In November, EFB released its position paper on the CCCTB. We argued that, to support family businesses, it is important to consider the different levels of taxation which incur at the business level but also crucially at the owner/household level.

Over the years, European Family Businesses has consistently advocated for a system that takes both the corporate and owner level into consideration. To support family businesses, it is important to consider the different levels of taxation which incur at the business level but also crucially at the owner/household level. Therefore, when trying to mitigate the adverse effects of the debt-equity-bias, one must look at the Total Efficient Tax Rate (TETR).

In its current state, the CCCTB would affect taxation at the corporate level, but taxation at the owner level would remain at the discretion of the Member States. This would mean that there would be no party that could ensure that the TETR on income from equity is on a level that decreases the debt-equity bias in taxation.

The inclusion of the Allowance for Growth and Investment (AGI) in the CCCTB proposal is a step in the right direction by putting equity on par with debt financing. But, as previously mentioned, the debt-equity-bias cannot be solved merely by means of corporate taxation but as a combination of taxation on both the company and owner level.

EFB is concerned that with the new tax revenue allocation system contained in C(C)CTB, some Member States will lose tax revenue, and some will gain. Those who lose will start looking for new sources of tax revenue. From the family business perspective, the risk is that the source of new tax revenue will be from the owners.

EFB is also concerned that the introduction of the C(C)CTB will increase the complexity of the corporate tax laws among the Member States. The C(C)CTB rules themselves presuppose the existence of a domestic corporate tax system. By nature, the implemented C(C)CTB will have a hybrid character that partly relies on domestic rules and infrastructure, and is partly based on EU law.

In general, EFB is encouraged to see that its concerns surrounding the treatment of equity have been acknowledged by the European Commission with the introduction of the AGI. We believe that, ultimately, a taxation system that puts both equity and debt on the same footing will have a positive effect on long-term family companies. But, EFB maintains, for it (AGI) to work properly corporate and owner level taxation must be recognised as being linked.