FRAL - Programme franco-allemand en Sciences humaines et sociales

Bilateral cooperation as an instrument of harmonization in the field of direct company taxation -a comparative legal analysis with particular focus on the German-French intergovernmental cooperation – BiHACoTax

Towards a Franco-German convergence on corporate taxation?

Bilateral Harmonisation Approach in Company Taxation. A comparative legal analysis between the German and French tax systems

Comparative study of corporate taxation in France and in Germany

The BiHacoTax project aims to contribute to the debate on corporate tax harmonisation throughout countries in Europe. Analysis was based on two legal orders, those of France and Germany. The main idea of the project was to assess whether taxes incumbent on enterprises in France and in Germany could be harmonised through bilateral cooperation between the two States outside the European Union framework. Thus, the research aims of the project were double: On the wake of the « Green book on French-German cooperation on corporate taxation », published in 2012 by the French and German ministries of finance, the study aimed to assess the conditions for a harmonisation of legal rules related to corporate taxation with respect to the structural, especially constitutional, framework, but also the technical tax system implemented in the two countries. <br />Moreover, this method appeared to be in line with further evolutions, given that France and Germany published in 19 June 2018 a common position on a draft EU directive on a common tax base for the taxation of corporate tax subjects. Besides, on 22 January 2019, Germany and France concluded a “Treaty on German-French Cooperation and Integration” (Aachen Treaty). According to Articles 1 and 20 id. 1 of the treaty, both States agree on promoting the convergence in tax matters and bilateral harmonisation of law.

The steering committee of the project included French and German researchers. First, the committee drafted preliminary questionnaires in English in order to pursue a comparative research of the two tax systems in order to analyse principles and objectives that apply in the field of direct taxation of enterprises in France and in Germany. The ultimate aim was to find common features but also differences between the two systems. Analysis shows that, in some points, the two systems are similar and therefore comparison of corporate income tax rules is possible. Second, the committee drafted a supplementary questionnaire in order to be able to compare the general structure of corporate income tax but also of the technical rules that regulate the definition of the taxable result and the assessment of the concrete tax liability.

The study is based on a cross-reading of the questionnaires delivered followed by a comparative analysis of he two systems. Further, the study allowed highlighting the confluences and discrepancies between the two systems with respect to comparative company taxation. Analysis showed that the constitutional framework in the two States if very similar, but the discrepancies between the two systems are linked to major stakes for the two countries. From a technical standpoint, the fundamental principles of corporate taxation are similar in both countries. The difference of taxation techniques is still significant, however. A harmonisation between the tax rules applicable in the two legal systems would have remarkable effects for the tax system as a whole.

From a technical standpoint, the fundamental principles of corporate taxation are similar in both countries. The difference of taxation techniques is still significant, however. A harmonisation between the tax rules applicable in the two legal systems would have remarkable effects for the tax system as a whole.

A scientific publication is currently being prepared. It will take the form of a book with a synthesis of our findings, the questionnaires with the answers, and our conclusions regarding harmonization of direct taxation of companies in France and Germany.

The aim of the research project is to analyze the suitability of intergovernmental cooperation as an instrument for the harmonization of corporate tax law in the European Union. The project is based on an acute dilemma: On the one hand the EU Commission and member states still hold the opinion that there is an ongoing and urgent need for further harmonization. On the other hand the conventional instruments have been deemed unsuitable for such harmonization. To break this deadlock, Germany and France have in recent years examined the possibilities of bilateral harmonization and have – to a certain extent – implemented consistent provisions of company taxation. This readiness to break new ground gives reason to examine the suitability of the bilateral approach as a new instrument of harmonization. In our opinion, as the bilateral approach takes place outside the institutional framework of the EU and therefore does not participate in the primacy of application of Union law, the suitability of the approach largely depends on the way in which harmonizing measures are compatible with the existing tax systems of the cooperating states. Thus an examination of the suitability of the bilateral approach first requires the identification of the legal (and possibly non-legal) factors which are relevant for harmonization with regard to reference areas. Next, the importance of those factors has to be weighted with respect to the respective reference areas. Finally, the knowledge acquired has to be classified in a meta-framework. The systematization shall enable us to draw general conclusions regarding the suitability of the bilateral approach. The findings shall show the institutions participating in the legislative process on both the supranational and the national level the appropriacy of intergovernmental cooperation in addition to the existing methods of harmonization.

Project coordinator

Monsieur Daniel Gutmann (Institut de Recherche Juridique de la Sorbonne)

The author of this summary is the project coordinator, who is responsible for the content of this summary. The ANR declines any responsibility as for its contents.

Partner

Uni Osnabrück, Institut für Finanz- und Universität Osnabrück, Institut für Finanz- und Steuerrecht
IRJS Institut de Recherche Juridique de la Sorbonne

Help of the ANR 118,371 euros
Beginning and duration of the scientific project: December 2014 - 36 Months

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