Establishing a Head Office Tax system for micro, small and medium sized enterprises
01020304
With the European Parliament.
Last active 10 Apr 2024
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What this bill does
In plain terms: what it changes and who it affects.
This proposal lets certain standalone SMEs use their home-country tax rules for permanent establishments in other EU Member States.
Who it affects
It affects micro, small and medium-sized businesses expanding across EU borders through permanent establishments, not subsidiaries. It also affects Member State tax administrations handling those businesses’ filings and tax transfers.
Core of the proposal
- Eligible SMEs may opt to compute foreign permanent establishment profits under head office tax rules.
- The option lasts five fiscal years and can be renewed if eligibility conditions remain met.
- A one-stop-shop filing system centralises returns, assessments and tax payment through the head office Member State.
- Host Member States keep their own tax rates and audit powers for permanent establishments.
Key provisions
- Takes effect
- The directive enters into force on the twentieth day after Official Journal publication; Member States apply national measures from 1 January 2026.
- Transitional law
- Member States must adopt and publish implementing measures by 31 December 2025 before applying them from 1 January 2026.
Articles changed · 4 across 1 law
- Directive 2011/16/EU (32011L0016)
- art. 3(9)(a): replaces point (a) on automatic exchange of information
- art. 3(9)(c): replaces point (c) on automatic exchange of information
- art. 8ae: adds new Article 8ae on mandatory automatic exchange for Head Office Taxation
- art. 20(4): replaces paragraph 4 on standard computerised formats
Latest update
26 May 2026The most recent development in this bill's progress.
Moved to European Parliament
Documents
2 recentSourcesOEIL