BEFIT – Business in Europe: Framework for income taxation [EU Legislation in Progress]

Written by Pieter Baert (2nd edition, updated on 22.07.2024).

When businesses start operating across borders, they are faced with a new and unfamiliar corporate tax system in every EU Member State. As a result, businesses with cross-border activities have to spend time and resources on understanding and complying with complex local corporate tax rules. This represents a significant administrative burden for those companies, increases the risk of double taxation and discourages companies from taking full advantage of the single market.

On 12 September 2023, the European Commission tabled the Business in Europe: Framework for income taxation initiative (BEFIT) proposal. It introduces a common EU-wide system for the calculation of the corporate tax base for large business groups. The corporate income tax base of each group member is established according to common rules, and subsequently added together into a single EU-wide tax base. The aggregated income is then reallocated between the group entities, where it is taxed according to the national corporate tax rate of the country in which the entity is resident.

The proposal is subject to a special legislative procedure, requiring unanimous support in the Council, following consultation of the European Parliament and the European Economic and Social Committee. Discussions in Parliament and Council are on-going. The decision of the Conference of Presidents on unfinished business will determine the basis on which work resumes in the new parliamentary term.

Complete version

• July 2024: ‘BEFIT – Business in Europe: Framework for income taxation‘ (2nd edition)