What factors would be taken into account in apportioning the tax base between Member States?
For the purpose of this narrow pilot scheme it should be sufficient to use a simple but economically robust formula for apportioning the tax base between the participating Member States. This is because the tax revenue ‘at stake’ is limited by various factors: the restriction of the scheme to small or small and medium-sized companies; the limited number of small and medium-sized companies with establishments in other Member States; the optional character of the scheme; the strict monitoring that would apply; the generally low tax liabilities of SMEs etc. Moreover, a simple formula is easy to administer and operate. The Commission recommends using the respective share in the total payroll (50%) and overall turnover (50%) of the participating business in each Member State concerned as apportionment formula. These figures are easy to identify in the company’s accounting and tax declarations. Moreover, the combination of an input-related factor (payroll) with an output-related factor (sale
