EU: single CT rulebook (BEFIT)

We wish to inform you of a significant development with regards to the BEFIT regime: On November 13, 2025, the European Parliament adopted its position on the uniform corporate tax base, known as BEFIT (Business in Europe: Framework for Income Taxation) (see also: EU Parliament Report). The approval of BEFIT marks the beginning of a new era in EU corporate taxation. This joint initiative by EU countries aims to promote tax fairness, transparency, and simplification in European corporate taxation. For Austria, in particular, this is an important milestone as BEFIT could fundamentally transform the tax landscape for both businesses and the Austrian tax administration.

Uniform Corporate Tax Base

BEFIT proposes EU-wide harmonization of the calculation of the corporate tax base for certain groups of companies. Through a unified EU corporate tax system, legal certainty is expected to increase while tax compliance costs shall decrease. For further details, we refer to our Tax News article: BEFIT: Business in Europe: Framework for Income Taxation.

Adjustments to the Draft in the EU Parliament

While the core elements of the Commission's proposal were largely supported, several details were added to the Commission's draft from September 12, 2023 compared to the original (see also: Revised Draft by MEPs and Amendments in Detail - BEFIT: Amendments in Detail):

• A clause on the "significant economic presence" was added. This states that companies with over 1 million euros in revenue in a member state are considered established there permanently. This clause will help identify member states that should be considered when distributing the tax revenues of an international company calculated based on the common EU tax base. It ensures that digital companies pay taxes in jurisdictions where they actually earn profits, whether through services or product sales.
• To ensure a minimum level of taxation of royalties, a regulation was proposed to limit royalties paid by companies within a BEFIT group. If a company pays royalties to another group company taxed at less than 9%, the paying company must add these payments to its taxable income—unless the receiving company demonstrates substantial economic activities with personnel, equipment, and offices.
• A regulation was proposed to prevent companies from shifting profits to foreign subsidiaries in low-tax areas that lack genuine economic activities. If these subsidiaries earn passive income (such as interest or royalties) and lack real economic activities, such income must be added to the taxable income of the parent company.
• Another change accelerates tax depreciation for certain assets that support EU goals in climate, social, digital, or defense areas. This would encourage investment, achieve a sustainable transition, and strengthen the EU's ability to prevent and respond to emerging threats and crises.
• Finally, to reduce potential abuse of losses, a negative tax base caused by a subsidiary's loss may be used by the parent company only for up to five years to reduce its own taxable income (limitation on carry-forward of losses). The loss carry-forward should offset the next positive BEFIT tax base. Loss deductions may not bring the company’s taxable income below zero.

Impacts on Austria

The BEFIT directive requires mandatory application when the group's ultimate parent company is EU-based, prepares consolidated financial statements, and has achieved an annual turnover of at least EUR 750 million in at least two of the last four fiscal years. In this case, the BEFIT regulations must apply to all EU companies in which the ultimate parent company holds at least 50% direct or indirect ownership (“BEFIT Group”). Austrian ultimate parent companies and Austrian subsidiaries within a BEFIT group must comply with the regulations.

Smaller corporate groups that prepare consolidated financial statements but do not exceed the maximum revenue thresholds can apply the BEFIT framework voluntarily.

Timeline

The BEFIT directive is slated for implementation into national law by January 1, 2028, and application from July 1, 2028. However, unanimous approval by the European Union Council is still required. Therefore, further developments remain to be seen.

Stay tuned for more updates as the situation evolves.