Proposal for Head Office Tax system for SMEs
28 September 2023
The European Commission has released a proposed Directive which introduces the concept of Head Office Taxation, giving SMEs operating cross-border through permanent establishments the option to interact with only one tax administration instead of having to comply with multiple tax systems. In terms of this proposal, eligible SMEs will have the option to calculate the taxable result(s) of their PE(s) on the basis of the tax rules of the Member State of their head office, while the applicable tax rate(s) will remain that/those of the Member State(s) where the PE(s) is/are located.
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