The Business in Europe: Framework for Income Taxation (BEFIT) Directive aims to establish a common set of rules to determine the tax base of companies that form part of a group, and which prepare consolidated financial statements and which are subject to corporate income taxation in a Member State.
The proposed directive sets forth rules introducing a common framework for corporate income taxation in the European Union (EU), with the aim of replacing the current Member States’ various ways for determining the taxable base for groups of companies that have annual combined revenues exceeding €750 million.
It will also apply to non-EU companies which are headquartered in the EU and which exceed specific thresholds. The BEFIT proposal was initially announced in the Communication on Business Taxation in 2021.
The proposed implementation dates for the BEFIT directive are 1 July 2028 for BEFIT and 1 January 2026 for the transfer pricing proposal. The proposed directive is also consistent with the implementation of the OECD/G20 Inclusive Framework Two-Pillar Solution.
The full text of the proposed BEFIT Directive can be found on the below link:
https://taxation-customs.ec.europa.eu/system/files/2023-09/COM_2023_532_1_EN_ACT_part1_v6.pdf
We will be reporting on the specific provisions of the draft Directive in due course.
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