Mr. Bert Zuijdendorp:

We believe this proposal is not encroaching on member states' competence. Otherwise, we would not have proposed it. We believe our proposals are entirely in line with, and in the spirit of, subsidiarity and proportionality. It is important to keep in mind that what we do is make proposals. It is for member states to either adopt or reject these proposals. In the tax area, they do so in unanimity. There are checks and balances to ensure that anything that is agreed at EU level carries the support of all member states, including Ireland. On that score, I do not believe we would have any concerns that anything we propose would encroach on member states' sovereignty.

On the perceived negative effects for Ireland, I would be a bit cautious not to draw the conclusion too rapidly. We will carefully need to listen to what the effects on individual member states will be. When we present proposals, we look at their impact on the 28 member states. What we did not do in this case was drill down to the level of the individual member states because our modelling does not allow that in any great detail. This is also a matter in which member states will need to be engaged. To drill down to the level of member states, one needs the kind of information that only member states can provide, such as tax files. Member states are best placed to provide that information. We are happy to do that analysis with them.

On the figures presented in the impact assessment, it is important to note the system is designed to be tax neutral. Broadly, this is the case. There may be minor pluses or minuses but when one looks at the grand total, they are designed to be neutral. We saw the figures mentioned in the newspapers and they were used as the basis for the ESRI report referred to in the previous discussions. There are probably a few caveats to be made. The figures used here were used in the study carried out by the Irish Government and Ernst & Young in the context of the first CCCTB proposal in 2011. This was based on figures from 2008 and it may be slightly outdated by now. This an area in which we might want to compare notes to see how the figures compare to those used in our impact assessment. Moreover, the effects measured on the CCCTB are from the 2011 proposal. There are some fundamental changes in the relaunched proposal with method, the two-step approach and scope. The new proposal also means the CCCTB will be mandatory for certain groups of taxpayers, which was not the case in the 2011 proposal. The new proposal has new features such as research and development incentives and allowance for growth and investment, while it has been strengthened with the integration of all the elements of the anti-tax avoidance directive. All these changes were not factored into the study carried out before. We need to be cautious in using the figures related to the previous proposal to assess the impact of the current proposal on any member state.

We were very happy to compare notes with member states in carrying out these analyses of what the new proposals mean for them.

On the allocation and as mentioned already, there are three factors. If one looks at member states, one will see that certain factors will be more relevant for some than for others. It is clear, for example, that for member states with large domestic markets, the factor of sales by destination would be more important than for smaller member states. In the case of Ireland, the other two factors, namely, capital and payroll, would be considerable. I would not speculate on the outcome because this is something that we will still need to discuss with the member states. I certainly would not jump to the conclusion that because Ireland has a relatively small domestic market, the formula will always work to the disadvantage of Ireland and other member states in a similar position. If this was the case and if that was the outcome of the discussions with member states, then I am sure that there will be further discussions on whether this is the right formula and the right weighting for each of the different factors. Of course, we are very open to having that discussion with the member states.

I should add that the formula is not something we have invented in the Commission. It is a formula that has already been used for over 100 years in the United States of America because it has a system of formulary apportionment. There are similar formulary apportionment systems applied in other countries around the world, including Canada and Switzerland. In that sense, what we are proposing is not a complete novelty. It is a system that is already in force in several places today.