The European Commission has announced plans that will allow small companies
operating across national borders to work under a simplified tax regime.
The aim of the plan is to reduce the burden of complying with 25 different
tax regimes for companies with less than 250 employees and £34m turnover, which
can be as high as 30% of tax paid, according to the Financial Times.
Under the proposals, companies would be allowed to calculate all profits
using the tax rules of its home country. Treaties would need to be agreed as to
how revenue is distributed between member states, which would then tax the
profits at their own corporate rates.
However, the scheme is voluntary, with the Commission not planning to
legislate in this area, and it would rely on member state’s agreeing to respect
each other’s tax systems.
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