Cross-border activities of micro, small, and medium enterprises (SMEs) may create permanent establishments with the effect that (corporate) income taxation is triggered in the source state. The current system of business taxation in the EU is more than complex. Particularly SMEs face high tax compliance costs and risk double or over taxation and time-consuming legal disputes. This is why it is proportionally more difficult for SMEs to deal with the different set of the EU member state’s tax rules as compared to large groups. A new proposal for a council directive, which was released on September 12^th, 2023, alongside a council directive on a framework for income taxation (BEFIT) for large business groups and on EU transfer pricing, should give standalone SMEs having permanent establishments (instead of subsidiaries) in the EU the option to interact with the tax administration in the head office residence state only instead of having to comply with 27 different tax systems. SMEs could opt to calculate the tax base of their permanent establishments according to the tax rules of their head office residence state, file one single tax return with the competent tax authority that would c...