- Business in Europe: Framework for Income Taxation initiative (BEFIT) proposes a common EU corporation tax framework comprising a single set of rules for calculating, consolidating and sharing tax bases.
- Groups with annual combined revenues of at least EUR 750 million will be in scope of BEFIT, with respect to their EU group entities that meet a 75% ownership threshold (“the BEFIT group”). For non-EU headed groups, BEFIT would only apply if the revenues of the BEFIT group within the EU exceed 5% of the total group revenues or account for at least EUR 50 million in combined revenue in two or more of the last four years.
- The BEFIT tax base of each BEFIT group member is determined as a result of a series of adjustments to its financial statements, it is then aggregated into a total amount and allocated among BEFIT group members.
- Under the currently proposed transitional rules, for the first seven years the allocation to BEFIT group members is based on the average of taxable results for three prior years, with a permanent allocation mechanism (formulary apportionment) to be proposed at a later stage .
- Member states have discretion to make further adjustments to their allocated share of BEFIT tax base under domestic law.
- A BEFIT information return is to be filed in a member state where the group's filing entity is tax resident, to be approved by a 'BEFIT team', comprised of representatives of each EU member state’s tax authority where the BEFIT group has group members. Following this, each BEFIT group member would have to file its individual tax return with its national tax authority.
- Most respondents to the public consultation thought that Pillar Two rules needed to be given time to operate for a few years and generate feedback, before the new regime is considered. They also generally called for a greater simplification and alignment with Pillar Two.
- In September 2025, members of the European Parliament’s Committee on Economic and Monetary Affairs (ECON) have adopted a position that seeks to strengthen anti-avoidance provisions, including a significant economic presence clause, a royalties limitation rule, and a rule to keep companies from shifting profits to low-tax jurisdictions. These amendments will be put to a plenary vote, expected in November. If passed, the EP’s position will be given to member states to adopt the final text.
- Timing: The directive requires unanimous approval by member states and timing of adoption is uncertain. If adopted in its current form, it would be implemented by 1 January 2028 and would apply as from 1 July 2028. A progress report was approved by the Council in June 2025.
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