Changes from report parliamentary committee draft to plenary report

RemovedArticle 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.

RemovedArticle 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…

RemovedArticle 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.

RemovedArticle 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.

RemovedArticle 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).

RemovedArticle 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.

RemovedArticle 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.

RemovedArticle 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:

Article 48 – paragraph 2: 2. In addition to the adjustments listed in paragraph 1, a Member State may, subject to Directive (EU) 2022/2523, allow for increasing or decreasing, through additional items, the allocated part of BEFIT group members that are resident for tax purposes or situated in the form of a permanent establishment in that Member State.

Article 48 – paragraph 2 a (new): 2a. A Member State providing incentives for research and development shall refrain from offering output-based incentives, such as patent boxes, which would decrease the allocated part of BEFIT group members that are resident for tax purposes or situated in the form of a permanent establishment in that Member State.

Change 21

RemovedArticle 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.

AddedArticle 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.

RemovedArticle 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.

AddedArticle 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.

AddedArticle 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.

AddedArticle 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).

AddedArticle 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.

Article 60 – paragraph 2 a (new): 2a. Member States shall attribute adequate human resources to the BEFIT team, including by providing content and language training to the BEFIT team representatives.

Article 60 – paragraph 3: 3. Information communicated between the members of a BEFIT team, shall be provided by electronic means to the extent possible, via a secure connection or a secure network, through making use of a BEFIT collaborative tool.

Article 60 – paragraph 4: 4. To facilitate the operation and communication of the BEFIT team, the Commission shall, by means of implementing acts, standardise the communication of the information between the members of a BEFIT team through making use of a BEFIT collaborative tool and support the secure transmission of information. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 73.

Change 22

ChangedArticle 6263 – paragraph 1: 1. Until 30 June 2035, eachA BEFIT group member shall file its individual tax return withnotify the competent authority of the Member State in which that BEFIT group memberit 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), orerrors in case of a domesticthe group,individual notax laterreturn thanwithin eightthree months fromof the endtimely ofsubmission theof fiscalsuch year.return.

Change 23

RemovedArticle 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.

RemovedArticle 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.

Article 65 – paragraph 1: 1. The competent authority of a Member State may initiate and coordinate audits of BEFIT group members that are resident for tax purposes or situated in the form of a permanent establishment in that Member State. That competent authority shall notify the other BEFIT team members within one month of the initiation of such an audit.

Change 24

ChangedArticle 67 – paragraph 1: 1. Until 30 June 2035, aA 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 two3 months afterof the assessment wasbeing 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

ChangedArticle 6968 – paragraph 1: 1. Until 30 June 2035, whereWhere the decision pursuant to Article 6766 has been confirmed or varied, a BEFITthe groupfiling memberentity 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 two3 months afterof the decisionreceipt of the administrative appeals body referred to in Articledecision 67of wasthe notifiedadministrative toappeals it.body. TheA judicial appeal shall be governed by the law of the Member State in whichwhere the BEFIT groupfiling memberentity is resident for tax purposes or situated in the form of a permanent establishment.

Change 26

AddedArticle 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.

Article 70 – paragraph 1: Where the outcome of an administrative or judicial appeal requires amendments to the tax assessment of the BEFIT group or to the individual tax assessment of one or more members of a BEFIT group, Member States shall take the appropriate measures to ensure that such amendments remain possible, within a timeframe of 10 years.

Article 72 – paragraph 1: Member States shall lay down rules on penalties applicable to infringements of national provisions adopted pursuant to this Directive and shall take all necessary measures to ensure that they are implemented and enforced. Penalties and compliance measures provided for shall be effective, proportionate and dissuasive. Penalties shall be set at a minimum of 0,1 % of the turnover of the BEFIT group in the event of a failure to file the BEFIT information return in accordance with Article 59 and in the event of a deliberate misreporting in a BEFIT information return.

Change 27

RemovedArticle 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.

AddedArticle 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.

RemovedArticle 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…

AddedArticle 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.

RemovedArticle 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.

AddedArticle 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…

AddedArticle 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.