2.4.3.1 Introduction

Art. 11, Council Directive (EU) 2006/112/EC of 28 November 2006 on the common system of value added tax (i.e., a Directive in the field of indirect taxation/Value Added Taxes) provides Member States with the possibility of regarding as a single taxable person any persons who are established within the territory of that Member State and who, while legally independent, are closely bound to one another by financial, economic and organizational links. Thus, for value added tax purposes the group is seen as a single taxable entity. The objective of this provision is to simplify administration or to combat abuse (e.g., splitting up one undertaking into several taxable persons to let each taxable person benefit from a special scheme, see Proposal for a sixth Council Directive on the harmonization of Member States concerning turnover taxes - Common system of value added tax: Uniform basis of assessment, COM(73)950, p. 8).

For the sake of completeness, for the application of Council Directive (EU) 2016/881 of 25 May 2016 amending Directive 2011/16/EU as regards the automatic exchange of information in the field of taxation, the group concept is aligned with the group concept used in consolidated financial statements (Annex 3, Part 1). A multinational group is then defined as: ‘any Group that includes two or more enterprises the tax residence for which is in different jurisdictions, or includes an enterprise that is resident for tax purposes in one jurisdiction and is subject to tax with respect to the business carried out through a permanent establishment in another jurisdiction, and is not an Excluded MNE Group.’(Annex 3, under 3). Council Directive (EU) 2018/822 of 25 May 2018 (amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements) does not include a group concept in respect of mandatory automatic exchange of information on tax matters relating to reportable cross-border arrangements. Note that Hallmark E3 does mention a ‘intragroup transfer of functions and/or risks and/or assets’.

The EC will replace the CCCTB with BEFIT. The proposal will be presented in 2023.

Proposal for a Council Directive on ensuring a global minimum level of taxation for multinational groups in the Union, COM(2021)823.

Council Directive 2009/133/EC of 19 October 2009 on the common system of taxation applicable to mergers, divisions, partial divisions, transfers of assets and exchanges of shares concerning companies of different Member States and to the transfer of the registered office of an SE or SCE between Member States (a recast of Council Directive 90/434/EEC of 23 July 1990).

Proposal for a Council Directive implementing enhanced cooperation in the area of financial transaction tax, COM(2013)71.

Proposal for a Council Directive laying down rules to prevent the misuse of shell entities for tax purposes and amending Directive 2011/16/EU, COM(2021)565.

The draft directives on rules for taxation in the case of a significant digital presence (Proposal for a Council Directive laying down rules relating to the corporate taxation of a significant digital presence, COM(2018)147) and the draft Directive for a digital services tax (Proposal for a Council Directive on the common system of a digital services tax on revenues resulting from the provision of certain digital services, COM(2018)148), are not taken into consideration due to the considerable lack of clarity that surround them.