system radically transformed the traditional business models. In facts,

system that
is in place today was conceived during the first half of the twentieth century,
at a time when most companies were industrial and used to sell tangible
products, as opposed to the virtual ones that we are now interacting with every
day. Therefore, the corporate taxation system based on this premise has been
adequate until the time changed and the global transformation process radically
transformed the traditional business models.

In facts,
the debate on European integration started in the 1960s, when there already
were issues on the achievement of a Single Market. For example, the Member
States already struggled with double taxation issue at that time.

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studies carried out in this decade already stressed the necessity to achieve at
least a limited degree of harmonization of the corporate tax system. The
Commission followed this advice by making three attempts to introduce this
issue through three different directives between 1975 and 1985. These were all
withdrawn, since the Member States, at that time, were deeply reluctant on the
issue and were not ready to deal with it.


In 1990, a
Committee of independent experts was requested by the European Commission to do
a study on Internal Market, in order to understand whether or not the
differences in corporation tax causes distortions. The Committee’s final
opinion was that distortions were effectively present in the European market,
despite the positive fact that a convergence had been observed.

Committee stressed the Member States could not solve the problem through
different national approaches, but an action was needed at a higher level
instead. The main guidelines given were: removing obstacles to cross-border
business investment and shareholding, setting a minimum level for statutory
corporation tax and a common set of rules for a minimum tax base and
encouraging transparency. The two focuses of the European Union should have
been the corporation tax, to prevent tax evasion, and the suppression of the
double taxation of cross border income flows. It was not recommended, instead,
to aim at a “total harmonization” framework, since it was considered a
long-term objective, a goal to reach through intermediate steps.

in 1990, the Commission started to take measures. Since it was impossible to
make the existing initiatives advance, a Communication proposed that every
initiative should pass through a consultative process among the Member States.

This premise let to the adoption of two directive and a convention: the Merger
Directive, the Parent-Subsidiary Directive and the Arbitration Convention.

The Merger
Directive aimed to create a common taxation system for mergers, divisions and
reorganisations, in order to eliminate the fiscal barriers that impeded these
operations for companies placed in different Member States.

The Parent
subsidiary directive, that was then improved 2003, aimed to remove the fiscal
obstacles for profit distributions among companies’ groups, especially
“preventing double taxation of parent companies on the profits of their

Arbitration Convention was also established with the aim of resolve
controversies on double taxation.

A second
huge step was made with the Tax package and the Code of Conduct for business
taxation of 1997. This would allow to every Member State that adopts it to
remove the fiscal measures that create harmful tax competition, for the
countries to work in parallel on the same issue.

In 2001, a
Commission’s Communication on the coordination of direct taxation systems in
the Internal market was released, containing new plans for company taxation.

The communication restated the need to remove all fiscal barriers and to fight
against the harmful tax competition. It also underlined again the fact that, to
do so, it is not necessary to adopt a full-harmonisation, but just an
alignment, since each Member State is free to choose the tax system it retains
most appropriate

Two years
later, another Communication took stock of the 2001 announced strategy. It
ensured that the strategy was being followed, and contained the initiatives
that were being made. In particular, it contained proposals of a “pilot scheme”

In February
2005, the Commission relaunched the Lisbon Strategy with the aim of creating
better jobs. The principal aim was to adapt the economy to the changes in the
environment and the population, to the social changes. The political measures
proposed concerned three areas: the innovation for growth, the improvement of
Europe’s investing and working attractiveness and the creation of
higher-quality and higher-quantity jobs.

Commission also stressed the Member States to find financing for the creation
of a SANA and prosperous competition, even though it had not been possible to
find an agreement on financial perspectives for the immediate following years

It was
finally in 2011 that the action to concretely start to eliminate the obstacles
impeding the achievement of the Single Market started to take place, with the introduction
of the Common Consolidated Corporate Tax Base (CCCTB).

ambitious and revolutionary project was the culmination of a work lasted more
than ten years, developed with the collaboration of experts from national
administrations, of the business world and of companies’ associations.

is a single set of rules that the companies operating in the EU could use to
calculate their taxable profits. This means that an enterprise would have to
respect a single regulation, instead of taking into account 28 different
schemes. However, the Member States’ power to apply their own corporate tax
rates would not be affected by the measure, which priority aim is, instead, to
make the national taxation systems more coherent.

designed at that time would have been optional and available for all societies
in the European Union, regardless of the size of the company. In June 2015, the Commission adopted
an “Action Plan on fair and efficient tax system in the European Union”, which
contained a reform initiative on the issue, in order to fight against fiscal
evasion, to ensure durable profits and to reinforce the internal market .After having restated that the top priority
for the EU was the complete realization of the Single Market, it became clear
that a framework for the concrete completion of a fairer and more efficient
corporate taxation of profits could not be avoided any longer. Over the years, a situation of
general discontent had been growing among the policy makers, the inhabitants
and the companies of the European Union. On one side, the lack of fairness and
the recurring profits shifting cases contributed to create public dissatisfaction,
while on the other hand the double taxation issue kept irritating the
companies. The lack of coordination was considered
the major obstacle in pursuing the realization of the Single Market. It was
only due to a non-unanimity among the Member States, which wanted to act in
their best interest, going to the detriment of global needs; and only
contributed to increase the harmful and aggressive use of corporate tax
systems. This status quo, in addition with the opposed issue of double taxation,
created an unbearable situation, that had been taking place for many decades. Moreover, another major issue
concerning the tax competition was affecting the Member States, which were
stressed by the strong tax competition. In facts, some countries gradually
lowered their national corporate tax rates in order to raise their business
attractiveness. This, together with fiscal avoidance, led to a lower income for
the governments from profits taxation, that some countries compensated through
an increase of tax burden on settled companies and on labour. This measure
compromised the efficiency of taxation system, as well as negatively impacting
not only on their growth, but also on work. In facts, a higher fiscal pressure
results in a disincentive for employment and investments. Naturally, the
companies that are not able to aggressively compete in tax planning are
undergoing many disadvantages.Therefore, the 2015 Action Plan
identified five key areas or pillars1.     Implementing
and relaunching the CCCTB project, through a step-by-step initiative, in order
to reduce discontentment. The Commission announced an important innovation, by
making it mandatory instead of optional, at least for multinational companies.2.     Ensuring
an equitable fiscalism at the place where profits are generated, meaning that
profits need to where the value is effectively created;3.     Creating
a better environment for business through measures aiming for the suppression
of fiscal obstacles in the Single Market, in order to make it become more attractive
for a company to expand in another country;4.     Improving
fiscal transparency to better fight against abuse and evasion;5.     Improving
the coordination among the EU, as a first essential step to successfully
address the fiscal avoidance and fiscal evasion issue. (How to optimize and
improve the existing ways of cooperation)2016: The Corporate
Tax Reform PackageIn September 2016, a Corporate Tax Reform
Package was published. Apart from the CCCTB, proposals were made on two
different subjects. The first one addresses the need to
definitively solve the double taxation issue, while the second one tackles the
ways to avoid asymmetries existing with third countries As far as the CCCTB is concerned, the last step
that was made so far was the relaunch of the CCCTB. This is planned to happen
with a two phases process: first, the common base will be implemented, at a
second time it will be consolidated.In its definitive version, the CCCTB is mandatory
(at least for the largest companies). It will focus on the supporting of
Research and Development (R&D), as well as representing an encouragement to
stable financing. 2017: Fair and Efficient Tax System
in the EU for the Digital Single market (by spring 2018)Referring to the Introduction,
the Commission published, in September 2017, a communication on “A Fair and Efficient Tax System in the European Union for the Digital
Single Market”, that should be the basis for debate between Member States in
order to grant, on the long-term, a fair and equitable tax on digital economy,
which represents one of the top-10 priorities of the work-programme of the
Commission. The main difficulties on digital
taxation for the policy makers resident
in the choice of the taxation place in a dématérialisée
economy. Three objectives guide this approach to digital economy: ensuring
competitiveness of European companies, reinforcing the integrity of the Single
Market and granting the durability of this fiscal system.

The principles contained in the
Communication are expected to be follow by legislative proposal next Spring.

Some other “faster” ways to act are also mentioned, such as a specific tax on
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