New FEE Position Paper Tackles CFC Taxation In European Union

by Ulrika Lomas, Tax-News.com, Brussels

31 May 2002

The European Federation of Accountants (FEE, or Federation des Experts Comptables Europeens) has released a new position paper on the taxation of controlled foreign companies in response to European Commissioner, Frits Bolkestein's recent speech on the subject 'Towards an Internal Market Without Tax Obstacles'.

In the paper, the accounting group considers how CFC rules are structured and applied by EU Member States, analyses differences and similarities of national CFC laws, and examines the consistency of the current legislation with the fundamental principles of the EC Treaty.

With regard to the tax treatment of CFCs in EU member states, FEE makes the following recommendations:

- That no CFC legislation should be applicable within the internal market, provided that the tax regime of the subsidiary is in line with the prescriptions of the Code of Conduct.

- That there should be a better coordination in the tax treaty policy towards non-EC countries with regard to the application of CFC rules, to avoid distortions in the allocation of resources within the internal market

- That there should be a better coordination among the different CFC legislations in place in the EU member states, in order to avoid international double, or multiple taxation.

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