplify tax rules, ensure more tax harmonisation in the EU, increase tax certainty and foster a level playing field for EU businesses while strengthening the Single market, cross-border trade and the competitiveness of European companies;

Added:9. Regrets the absence of tangible progress in the Council on the introduction of new own resources; 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; urges the Commission to reflect in its future proposal the principles set out in the roadmap for the introduction of new own resources enshrined in the IIA whereby new own resources should be aligned with Union priorities; is concerned 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; highlights, in this regard, the commitment under the IIA that the expenditure from the Union budget related to NGEU repayments should not lead to an undue reduction in programme expenditure or investment instruments under the MFF.

2 changes of wording only

Change 3 Wording

AI summary:Rephrases recital 15 on distribution-based systems, adding a sentence about avoiding contradiction and changing 'five' to '5'.

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Changed:Recital 15: (15) Some Member States operate corporate tax systems which are built on principles that differ from the most common approach, such as distribution-based tax systems. It is therefore of prime importance to put in place the necessary adjustments, in order to ensure a workable interaction with those ~~systems.~~systems and not to introduce a contradiction between the two systems, which would discourage business creation. The solution could be sought in certain post-allocation adjustments. These would entail that the part which would be allocated to a group member under a distribution-based system has to be modified in proportion to the distributions made during the fiscal year. The essence of a distribution-based tax system would be fully retained, considering that the distribution marks a timing point for taxing the allocated part and accordingly determine how much of this would need to be taxed. In this regard, it should be envisaged to operate a carry-forward mechanism, to ensure that the allocated part which is not taxed in the current year would be taxable in the following years. The possible inclusion of distribution-based tax systems within the scope of this Directive should be assessed after ~~five~~5 years.

Change 4 Wording

AI summary:Rephrases recital 18 on penalties, changing wording from 'They' to 'Those penalties' and 'in the event of a failure' to 'in case of failure'.

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Changed:Recital 18: (18) To ensure that the rules of the common framework are implemented and enforced correctly, Member States should lay down rules on penalties applicable to infringements of national provisions adopted pursuant to this Directive. Such penalties should be effective, proportionate and dissuasive. ~~They~~Those penalties should be set at a minimum rate of 0,1 % of the turnover of the BEFIT group in ~~the event~~case of a failure to ~~comply with the requirements laid down in this Directive to~~ file the BEFIT information ~~return,~~return accordingly and in ~~the event~~case of a deliberate misreporting in ~~the~~a BEFIT information return.

What changed between the draft committee report and the plenary report

AIAI:What changed, in short

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AI:What changed, in short