The “Business in Europe: Framework for Income Taxation (BEFIT)” Proposal

• Jurisdiction: European Union
• Year: 2024

Speaker

Mart van Hulten is an Assistant Professor of European and International Taxation and Dutch Corporate Taxation at the Fiscal Institute of Tilburg University, Netherlands. His PhD research focused on the well-being related use of taxation by states.

Mart's academic contributions appear in journals such as the Journal of International Taxation, EC Tax Review, and Intertax. Additionally, he is a tax lawyer (counsel) at Lubbers, Boer & Douma, a specialized tax boutique in the Netherlands, where he focuses on tax opinions and tax dispute resolution.

Topic

The BEFIT Proposal, introduced on 12th September 2023, outlines a framework for income taxation in Europe. It proposes aggregating EU profits into a single tax base under a unified rulebook, aiming to reduce administrative burdens and create a more business-friendly environment by 1st July 2028.

While shifting towards a more harmonizing EU regulatory strategy, it necessitates significant sovereignty transfer but doesn't incorporate formulary apportionment. The proposal targets large groups initially, mandating participation, while smaller groups have the option, provided they prepare consolidated financial statements. It computes tax bases based on financial accounting results, with adjustments kept minimal.

The proposal also addresses tax base allocation, TP risk assessment, administration through a one-stop-shop, and outlines concerns such as additional compliance burdens, timing of implementation, interaction with existing tax conventions, and dispute resolution.

Currently, it awaits discussion among EU Member States in the Council of the EU, with adoption requiring unanimity.

Related documents

Council Directive (EU) 2023/2226 of 17 October 2023 amending Directive 2011/16/EU on administrative cooperation in the field of taxation

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

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...