Global Tax Alert | 21 June 2018

France and Germany publish common position paper on Common Corporate Tax Base

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Executive summary

On 19 June 2018, France and Germany agreed on a common and supportive position (the Meseberg Declaration) on the European Commission’s proposal1 for a directive establishing a Common Corporate Tax Base.

Detailed discussion

The European Commission proposed in October 2016 the re-launch of the idea of a Common Consolidated Corporate Tax Base (CCCTB) throughout a two-step process, consisting of two legislative proposals for a directive establishing a common corporate tax base ( the CCTB Directive) as well as a directive for establishing a common consolidated corporate tax base (the CCCTB Directive).

In their Meseberg Declaration, France and Germany state their strong support towards both proposals with the goal to foster tax harmonization in Europe. Both states confirm that they are deeply committed to swiftly adopting the CCTB Directive.

One objective of this joint position is to foster current discussions on the CCTB Directive at European Union (EU) level and rally the other EU Member States to adopt the CCTB Directive as soon as possible, before considering possible adoption of the CCCTB Directive.

The common position provides, inter alia, for the following scope and general principles:

  1. Harmonization of the tax base should as a main outcome improve transparency and support EU competitiveness as a whole. These objectives can only be attained by applying the harmonization to all corporate taxpayers. Therefore, following the French-German position, it would be necessary to extend the scope of the CCTB Directive and make it compulsory for all companies subject to corporate tax (irrespective of their legal form or size).
  2. General principles of profit and loss recognition, as proposed by the CCTB Directive, are agreed on by France and Germany as well. But in addition, it should be considered to supplement these principles with a general rule, in order to provide that the tax base is determined on the basis of accounting principles and calculated by applying the business asset comparison method. This means application of a simple and comparable method while keeping bureaucratic effort at a minimum.
  3. France and Germany consider that within a harmonized corporate tax base, no tax incentives and no provisions for cross-border relief (article 42 of the CCTB Directive) should be included. Both countries are not in favor of providing tax incentives neither for research and development (R&D) activities nor for equity financing as it is proposed in the CCTB Directive. In order to ensure an effective tax harmonization of the corporate tax base, further discussions will be necessary especially with respect to the possibility for Member States to grant other tax policy measures “outside” the scope of the CCTB Directive (e.g., tax credits) and regarding the approximation of corporate tax rates.
  4. To ensure a technical adaption, both countries support a reasonable transitional period of at least four years. Therefore, the directive should substantiate transitional rules.

Furthermore, the position paper discusses detailed amendments of a more technical nature regarding the deduction of all taxes and duties, a participation-exemption rule, the deduction for gifts and donations, asset depreciation and special provisions on hedging instruments and insurance undertakings.

France and Germany support further alignments of the Directive with Anti-Tax Avoidance Directive (ATAD) in respect to certain measures such as general anti-abuse rules, hybrid mismatches and exit taxation.


On the one hand, the joint declaration sends a strong political signal towards the other Member States to support the final agreement on the directives in due course. On the other hand, the common position embraces a wide range of amendments and corrections, in particular of the CCTB Directive which would substantially modify the substance of the Directive. From a European procedural issue, the question must be asked whether these changes require a complete re-launch of the Directive and whether the deletion of the major tax incentives (R&D deductions, notional interest deduction and cross-border loss compensation) lead to an increased willingness of smaller Member States and the whole corporate business community to welcome these developments.


1. See EY Global Tax Alert, European Commission proposes staged approach towards harmonized group tax base, dated 26 October 2106.

For additional information with respect to this Alert, please contact the following:

Ernst & Young GmbH Wirtschjaftsprüfungsgesellschaft, Munich
  • Klaus von Brocke
  • Maximilian Brändle

EYG no. 03205-181Gbl