Valère Moutarlier at Irish Tax Institute Global Tax Conference

Valère Moutarlier, DG Taxation and Customs Union at the European Commission talking at the Irish Tax Institute Global Tax Conference in Dublin.

Here are some of the key messages he gave:

EU Member States (MS) have agreed to implementation of CBCR.

There is a new speed within the EU. It is moving away from old-style lengthy discussion into a more open and collaborative approach.

The EU objective is:

• Fair and effective taxation
• Improving environment in which businesses operate.

We speak about effective taxation, but NOT harmonisation of the corporate tax rate. We have no such agenda. This is an issue for Member States. This line will remain for foreseeable future. [Very clearly aimed at the primarily Irish audience.]

However, when MS decides on tax rate, it must be able to apply that rate without aggressive tax avoidance and the actions of neighbours.

The global nature of the tax issue makes it vital to have a response at the single market level.

Individual MS approach would neither be legal nor effective. The Single Market is an asset we need to protect, so we need EU level approach.

For example, on CBCR, Irelands was one of the first to adopt, and should be congratulated. Now, thanks to EU law, Ireland can rest assures that all Member States will implement CBCR too.

Consistent adoption of BEPS is good for business, as they don’t have to deal with similar, but different approaches.

But also avoids risk of double taxation.

The commission proposals are very balance, taking into accounts discussions at OECD and EU level discussions.

On public CBCR, we are preparing a proposal for next month, although I can’t share it. But 2 elements:

• We resisted pressure to rush, and looking to find balance between public transparency and protecting competitive interest of countries.
• Conscious that public CBCR should not add more red tape for businesses.

More and more MNEs are already disclosing, and we can’t stop that trend. EC proposals will not bring great shockwaves.

On CCCTB, we have already taken view to split proposal, and move away from optionality to mandatory for MNEs.

Looking into treatment of debt vs. equity, and support for innovation. In agreement with Pascal Saint-Amans view that patent boxes are not the right policy and are not a good use of taxpayer money. Patent Box ranks very very low in fostering innovation and growth. 

Ireland WILL be able to retain 12.5% tax rate, but in the context of a common tax base and cross border loss relief.

But is is clear, any tax proposal can only adopted with unanimity, so it can’t be imposed.

We would never have been able to capture everything that has evolved in the digital economy, so it was right not to try 

When asked whether we will see CCCTB in his lifetime, Valère said we needed BEPS, and we need to make all out efforts to implement in a Single Market. However, we are a European Union, and we can't afford to not push for a more inclusive agenda. This is out DNA. Every MS must be safe. We must push for more including, beneficial for MS and businesses.

When MS sign up is a difficult question.

CCCTB opens up uncertainly. Moving from arms-length to formulary apportionment is difficult. And putting this on the table in 2011, when every MS was struggling to balance the books, was not ideal. Timing was not the best.

A lot have changed, and redesign to securing tax bases and simplification may give it a better chance. [So not quite a yes to the question as to whether it will happen in his lifetime]

When questioned about difference between EU and OECD approaches, especially on hybrids - BEPS is a toolbox. Taking what is needed to be implemented in the EU is right. If something is optional in BEPS, and EU chooses to adopt, that is appropriate. We adopt what we see as the best models for us. We will take everything that is possible from BEPS as legally binding instruments. BEPS is not just the pure minimum standard.

Plus, the EU has its own constraints, and some things are not compatible with those constraints. Unfortunately we have to adjust the BEPS outcome in order to survived legal scrutiny of ECJ. Also, work done in European Council deserves attention, and should not be thrown in the bin.

The wish by 2020 is wider reach and dialogue between tax administrations, and particularly in eastern Europe.

And a final reiteration that CCCTB is not about harmonisation of corporate tax rates.