Concept and Implementation of CFC Legislation

S. 2321. Introduction

1.1. Topic

The objective of this thesis is to define the concept of taxable income for the purposes of the CFC regime. The ATAD Directive devises, among others, a specific methodology aiming to identify the taxable income of a CFC (entity or PE). This methodology is based on the classification of predefined types of income and is therefore called the “categorical approach”. The purpose of the thesis is also to explore whether the specific classification of income contemplated by the categorical approach is consistent with the aims of the directive. Each individual class of income may, in fact, be defined and taxed differently in each Member State, thus giving rise to tax planning phenomena. Consequently, the classification of CFC taxable income is a very critical issue for taxpayers, tax authorities, and tax advisors.

1.2. Specific purpose and scope

This thesis attempts to provide an answer to the following research questions: