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Common Consolidated Corporate Tax Base
15th VolumeNovember 2012issue #1
Column P. KavelaarsNecessity for the EU
Interview J. van de StreekAn expert about CCCTB
News updateNew swathe of difficulties as Dublin abstains from tax plan
p35p28 p50
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Common Consolidated Corporate Tax Base
Preface
Dear reader,
This is the first edition of the fifteenth year of the FSR Forum. The goal of the FSR Forum is to
connect the theory with the practice. You can find the theory in the scientific articles and the
columns provided by Prof. dr. P. Kavelaars and mister Groeneveld. You can find the practical
part in the company presentations and the columns of a former FSR board member and an FSR
member.
The theme of this edition is Common Consolidated Corporate Tax Base (CCCTB). CCCTB is a
single set of rules that companies operating within the EU could use to calculate their taxable
profits. A company or group of companies would not have different rules in each member state
in which they operate, rather they would have just one EU system for computing its taxable
income. In addition, groups using the CCCTB would be able to file a single consolidated tax
return for all of their activities in the EU. The consolidated taxable profits of the group would
be distributed to the individual companies by a simple formula so that each member state can
then tax the profits of the companies at the tax rate that each member state chooses.
This edition will contain three scientific articles. The first article of this edition is from Matthias
Petutschnig. This article will provide you an explanation about the apportionment factors and
the apportionment system. The second article is written by Tim Moolenaar and Ivonne van den
Berg. In this article the characteristics of the CCCTB and the European Union Corporate
Income Tax will be addressed. The last article is from one of the professors at the Erasmus
School of Economics: Rolph van Ovost. This paper answers the questions whether our depre-
ciation limitation fits within the rules of IFRS and whether the legislation will derive concerns
within European tax base.
In this edition we interviewed an expert in the field of CCCTB. Jan van de Streek is an assistant-
professor of corporation and income taxes at the UvA and he is also working at the Tax Knowledge
Office of Ernst & Young. Jan van de Streek has published multiple articles on CCCTB, in this
interview he gives information about CCCTB.
I am pleased to tell you that mister Groeneveld PhD RA RV has again decided to devote his time
five times this year on his column ‘K(r)anttekening’ in the FSR Forum. In this edition mister
Groeneveld discusses the trust in the field of accountancy.
Also this year a teacher will write a column for the FSR Forum. The first teacher to write a
column this year is Prof. dr. P. Kavelaars from the Erasmus School of Economics. The topic of
Prof. dr. P. Kavelaars’ column is about the advantages and disadvantages about the CCCTB and
why countries should not resist the CCCTB.
As in every edition of the FSR Forum a former FSR board member and an FSR member will talk
about their experiences in the working sector or in their internship. The FSR committees will
also introduce themselves and they will give a short description of the events they are going to
organize. There will be an activity report about the Kickoff Days, GMA and Ernst & Young
fsrforum • volume 15 • issue #1
2 • Preface
drink. For the first time the FSR organized the Erasmus Banking Congress. You will find a report
about this event in this edition. There will also be a report about the Big 4 Cycle.
Since last year the FSR Forum contains the News Update. With this item we will inform you
about the news and developments around the subject of the FSR Forum. In this edition we discuss
the fact that Ireland has rejected the CCCTB and the consequences of this decision.
After the News Update there is an Alumni letter from Ashmita Krishna. All former active FSR
members can become an Alumni member and can join several activities that the Alumni Association
organizes. This edition of the FSR Forum will end with the FSR Activity Agenda in which you
can find all the events that the FSR will organize this year.
Finally I would like to thank the editorial committee, Petra van den Akker and Roija, for helping
with this edition. I am confident that Petra and Roija will be of great value for the FSR Forum.
Furthermore I would like to thank Anne van Driesum for all her help and tips which helped us
to make the FSR Forum.
I hope you enjoy reading this FSR Forum!
Sincerely,
Maaike Lanphen
Editor in Chief FSR Forum
FSR board 2012-2013
Preface • 3
Table of contents
ColofonFSR FORUM appears five times a year and is an edition of the Financial Study Association RotterdamKvK Rotterdam no: V 40346422VAT no: NL 805159125 B01ISSN no: 1389-0913
15th volume, number 1, circulation 1700 copies
Editor in chiefMaaike Lanphen
Editorial department Petra van den AkkerRoija Rasuli
Editorial advisoryDr. M.B.J. SchautenDr. W.F.C. VerschoorDrs. R. Van der Wal RA
With the cooperation ofI. van den BergDrs. J.G. Groeneveld RA RVProf. Dr. P. KavelaarsT. MoolenaarR. van OvostM. Petutschnig
Editorial addressEditiorial office FSR Forum, Erasmus Universiteit Rotterdam Room H14-06Postbus 1738, 3000 DR RotterdamTel. 010 408 1830E-mail: [email protected]
Common Consolidated Corporate Tax Base: Effects of Formulary Apportionment on Corporate Group EntitiesMatthias Petutschnig (2010)One of the cornerstones of the CCCTB-Draft is the apportionment of the group’s overall taxable
income according to a predefined micro-economic factor based formula. This article discusses
the proposed definitions of the apportionment factors and shows that the apportionment system
might lead to over-taxation and under-taxation of any given group entity. 6
Introducing a European Union Corporate Income Tax on the basis of an Enhanced Cooperation AgreementTim Moolenaar, Ivonne van den Berg (2011)In this paper the characteristics of the CCCTB and the European Union Corporate Income Tax
(EUCIT) will be addressed. There will also be given a clear explanation of the distinctive charac-
teristics of an Enhanced Cooperation Agreement and an understanding of the existing studies
on the implementation of the CCCTB amongst all or a subgroup of MS and the implementation
of the EUCIT. 14
Depreciation of buildings viewed in the light of European tax baseRolph van Ovost (2012)Because in the EU context its examined whether it is possible to develop a common tax base for
corporate profits, namely CCCTB, which is often associated to IFRS rules, the question this
paper wants to answer is whether our depreciation limitation fits within the rules of IFRS and
whether the legislation derives concerns within European tax base. 20
Common Consolidated Corporate Tax Base
4 • Table of contents
fsrforum • volume 15 • issue #1
SubscriptionEUR Students through membership FSR; costs E 5,00.Others through subscription. To obtain information, contact the editorial department; costs E 27,50 (including VAT and postage).
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AdvertisersBaker Tilly Berk
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Ernst & Young
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KPMG
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Mazars
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NIBC
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Optiver
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Interview J. Van de Streek 28
Expert on CCCTB
Column Joost Groeneveld PhD 32
Vertrouwen of (on)macht
Column professor 35
P. Kavelaars
FSR News
Word of the Chairman 36
FSR former board member 38
FSR member 39
Introduction committees 40
Activity reports 45
News Update 50
FSR Alumni Association 51
FSR Activity Calendar 52
Company Presentations PwC 12www.werkenbijpwc.nlErnst & Young 18www.ey.nl/carriereKPMG 26www.gaaan.nu
Table of contents • 5
Common Consolidated Corporate Tax Base: Effects of Formulary Apportionment on Corporate Group Entities
Matthias Petutschnig
6 • Common Consolidated Corporate Tax Base: Effects of Formulary Apportionment on Corporate Group Entities
fsrforum • volume 15 • issue #1
»
Abstract One of the cornerstones of the CCCTB-Draft is the apportionment
of the group’s overall taxable income according to a predefined
micro-economic factor based formula. This article discusses
the proposed definitions of the apportionment factors and shows
that the apportionment system might lead to over-taxation
and under-taxation of any given group entity.
1. Introduction In October 2001, the European Commission communicated
its plans for the coming years for company taxation in the
European Union (COM(2001) 582 of 23/10/2001). The document
identified several steps which should be taken to remove
individual tax obstacles to cross-border trade in the Internal
Market. Among others the Commission concluded that in
the longer term member states should agree to allow EU
companies to use a single consolidated base for computing
tax on their EU-wide profits.
In 2004, the European Commission established a Working
Party to examine from a technical perspective the definition
of a common consolidated tax base for companies operating
in the EU. The so called Working Party Common Consolidated
Corporate Tax Base (WP-CCCTB) was thus instructed to
develop and discuss recommendations and eventually draft a
legislative proposal for an EU-wide corporate tax base which
was eventually published in March 2001 .
The basic outline of the proposed EU-wide cross-border cor-
porate tax system contains of a three step determination of
the taxable income of any given group member. At first each
group entity separately calculates its income based on its
financial accounting by adjusting the financial accounting
income to the provisions of the CCCTB. This separately
accounted preliminary taxable income of the group entity
may then be corrected to eliminate the income derived from
intra-group trade to form a (semi-)separately accounted pre-
consolidation income of every member of the CCCTB-group.
These (semi-)separately accounted pre-consolidation profits
or losses of every group entity will then be consolidated to
form the Common Consolidated Corporate Tax Base of the
group which will in a last step be allocated to the group entities
using a predefined micro-economic factor based apportionment
formula. As it is currently not proposed that the consolidated
group is subject to a supranational corporate income tax
levied by the EU every group entity will consequently be
taxed separately by its situs state based on the apportioned
income at the situs state’s statutory tax rate.
While the proposed income determination aims at regarding
the corporate group as one single economic unit the income
allocation procedure and the subsequent taxation of the
group income takes the corporate structure of the group in
consideration and taxes the group income at the level of the
group entities not at the level of the group.
The proposed sharing mechanism “itself is not the purpose of
the comprehensive tax reform, but a necessary and unavoidable
consequence of the consolidation” (WG CCCTB, 2007a). The
sharing mechanism and the proposed apportionment formula
is aimed at being “as simple as possible to apply” and “difficult
to manipulate” by the taxpayers by shifting of the factors to
artificially relocate (parts of) the consolidated tax base and
subsequently to artificially shift taxable income to low tax
countries. Additionally the sharing mechanism aims “to dis-
tribute the tax base among the various entities concerned in
a way that can be considered fair and equitable” and there-
fore the sharing mechanism aims “not to lead to undesirable
effects in terms of tax competition” (WG CCCTB, 2007a). The
proposed apportionment formula is intended to achieve
these aims by using three factors, Sales (S), Labour (L) and
Assets (A). The factor Labour is divided into two “part-factors”:
the labour costs Payroll (P) and the Number of Employees
(NE). Hence the tax base of a particular group member (Π i)
would be calculated as follows:
The adoption of a Common Consolidated Corporate Tax Base
and a sharing mechanism using a predefined microeconomic
factor based formula would be a major change in corporate
income taxation for every EU member state as well as for
every corporate group. Formulary apportionment of corpo-
rate income for tax purposes between sovereign nation states
is currently nowhere in place (Weninger, 2009). Currently
each member state of the European Union uses Separate
Accounting with a dealing at arm’s length approach to deter-
mine the taxable income of corporations trading with affiliated
companies. However, formula apportionment is used by a
number of countries (e.g. Canada, Switzerland, Germany,
Common Consolidated Corporate Tax Base: Effects of Formulary Apportionment on Corporate Group Entities • 7
USA) to allocate corporate income between provinces, states and municipalities or townships
(Kobetzky, 2008; Martens-Weiner, 2005; Weninger, 2009). As the implementation of a consoli-
dation with subsequent Formulary Apportionment is a fundamental change in corporate
income taxation throughout Europe, this article aims to evaluate the possible impacts of this
change to the tax burden of any given group entity concerned.
2. Analysis of the Apportionment FactorsThe WP-CCCTB proposes an apportionment formula using three apportionment factors (Sales,
Labour and Assets) whereas the factor Labour is split into two “part-factors” Payroll and
Number of Employees. The aim of these apportionment factors is to represent all phases of the
profit-making process of the multinational group. The factor Sales therefore represents the
demand side of this process while the factors Labour and Assets represent the supply side.
These two phases are also represented in the pre-consolidation income determination of every
group entity in the form of revenues and expenditures of the respective group entity.
The following section analyses differences in the definitions of the proposed apportionment factors
compared to the respective income producing factors and show their effects on the outcome of
the apportionment procedure compared to the group entity’s pre-consolidation income.
2.1. SalesThe factor Sales represents the marketing phase of the profit making process and is basically
equal to the income determination factor revenues. As all profits or losses of the group entities
are consolidated and therefore the income from intra-group trade in goods and services are
excluded from the apportionment factor, Sales will only contain sales from trade in goods and
services to buyers not part of the consolidated group (external sales). But not all proceeds of
sales of goods and services to third-party buyers will be included in the apportionment factors
Sales. The WP-CCCTB suggests that extraordinary income should be excluded from the factor
as well as revenues from passive income such as interests, dividends, deemed dividends and
royalties should be excluded unless these revenues are accrued in the ordinary course of business
of the respective group entity. The WP-CCCTB further stresses that these exclusions should
only affect the apportionment factor and not the tax base with the effect that this extraordinary
and passive income will be taxable (WP-CCCTB, 2007a, point 50).
The location of the factor Sales is suggested as sales by destination. One rationale of this concept
is that the destination of goods or services especially the place of consumption of the goods by
the customer can hardly be influenced by the seller company. A second rationale of this concept
is that the marketing-state which enables supply and demand to meet is compensated with tax
revenues in exchange for the cost of providing markets and infrastructure to the seller and the
buyer (Oestreicher, 2000, p 155). Assuming that the sales will regularly exceed the costs of pro-
duction (represented by the factors Labour and Assets) the destination-based sales-factor will
regularly apportion a greater share of the taxable income to the marketing-state than to the
production-state.
The concept of sales by destination causes the need to determine that very destination. A pure
concept of sales by destination would lead to an allocation of a share of the group’s taxable
income to any member state in which the group has sold one product or in which the group
has provided one service. This would lead to an increase in the group’s compliance costs and in
certain situations to an increase in the group’s overall tax
burden. Therefore the WP-CCCTB suggests allocating taxable
income to any given member state only if the group of com-
panies has a qualitative economic relation (Nexus) to that
member state. To establish Nexus it is necessary according to
the WP-CCCTB to have a physical presence (WP-CCCTB,
2007a, point 61) in that very state which means that the tra-
ditional concept of permanent establishment and its short-
comings is prolonged by the CCCTB and the concept of sales
by destination is only implemented to a certain degree. Sales
to a buyer located in a state where Nexus is not established
will be allocated to all group entities according to the so
called spread throw-back rule (WP-CCCTB, 2007a, point 58)
which implicitly gives the other two apportionment factors a
higher weighting.
The WP-CCCTB aims at making the apportionment factor
Sales as less manipulable as possible. This aim is pursued by
excluding proceeds from passive income whose underlying
assets could easily be transferred to other group entities and
by proposing the sales by destination concept. However, the
proposed Nexus-requirements still allow the group of com-
panies to manipulate its overall tax liability by choosing to
establish Nexus or not. Not-establishing Nexus in a high tax
country will lead to an apportionment of all proceeds from
this country to the whole group and to a taxation of those
proceeds at the effective (average) group tax rate.
2.2. Labour The factor Labour representing the supply side of the profit
making process is suggested to be split into two “part-factors”
Payroll and Number of Employees. The split is justified by
the WP-CCCTB with the different wage levels throughout the
European Union especially between the western European
member states (EU-15) and the central and eastern European
member states (EU-12) (WP-CCCTB, 2007c, point 16). The
higher wage levels and the higher ancillary labour costs in
the EU-15 would lead to an allocation of a greater part of the
group’s tax base to the EU-15 which may not always correspond
with the value created in these member states. Thus it is seen
necessary to relativise the Payroll costs by the Number of
Employees producing these costs.
2.2.1. Payroll The factor Payroll is relatively straightforward defined as it is
Three apportionment factors (Sales, Labour and Assets).
fsrforum • volume 15 • issue #1
8 • Common Consolidated Corporate Tax Base: Effects of Formulary Apportionment on Corporate Group Entities
»
suggested that the apportionment factor Payroll should be
equal to the remuneration that is taken into account as a
deductible expense for the purpose of calculating the tax
base, including fringe benefits, social contributions, etc (WP-
CCCTB, 2007a, point 25), which should make the calculation
of this apportionment factor relatively easy. However regarding
the definition of the factor Payroll two issues arise: The loca-
tion of the factor Payroll and the definition of ‘employee’ are
critical. Usually the employee will render services at the
same place where the group entity that registered this
employee on its payroll is located. So therefore the corporation
paying the wage will also be the corporation that benefits
from the work of the employee and therefore it is reasonable
to allocate taxable income to that corporation. However it is
possible that a corporation has an employee on its payroll but
the employee provides services to a different group entity.
The group could for example use a special purpose corporation
in a low tax country that registers all employees of the group
on its payroll to artificially shift portions of the tax base to
this low tax country by shifting the Payroll-factor to this low
tax country. To hinder such artificial factor shifting it is sug-
gested that the factor Payroll contains only the wages paid to
employees that actually perform services for or to the respective
group entity regardless which group entity actually registered
the employee on its payroll.
The second issue is the definition of ‘employee’. The WP-
CCCTB does not provide one harmonised definition of employee
but instead proposes that the definition of employee should
be based on the domestic legislation of the member state in
which the employee performs its services (WP-CCCTB,
2007a, point 22). The WP-CCCTB further suggests a system
of mutual recognition of the various employee definitions by
the other member states involved. The definition of a ’typical’
employee will regularly not differ heavily from one member
state to the other but on the edges of this definition where
directors or (in)dependent contractors are concerned these
definitions may vary from member state to member state. In
the U.S., on the contrary, the harmonised definition of employee
for tax purposes is seen as a major advantage (Hellerstein and
McLure, 2004).
2.2.2. Number of Employees With the part-factor Number of Employees the WP-CCCTB
proposes an apportionment factor that has no direct influence
in the calculation of the consolidated group. The implementation
of this part-factor Number of Employees seems at a first
glance reasonable and justifiable as it should help to even the
influences of the different wage levels in the various member
states on the apportionment results. By drawing this direct
relation between Payroll and Number of Employees it is
assumed that a high amount of payroll combined with a rela-
tively small number of employees shows a lower degree of
productivity whereas a small amount of payroll combined
with a relatively high number of employees shows a higher
degree of productivity. The lower degree of productivity
therefore justifies allocating a smaller amount of tax base to
the situs state whereas a higher degree of productivity justi-
fies the opposite. But a higher amount of Payroll combined
with a small Number of Employees could also mean that the
services the employees perform demand a higher degree of
education and knowledge and therefore higher wages are
justifiable. Therefore the part-factor Number of Employees
seems to result in reasonable allocations only if any one unit
of labour has the same effect on the value of the corporate
group which may not always be the case.
2.3. Assets The WP-CCCTB proposes that for practicability, simplicity and
manipulability reasons only fixed tangible assets (Property,
Plant and Equipment – PPE) should be taken into account
for calculating the apportionment factor Assets (WP-CCCTB,
2007a, point 30). Financial assets and current assets are
excluded because of their mobility which could easily be used
by the group to manipulate its tax liability by factor shifting.
The exclusion of intangible assets (patents, trademarks, etc)
is primarily justified with the difficult valuation of intangible
assets especially of self-generated intangible assets. This
argumentation does only hold true with respect to self-gen-
erated intangible assets while acquired intangible assets can
easily be valued with their historical cost or their historical
cost less amortisation (book value) as it is proposed for PPE.
Additionally the WP-CCCTB mentions that self-generated
intangible assets are already included indirectly in the appor-
tionment formula by the other factors (WP-CCCTB, 2007a,
point 34); in the factors Payroll and Number of Employees
through the employees (researchers and developers) producing
the intangible assets and in the factor Sales through the
goods sold that were produced with the intangible assets.
This argument is basically correct but it is not an argument for
the exclusion of only intangible assets as also self-generated
Common Consolidated Corporate Tax Base: Effects of Formulary Apportionment on Corporate Group Entities • 9
fixed tangible assets and self-generated current assets are represented in the apportionment
formula by the other two factors. Based on this argument it would be justifiable to exclude all
self-generated assets regardless whether they are fixed or current, tangible or intangible but
not only self-generated intangible fixed assets.
Apart from the question which categories of assets may be included the WP-CCCTB suggests as
regards to valuation using the “tax written down value” (historical cost less amortisation) of
the assets (WP-CCCTB, 2007a, point 36). To hinder arbitrary factor shifting shortly before the
balance sheet date the WP-CCCTB suggests the use of an average of the tax written down value
at the actual balance sheet date and the previous balance sheet date.
The respective asset is suggested to be located for purposes of the apportionment factor not at
the legal owner but at the group entity which effectively uses the asset. Intra-group rented/
leased assets will therefore be located at the lessee. For rented or leased assets from a lessor or
to a lessee outside the group it is suggested to include the asset in both the lessor’s and the lessee’s
apportionment factor as both use the asset to generate taxable income. At the level of the lessor
it should be included with the tax written down value. And at the level of the lessee the asset is
suggested to be included at eight times the annual lease. Using eight times the annual lease as
a value for leased assets is justified by the WP-CCCTB by the current practise in the U.S. This
seems rather unsubstantiated especially as this method is highly criticised in U.S. tax literature
(McLure 2002; Hellerstein and McLure, 2004).
As intra-group transfers of assets will be consolidated transferring written-down assets into low
tax countries prior to the disposal of the assets can be used to shift the Asset-factor and conse-
quently the taxation of the capital gains into that country. To hinder such arbitrary factor-shifting
it is suggested to either include the asset sold in the factor of the group-entity that has used it
primarily over the asset’s useful life or to impose a holding-period of two years before the asset
is included at the apportionment factor assets of the selling group entity (WP-CCCTB, 2007a,
point 41).
2.4. Concluding Remarks The proposed definitions of the apportionment factors are obviously influenced by the WP-
CCCTB’s aim of making the result of the apportionment as little manipulable as possible by the
corporate group. Therefore certain components of the underlying income producing factors
are excluded from the definition of the respective apportionment factor.
The apportionment factor Sales consists only of ordinary sales and active sales. However the
taxable income consists also of sales derived from extraordinary business and also of passive
income. Therefore the group entity earning the passive or extraordinary income and benefitting
from its positive cash flow is not taxed with the full amount of this passive or extraordinary
income but the passive or extraordinary income is allocated for tax purposes to every group
entity. With the passive income closely connected are the assets generating these revenues;
basically financial assets and fixed intangible assets. These components of an Assets factor are
also excluded from the apportionment factor Assets. Therefore the income producing financial
assets and/or intangible assets will not be included in the apportionment factor Assets of the
group entity owning these assets that also earns the passive income and benefits from the positive
cash flow. Not only that the passive income is not part of the apportionment factor Sales the
assets producing the passive income are also not part of the apportionment factor Assets. A
group entity that has passive income from these types of
assets will only be taxable with this income in the relation of
its Payroll and Number of Employees relative to the corporate
group’s Payroll and Number of Employees. Other income
producing factors used to determine a group entity’s pre-
consolidation income and the Common Consolidated Corporate
Tax Base of the group such as depreciation, consumption of
raw materials, inventory and stock are also excluded from
the apportionment formula.
The exclusion of certain components of the factor Sales as
well as of the factor Assets leads to an allocation of the taxable
income derived from those sales and produced with those
assets to all members of the corporate group regardless
whether the actual cash-flow from this revenues is allocated
to the whole group or not. Thus one group entity probably
pays taxes for income it did not realise while another group
entity realises income without being taxed.
2.5. Simulation To demonstrate the differences between the pre-consolidation
income of a given group entity and the allocated share of the
group’s tax base resulting from the formulary apportionment
a brief simulation using a corporate group established by two
corporations is conducted. It is assumed that all revenues
and expenditures from intra-group trade in goods and services
have already been considered and eliminated at the level of
each group entity. Thus only revenues and expenditures from
trade with external partners remain. It is further assumed
that both the parent and the subsidiary produce a positive
pre-consolidation income so that the results are not influ-
enced by an intra-group loss offset:
Income Producing Factors
Parent Subsidiary Group
Assets
Fixed tangible (useful life: 15 Y) 1.500 1.500 3.000
Fixed intangible (useful life: 25 Y) 3.500 0 3.500
Financial Assets 450 0 450
Sales
Sales (active) 300 600 900
Sales (passiv) 300 0 300
Labour
Payroll 100 200 300
Number of Employees 5 12 17
Miscellaneous
Leasing Cost 0 8 8
Consumption of comodity 100 200 300
fsrforum • volume 15 • issue #1
10 • Common Consolidated Corporate Tax Base: Effects of Formulary Apportionment on Corporate Group Entities
The conscientious manager of any given group entity however might not choose to enter into the CCCTB-System.
These income producing factors are used to calculate the fol-
lowing pre-consolidation earnings of the two group entities:
Pre-consolidation income
Parent Subsidiary Group
Revenues
Sales (active) 300 600 900
Sales (passiv) 300 0 300
∑ Revenues 600 600 1.200
Expenditures
Amortisation (fixed tangible) 100 100 200
Amortisation (fixed intangible) 140 0 140
Amortisation (Financial) 0 0 0
Leasing Cost 0 8 8
Consumption of comodity 100 200 300
Payroll 100 200 300
∑ Expenditures 440 508 948
pre-consolidation income (absolute) 160 92 252
pre-consolidation income (in %) 63,49% 36,51% 100%
These pre-consolidation earnings are then consolidated to
form the CCCTB (also presented in the table) which is then
apportioned by using the proposed components of the
income producing factors:
Formulary Apportionment
Parent Subsidiary Group
Apportionment Factors
Sales
Sales (active) 300 600 900
Labour
Payroll 100 200 300
Number of Employees 5 12 17
Assets
Fixed tangible assets 1.450 1.450 2.900
Leasing (8 x annual lease) 0 64 64
Apportionment Relation 37,88% 62,12% 100%
Tax Base (absolute) 95,45 156,55 252
If these income factors are used to allocate the group income
by using the proposed apportionment procedure and factors
the group income will be allocated to each group entity in a
different relation. As the proposed apportionment factors
exclude certain types and specifics of the income producing
factors the income derived from these factors is allocated for
tax purposes to every group member according to the relations
of the included factors. In the example a smaller share of the
group income than the pre-consolidation income is appor-
tioned to the parent company for tax purposes while the sub-
sidiary’s taxable share of the group income is higher than its
pre-consolidation income.
3. Summary The article shows the effects of the proposed income allocation
system and of the proposed definitions of the apportionment
factors. In an attempt of making the income allocation as
little exposed to artificial manipulations by the corporate
group as possible certain components of the income producing
factors are not represented in the definitions of the related
apportionment factors. This volitional incompleteness of the
apportionment factors leads to an allocation of the income
derived from the excluded components according to the
included components of the income producing factor. The
group entities concerned will regularly get a share of the
group’s consolidated tax base allocated that does not equal
the pre-consolidation income it has calculated (semi-)sepa-
rately before. The amount of this allocated share of the
group’s tax base can regardless of the group entity’s profita-
bility be higher or lower than the entity’s pre-consolidation
income which could lead to an over or an under taxation of
that particular group entity. The Apportionment Formula
will thus also allocate a share of the taxable group income to
a group entity even if the (semi-)separately calculated pre-
consolidation income is negative which may cause a substantial
decrease in liquidity of the group entity. Considering that
each group entity will remain a separate legal entity with all
the associated legal rights and duties the CCCTB apportionment
system potentially to unremunerated transfers of liquidity
and assets from one group entity to another. Therefore the
principle of capital maintenance and the diligence of a con-
scientious manager might render an accompanying system
of intra-group compensation payments from under-taxed to
over-taxed group members necessary especially if the
CCCTB-System will be optional. This optionality necessitates
every group entity to deliberate about whether to remain in
the current system or to transfer to the CCCTB-System. The
conscientious manager of any given group entity however
might not choose to enter into the CCCTB-System if the
CCCTB-System is disadvantageous to the particular group
entity with respect to its overall economic development
(Petutschnig, 2012).
Common Consolidated Corporate Tax Base: Effects of Formulary Apportionment on Corporate Group Entities • 11
© 2012 PricewaterhouseCoopers B.V. (KvK 3412089) Alle rechten voorbehouden.
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Introducing a European Union Corporate Income Tax on the basis of an Enhanced Cooperation Agreement
By Tim Moolenaar & Ivonne van den Berg
14 • Introducing a European Union Corporate Income Tax on the basis of an Enhanced Cooperation Agreement
fsrforum • volume 15 • issue #1
1. IntroductionTo this date, the European Union (EU) has not been successful
in implementing any serious cooperation or harmonization
in corporate taxation. The European Commission (EC)
already called for a harmonization of corporate tax systems
in the 1960’s. Subsequently the European Parliament (EP)
has produced several Working Papers on the subject of tax
coordination.
Research indicates that full tax harmonization would yield
the biggest welfare gain. However, the burden on national
sovereignty would suggest it unlikely to be implemented in
the EU as a whole. An Enhanced Cooperation Agreement
(ECA) enables the most ambitious Member States (MS) to
deepen cooperation between themselves. This might be the
only way to achieve full harmonization amongst the more
willing MS. Therefore, our research addresses the following:
will the introduction of a European Union Corporate Income
Tax, based on an Enhanced Cooperation Agreement, lead to
an increase in welfare within the participating MS and
thereby create incentives for other MS to join at a later time?
In section 2 we will shortly address the characteristics of the
Common Consolidated Corporate Tax Base (CCCTB) and the
European Union Corporate Income Tax (EUCIT). Then, in
section 3 we will give a clear explanation of the distinctive
characteristics of an ECA. Section 4 will give an understanding
of the existing studies on the implementation of the CCCTB
amongst all or a subgroup of MS and the implementation of
the EUCIT. It also addresses the possible Enhanced Cooperation
Union for Corporate Taxation (ECUCT). Section 5 concludes.
2. Possible reformsCorporate taxation in Europe has been the focus of the EC for
several years. In the 2001 EC Report on Company Taxation in
the Internal Market, the Commission indicated various company
tax obstacles prevailing in the EU, such as: high compliance
and administrative costs and the distortion of the international
allocation of capital. To a large extent, these shortcomings of
the current system originate from the co-existence of 27 dif-
ferent tax systems, which requires separate tax accounting
for every MS where a company operates. To reduce these
obstacles, the EC has been researching the possibility of har-
monizing the corporate tax systems in the EU.
The most developed concept of harmonization is referred to
as the CCCTB. Under this system, the EU-wide consolidated
profits of each multinational company (MNC) will be allo-
cated to MS by an apportionment formula. Companies that
are eligible and opt in, would then be taxed on their consoli-
dated taxable profits earned across the different MS. Each
state will subsequently tax the allocated profit at its own cor-
porate tax rate. Under the CCCTB, the compliance and
administrative costs of MNC are reduced, it leads to an alle-
viation of double taxation and it opens up the possibility of
cross border loss compensation. However, the precise impact
on welfare and revenues of a MS strongly depends on the
choice of the apportionment formula. It will certainly be dif-
ficult to agree upon the CCCTB amongst the 27 MS, especially
in view of the unanimous voting requirement on direct tax
matters.
Another possibility is implementing the EUCIT. This system
replaces all the corporate income taxes within the EU and
thus leads to base and rate harmonization. This necessitates
that countries lose their sovereign rights on corporate tax
matters altogether. It will, however, lead to a truly “single
level playing field”.
3. Enhanced Cooperation AgreementTo reduce tax competition there is an ongoing plea for estab-
lishing a single corporate tax zone. As direct taxation is still
subject to unanimous voting in the European Council, not
much progress has been made. The EU has reacted to these
developments by introducing a so-called Enhanced Coopera-
tion Agreement (ECA). An ECA is a procedure wherein a
minimum of nine EU MS are allowed to establish advanced
integration or cooperation in an area within EU structures,
but without the other EU members actually being involved.
Hence, an ECA enables the most ambitious MS to deepen
cooperation between themselves. The option of an ECA
amongst a subgroup could facilitate progress in integration,
as not all MS might be willing or able to participate in it yet.
A successful performance of such a subgroup may motivate
other MS to participate in the ECA at a later stage.
4. Conclusions and coordination effect of the CCCTB and the EUCIT
Looking at the research done, it is shown that corporate tax
base harmonization yields a welfare gain for Europe, though
The precise impact on welfare and revenues of a MS strongly depends on the choice of the apportionment formula.
»Introducing a European Union Corporate Income Tax on the basis of an Enhanced Cooperation Agreement • 15
small. Amongst the individual MS it gives very different
results, some will benefit while others will not. The simulations
ignore the reduction of compliance costs, which are expected
to increase welfare gains even more.
The CCCTB proposal consists of an optional common tax
code, besides the existing national tax codes. As it would be
optional, differences in treatment would remain. Under full
consolidation of the tax base, profit shifting within the EU is
no longer feasible. However, multinationals can still respond
to tax rate differentials that might create incentives to real-
locate. This implies that tax competition does not disappear
under consolidation, but will take a different form and it may
even cause further competition in tax rates in the EU. This
offers a rationale for rate harmonization, in addition to base
harmonization. Also profit shifting to low-tax countries that
are not part of the EU will still be possible, which means that
the individual EU MS will have to maintain separate account-
ing for profits earned outside the EU. Therefore the amount
of cost reduction under the CCCTB may be overestimated.
By implementing the EUCIT system, which is mandatory and
includes rate harmonization, some of the distortions caused
by the CCCTB are eliminated. The welfare gain under the
EUCIT is much larger in comparison to the welfare gain
under the CCCTB system.
CCCTB and EUCIT have the same problems of arriving at a
common tax code. A whole new tax system would have to be
devised. Furthermore, as the EUCIT is compulsory, this
necessitates that countries lose their sovereign rights on cor-
porate tax matters altogether.
Although it seems unlikely that harmonization will be imple-
mented in all 27 EU MS simultaneously, a small group of MS
may find it in their interest to do so under an ECA. A coalition
of winning countries reduces the welfare gain and may
induce a process of adverse selection, which destroys the pos-
sibility of cooperation. Furthermore, a coalition of similar
countries (in terms of the size of their multinational sector)
is more feasible in achieving agreement and is actually pre-
ferred by those countries over a EU-wide reform. Countries
with similar policies are more likely to form a coalition, as
the costs of cooperation are relatively minimal. Another
example of a coalition is one between larger countries. This
yields larger common gains from cooperation compared to a
coalition between small countries, since the spillovers inter-
nalized by a coalition of small countries are much smaller
than spillovers internalized by larger countries. Moreover,
small MS may prefer to remain sovereign as they benefit
more from tax-rate cuts.
These simulations are based on the compulsory CCCTB
regime. Although the consequences for individual MS under
full harmonization most likely will not correspond to the
CCCTB simulations, it remains clear that for Europe as a
whole, the EUCIT is more beneficial. Therefore it seems
probable that under the EUCIT a group of countries will ben-
efit from an ECA without having a significant effect for the
opt-outs. Although it is possible that this group would be
similar to the ones examined in the studies, this cannot be
said with the utmost certainty. Further research is necessary.
Following the ECA an Enhanced Cooperation Union for Cor-
porate Taxation (ECUCT) can be formed. Such an ECUCT
could have possible positive or negative pulling-effects on
the opt-outs.
The opt-outs can benefit from the experimentation and learn
the pros and cons of cooperative tax harmonization by the
ECUCT members. The possibility that enhanced cooperation
in one field, by one group of countries, will extend to other
areas and will thus benefit other countries, has already been
put forward by a number of authors. Cross-border economic
activities within the ECUCT are expected to increase with
harmonization. If cross-country differences in effective tax
rates would be removed this will lead to a more efficient allo-
cation of capital across the ECUCT, creating an incentive for
countries to be a part of the ECUCT. In case lower compliance
costs yield additional welfare gains, this also increases the
likelihood that countries opt in the system.
One of the fears is that enhanced cooperation may lead to a
permanent divide between insiders and outsiders. Furthermore
outsiders can choose explicitly to remain outside the ECUCT
for reasons of tax competition or national tax preferences.
5. ConclusionIn our paper we explored the possibility of a European Union
Corporate Income Tax. We started by shortly addressing the
fsrforum • volume 15 • issue #1
16 • Introducing a European Union Corporate Income Tax on the basis of an Enhanced Cooperation Agreement
characteristics of the CCCTB and the EUCIT. Secondly, we
explained the possibility of Enhanced Cooperation as it does
not seem feasible that all EU members would agree to one
corporate tax system in the near future. After this, we shortly
addressed a few studies of interest to our research and applied
this in our argumentation on the European Union Corporate
Income tax, more specifically the Enhanced Cooperation
Union for Corporate Taxation.
All studies addressed conclude that harmonization, whether
by CCCTB or EUCIT, is likely to produce a welfare gain for
Europe, although probably modest. It is acknowledged that
not all countries may benefit. If some countries are worse off,
it will be difficult to agree upon harmonization among the
EU MS. The biggest gain is expected from a reduction in
compliance costs, which no studies were able to incorporate
in their research.
A potential way out is enhanced cooperation whereby a sub-
group of EU MS coordinates their policies. However, a question
which remains is whether or not opted out countries could
gradually be enticed to participate in closer cooperation at a
later stage. This cannot be determined due to the different
results stemming from different factors which should be
taken into account such as which group of countries and the
choice of the rates and bases, amongst other factors. It seems
most probable that MS of similar size or with a similar mul-
tinational sector will deepen cooperation, since they will
have similar tax systems. We expect that MNC will prefer to
be allocated within the ECA due to the reduction in compliance
costs and other benefits mentioned in our paper, which will
create an incentive for the opt outs to join the ECA.
As a final remark it is relevant to inform the reader that as of
the 16th of March 2011 the European Commission has pub-
lished its long awaited draft directive of the optional CCCTB.
Although the reader knows our standing point on this proposal,
it could be a stalking horse for closer tax cooperation in Europe.
One of the fears is that enhanced cooperation may lead to a permanent divide between insiders and outsiders.
Introducing a European Union Corporate Income Tax on the basis of an Enhanced Cooperation Agreement • 17
importantly I became more familiar with the assurance department and got to know my colleagues. After working for a real audit during my internship, I was really convinced that I wanted to become an auditor. The work of an auditor is very varying: each week you will work for different clients together with different teams. This September I started working for Ernst & Young in Amsterdam and so far I do not regret my choice at all and I am looking forward to all the experiences that will come along during my career at Ernst & Young.
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After the Masterclass I got the opportunity to follow an internship at Ernst & Young. During this internship I did not only fi nish my thesis, but most
Sandhya Poeran Staff AssuranceErnst & Young Accountants
Almost two years ago, during the year I did my master in Financial Economics, while simultaneously being an active committee member at the Financial Study Association Rotterdam, I fi rst heard about Ernst & Young Transaction Advisory Services. Already having a strong interest in corporate fi nance, I quickly became curious to know more about Ernst & Young TAS.
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Joost Alberts Consultant Valuation & Business ModellingErnst & Young Transaction Advisory Services
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Depreciation of buildings viewed in the light of a European tax base
Mr. Rolph van Ovost
20 • Depreciation of buildings viewed in the light of a European tax base
fsrforum • volume 15 • issue #1
1. IntroductionThe revision of the Law on Corporation Tax 1969 with effect
from 1 January 2007, the legislature, where the buildings are
concerned, intervened on the principle of “good business
practice” by limiting the depreciation. The reason that the
legislature has given for this limitation is that there is a
much higher load (a higher depreciation rate) taken than the
actual value of the building. This difference is reflected in the
sale of the building but this gain cannot be taxed because the
entrepreneur in the sale of the building often uses the rein-
vestment reserve .
There were two options available to the legislature in order
to highlight the levy, namely to make an exception for prop-
erty for the purposes of the reinvestment reserve, or directly
introducing a depreciation limitation in the law.
The legislature has chosen for reasons of his own for a depre-
ciation limitation and not a limitation in the ability to form a
reinvestment reserve.
This base broadening that results from it, yields the Treasury
a structural benefit of approximately E 1.7 billion per year.
This gain is the main source of funding for the rate reduction
in the Corporation tax (corporation tax) to 25.5%, and for the
SME profit exemption for the benefit of IB-entrepreneurs.
Because in the EU context its examined whether it is possible
to develop a common tax base for corporate profits, namely
Common Consolidated Corporate Tax Base (CCCTB), which
is often associated to IFRS rules, the question arises whether
our depreciation limitation fits within the rules of IFRS and
whether the legislation derives concerns within European
tax base.
In this paper I intend to answer this question.
2. Depreciation limitation on buildings
2.1 General“Good business practice” implies that the income and
expenses should be allocated to the years to which they
relate. When an asset wears, then the good business practice
obliges to an annual depreciation, within the art. 3.25
Income Tax Act 2001 (IB) limits and according to a fixed
system where arbitrariness is excluded.
Art. 3.30, paragraph 1 IB, expects the amortization of assets
from the acquisition or production costs, so the historical
cost, subject of course to the residual value.
Depreciation is fiscal-judiciary cost distribution, which is
expressed in the text of Art. 3.30, paragraph 1 IB. Depreciation
is based on the matching principle: the cost of an asset should
be allocated to the years in which revenues are recognized.
The purpose of depreciation is derived from the jurisprudence.
Depreciation is not aimed at a lower market value of an asset
to come true, but to indicate a reduction in the utility value.
Even if the selling value increases, depreciation is possible
because even then the utility value of the asset will fall.
An asset's value decreases due to technical wear and / or economic
obsolescence. If there is no decline due to the use, for example
in the use of land, then it is not permitted to depreciate.
In art. 3.30 paragraph 2 IB under "Working on earnings" at 1
January 2007 a time limitation is applied to depreciation of
assets.
2.2 Depreciation of buildingsFrom art. 3.30a, paragraph 1 IB follows that buildings can
only be amortized up to the base value. This base value is
according to art. 3.30a, paragraph 3 IB, for buildings that are
held for investment equals the property (WOZ) value and for
buildings in use at 50% of the property value.
Art. 3.30a, paragraph 4 IB provides rules for determining the
property value. Art. 3.30a IB applies not only to natural per-
sons who enjoy profits from business, but this also accounts
through the linking provision of Art. 3.95 IB for taxpayers on
the basis of Art. 3.90 IB and further taxable income from
other activities.
Also the corporate tax bodies are faced on the basis of Art. 8,
paragraph 1, corporate income tax. with the depreciation
limitation of Art. 3.30a IB. There is a difference, Art. 8, para-
graph 6a, corporate income tax, gives for corporate tax its
own definitions of the terms 'joint entity' and 'joint person'.
Determining the residual value of a building as a result of
this amendment is of limited significance, because the base
value in the rule will be higher than the residual value.
However, the first depreciation area should be established
Even then the utility value of the asset will fall
»Depreciation of buildings viewed in the light of a European tax base • 21
9 and paragraph 10 IB. Art. 3.30a, paragraph 11 IB, defines
what should be understood with a connected body. There is a
difference between the IB and the corporate tax, Art. 8, para-
graph 6a, corporate income tax provides for corporation tax
its own definitions of the terms 'related entity' and 'con-
nected person'.The group approach is being considered here.
This means that if a building within an enterprise is rented to
another subsidiary, this building is considered a building in
use, allowing the amortization can occur up to 50% of the
property value of the building.
3. IFRSIFRS set by the International Accounting Standards Board
(IASB), prescribed to be the external commercial reporting.
The IASB is the regulatory body within the International
Accounting Standards Committee Foundation. These IFRS
rules are mandated, by the EU, for commercial financial
statements of listed companies.
The guidelines for annual reporting as published by the
Council for Annual Reporting (CAR) for firms in the Nether-
lands, are partly adjusted to the IFRS rules.
It is intended that the IFRS rules will become the global
standard for external reporting. Currently, in the US accountants
are mostly applying U.S. GAAP for unlisted companies. In the
meantime, an agreement has been made between the IFRS
and the SEC (Securities and Exchange Commission) that
European companies with a U.S. listing can suffice with
financial statements prepared according to IFRS rules. The
IFRS organisation is self-regulated that is separate from the
EU. In response, the EU has no direct influence. Because the
EU is afraid that the IFRS rules can develop in a direction
that is not desirable to the EU, the European Commission
(hereafter EC) has stipulated the right of approval.
The EU has therefore created two organs, the European
Financial Reporting Advisory Group (EFRAG) and the
Accounting Regulatory Committee (ARC).
3.1 Real estate and IFRSThe IFRS rules make a clear distinction between property
held as tangible fixed asset are not on investment (IAS 16)
and property held for investment (IAS 40).
art. 3.30 IB offers, prior to the depreciation limits of art.
3.30a IB can be accrued to.
According to the jurisdiction a fixed rule states that land and
buildings which collectively are in use in the fiscal sense
together constitute an asset. Moreover, on 1 January 2007,
this is expressly stipulated in art. 3.30a, paragraph 2 IB.
With the depreciation of the assets comprising of land and
building, the continuing value will be determined by the
residual value of the building, together with the residual
value of the land.
At constant value of the land only the building is depreciated.
When the value of the land increases, then, in principle, the
residue value of the whole is to be increased, so that the
write-space is reduced.
Art. 3.30a IB ensures that there can no longer be amortized
when the book value is reduced to the base value, or the base
value has risen to the book value.
2.3.2 Buildings for investment:In art.3.30a paragraph 3 IB for determining the base value
distinguishes between buildings that are held for investment
and buildings in own use.
Especially in buildings that are held for investment, it is the
view of the legislature an undesirable development that in
practice there is a significant discrepancy between the tax
depreciation and actual depreciation of buildings. These
buildings are mainly purchased because of the rental income
and potential appreciation. Buildings in use within one’s own
enterprise, said the legislator, are purchased because of the
added value that these buildings have for the company activities.
Pursuant to art. 3.30a, paragraph 3, subparagraph a IB, the
base value of a building that the investment is held equal to
the property value of the building. A building for investment
is defined as "a building that is intended to directly or indirectly
principally to have at one’s disposal to a different party other
than a person related to the taxpayer or body'.
2.3.3 Connected person or related entityThere is no question of a building for investment as the
building is made available from an associated person or body.
The term associated person is defined in art. 3.30a, paragraph
It was the EU’s goal to be the world’s most competitive economy by 2010.
fsrforum • volume 15 • issue #1
22 • Depreciation of buildings viewed in the light of a European tax base
The valuation of investment property is to be made on the
historical cost or current (fair) value. Empirical research
shows that most listed companies opt for measuring fair
value. A definition of fair value is, the amount for which an
asset could be exchanged between knowledgeable willing
parties who are acting independently of each other. The fair
value of investment property is determined as the most probable
price in the market is available on the date of the balance
This in itself is a logical trade method. On the commercial
balance, in particular used in the capital market, it is attractive
to show gains, the question is whether in a time of economic
crisis and falling real estate prices, it still happens.
If an investment property is carried at fair value it is not com-
mercially depreciated. So gains and losses on the fair value
that occur in one year should also be included in the profit
and loss of that financial year.
If an investment property is valuated at historical cost, the rules
for material tangible fixed assets are to be used. This means
that there must be depreciation and any impairment losses
should be taken into account. It is also permissible for investment
property, the balance sheet valuation is at historical cost while
the depreciation is calculated on the basis of current value.
4. Common Consolidated Corporate Tax Base (CCCTB)Over the past forty years multiple attempts have been made
to harmonize corporate taxation legislations in the European
Union (EU). These attempts have been made to prevent
unfair competition and to enhance Europe’s profile as one
economic region. It was the EU’s goal to be the world’s most
competitive economy by 2010. Plans to achieve this goal
have been set to 2020, based on the Lisbon treaty. It is the
European commission’s belief a common tax base will help
the EU reach this goal.
4.1 Tax base differences within the EUEvery EU member state has its own corporate tax, with each
its own tax base, tax rate, and exceptions. According to the
European Commission, the situation of little synchronization
between tax systems, and the differences between tax base
and tax rate lead to two (joint) problems:
• Corporations, which operate in more than one EU member
state, are confronted with fiscal hurdles and considerable
costs. This leads to problems with the internal market not
functioning optimally.
3.1.1 Property not for investmentIn order to for an asset to be considered as a tangible fixed
asset, it has to be used for more than one reporting period
and generate services to the operations of the entity. The
main rule of the IFRS, to set the assets in the most realistic
value. The main idea is that real estate valuation is at cost.
Valuation according to IFRS may also be done at fair value,
provided that they can be determined reliably.
It is obvious that the fair value at the time of the purchase is
equal to its purchase price, including the transaction costs
associated with the sale. IFRS also states that the reduction
because of usage should be charged through depreciation
annually, to the profit of the company. In addition, IFRS
points to a component approach. This means that at any part
of a building allocated to the cost price, this value or pur-
chase price can have a significant impact in the course of
trade so these must depreciated separately.
3.1.2 Investment PropertyFor property that is held for investment IFRS16 has a special
arrangement. The difference between property in own use
and real estate for investment is that investment flows generate
income, which are independent from other assets of the entity.
This definition can cause problems if a building is partly used
for own production and the rest meant for rental. In that
case, it is checked whether both parts can be sold separately.
If this is the case then the processes are treated separately.
However, when the building cannot be sold separately when
an insignificant portion of the building is used for own use,
then we may consider it to be of an investment property.
Within the context of IFRS, it qualifies for example keeping a
hotel as an investment property, even if the majority of the
property (briefly) made available to others.
3.1.3 Related entitiesA property that is leased within a group of consolidated or
merged companies is not regarded as an investment property
in the consolidated financial statements, because that property,
as seen from the group's own use. For the company that
owns the property the building, should in the financial state-
ments of the group classify it as an investment property. In
the financial statements of the group the real estate should
therefore be recognised and treated as an investment property. »Depreciation of buildings viewed in the light of a European tax base • 23
The European Commission has decided to make a distinction
between long term assets and miscellaneous assets, when it
comes to depreciation methods. The long term assets,
including real estate, are valued on a case-by-case basis and
are written off on a case-by-case basis. This is why it is impor-
tant to determine what the difference is between long term
assets and miscellaneous assets. Eventually the European
Commission went for a period of 15 years, where assets with
a useful of over 15 years are defined as long term assets and
assets with a useful life of less than 15 years are defined as
miscellaneous assets.
This leads to the conclusion that buildings are determined as
assets which are subject to impairment. Write-offs are man-
datory (art. 34 lit 4 draft directive) and are performed by the
beneficial owner. If the beneficial owner is lost, the legal
owner is allowed to perform the write-off. (art. 34 lit 1 and lit
3 draft directive, these rules apply to e.g. leasing contracts.)
The depreciation base comprises all costs directly related to
the acquisition, bringing in working order, or improvement
of a fixed asset. (art. 33 lit 1 draft directive) These costs
exclude deductible VAT.
Particularly remarkable is that scrap value is set to zero in all
cases.
The following rules apply to the acquisition of an existing
building: a second hand building will be written off over a
period of 40 years unless the legal tax payer can prove that
the estimated remaining useful life of the building is less
than 40 years, in which case it will be written off over a
shorter period of time; (art. 36 lit 2 draft directive). Hence,
there exists a rebuttal claim on the period of 40 years for the
acquisition of a previously existing building.
Per building a depreciation rate of 2.5% applies. The
‘’method’’ applied to compute the amount of depreciation is
simple. It entails that, in the year of acquisition, the asset is
subject to write offs the entire year, but in the year the asset
is disposed no write offs are possible. Real estate, which can
be regarded as provision, is valued by the European commis-
sion at acquisition price or, if lower, value in use.
The directive draft does not contain any information about
real estate for investments. I presuppose these assets should
• The widely differing tax rates and tax bases of corporate
taxation lead to unwanted tax competition and distort the
allocation of capital within the EU.
On the basis of aforementioned considerations and on the
agreements settled in the Lisbon treaty, the European com-
mission has decided to come up with a guideline to come to
a common fiscal base of taxation. This Common Consolidated
Corporate Tax Base (CCCTB) would determine on the basis of
which rules, profits should be determined. This arrangement
should lead to: cost savings, and it should make filling taxes
easier for corporations which are active in more than one
member state. As of today, the European Commission has
come up with a draft directive including a proposal for a
CCCTB.
4.3 CCCTB and real estateEven though the CCCTB draft directive initially thought it
could base rules for accounting for profits on the IFRS rules,
it is now necessary for the CCCTB to invent their own
accounting for profits rules. This is due to the fact that no
less than Business Europe and several academia have pres-
sured the CCCTB not to use the IFRS rules
De European Commission has not chosen for a principle
based system with general definitions of profit, but went
instead for well-defined measures of profit (rule based). The
determination of profit rules in the CCCTB are very short en
crude. Many questions that could arise are still left unan-
swered. Also not all terms are defined. A typical example is
the definition of a building in art. 4, which does not have a
definition thus far. Theoretically the question could arise
whether the tax payer has to pay taxes over a building or over
a tangible long term asset. The difference, now, is in the
depreciation period (40 years or 15 years).
4.3.1 DepreciationThe European Commission gives 3 possibilities for the writ-
ing off of fixed assets:
A) No depreciation possible ( art. 40 draft directive)
B) Impairment (e.g. buildings, art. 36 draft directive)
C) Depreciation within an asset pool (applies to other fixed
assets with a useful life less than 15 years. Art. 39 draft
directive)
fsrforum • volume 15 • issue #1
24 • Depreciation of buildings viewed in the light of a European tax base
the corporation and of the capital providers. Apart from that,
the prudent approach to jumps in value, either up or down,
in determining profit is a major advantage tax wise. Since, a
jump in value upwards would not lead to more cash or cash
equivalents for the entrepreneur. If only, such an improve-
ment in equity value could, in case it would fall under taxable
profit, lead to substantial financial distress.
Moreover, under the CCCTB real estate property is written
off as a standalone item, hence the building separate from
the land it stands on. While art. 3.30a IB writes that the
building and the land that carries the building should be
regarded as one. Then, under art. 3.30a IB it is possible that
depreciation will decrease of will cease as the market value of
land increases. While, at the same time, under the CCCTB
the change in market value of the land will have no effect
whatsoever on the depreciation of the building.
Art. 3.30a IB might prove to conflict with European jurisdiction,
which would give rise to the necessity of procedures con-
cerning equality and discrimination. In addition, it is ques-
tionable whether entrepreneurs will buy the story that some
real estate can be written off to 0 while other real estate can
only be written off to 50 % of the value of immovable property.
Apart from that, the CCCTB will only hold for legal bodies
liable to corporate taxation and not for sole proprietors. This
will only increase the feeling of inequality and unjustness,
either that or their will be a massive flight from sole proprietor-
ships to corporations.
Another relevant question is whether businesses with real
estate should massively choose for CCCTB. In particular, this
would happen because of the contested depreciation frame-
work of the CCCTB. This in turn could lead to problems for
the public treasury in the Netherlands, which would miss out
on structural cash inflows if the current depreciation limitation
were to (partially) cease to exist.
The final conclusion is that the CCCTB provides business
with real estate an apparent windfall compared to the current
corporate taxation system in place. An effect could be that
entrepreneurs choose for the CCCTB with large conviction.
The conditions of CCCTB, however, are not fully set out yet.
Hence, the possibilities are still endless. May them be posi-
tive or negative.
be valued at the acquisition price, after which depreciation
will take place just as with assets to a scrap value of 0.
It is not possible to write off land (art. 40 draft directive). It
seems land and the building that is on it should be regarded
as two separate assets. (hence not as such an asset as in art.
3.30a IB) In case it would be interpreted in such way, (as one
asset, which I do not suppose, but which is not clear) then it
is possible to write off real estate including land to 0. In addi-
tion, it is possible to reduce the value of land in case the legal
tax payer is able to prove the value of the land has reduced
definitely. (art. 41 draft directive). This could happen, for
instance, for mineral land of for land which is permanently
polluted.
4.3.2 CCCTB and corporate real estate There is no information in the draft directive about how real
estate, which is maintained within the business and is let to
another corporation, should be treated. I presuppose it
should be regarded as a stand-alone depreciable asset, which
shall be depreciated based on the method described in para-
graph 4.3.1, by the business regarded as the beneficial owner
(which is usually also the legal owner). When a corporation
has chosen for CCCTB and a consolidated balance is made up
with all shareholdings in the other European member states,
little is left of real estate and internal renting and letting,
which marks the minor importance of CCCTB and corporate
real estate.
5. Summary and conclusionFirstly, it is difficult to compare the IFRS rules, which are
solely important for determining balance sheets of corpora-
tions, with the accounting for profit rules mentioned under
art. 3.30a IB and under the CCCTB.
IFRS is written for a different target group, namely the capital
providers on the capital market. This target group, within
the corporation, has a different interest. Their interest is to
present the corporation and its capital as beneficial as possi-
ble within the allowed framework. As well as art. 3.30a IB as
for the CCCTB the main concept is to to value at historical
cost on which yearly depreciation is applied. This fits the
yearly profit determination of a company, which logically
wants to report its profit for tax purposes as low as possible.
It is near impossible to align the two conflicting interests of
Under the CCCTB real estate property is written off as a standalone item, hence the building separate from the land it stands on.
Depreciation of buildings viewed in the light of a European tax base • 25
© 2011 KPMG N.V., alle rechten voorbehouden. W W W.GA A AN.NU
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Scriptietip # 2:
“Niets werkt zo frusterend als het onderbreken van schrijfwerk voor extra onderzoek.”
EERST GRAVEN,DAN SCHRIJVEN
-04445_210x297mm_adv_Scriptanten_alle.indd 2 16-11-2011 13:09:44
Kun je jezelf kort introduceren?Mijn naam is Jeroen van Engelen, 25 jaar, woon in Utrecht en
ik heb 6 jaar gestudeerd aan de Erasmus Universiteit. In die
6 jaar heb ik het mr.drs.-programma gevolgd en daarmee heb
ik dus zowel (Bedrijfs-)Economie als Nederlands Recht gestu-
deerd. Uiteindelijk heb ik hierbij gekozen voor een master in
Financial Economics en in Ondernemingsrecht. Sommige
studenten zullen mij mogelijk nog herinneren van mijn tijd
als student-assistent voor Finance 1, wat ik drie jaar heb
gedaan.
Hoe ben je gekomen op de keuze voor KPMG?Ik ben naar de inhousedag van KPMG geweest begin 2011.
Naast de leuke opdracht die ik heb gedaan tijdens de
inhousedag, was er ook meer dan genoeg mogelijkheid om
contact te leggen met de mensen van de Corporate Finance
en dat klikte. Dit gevoel was blijkbaar wederzijds, want nog
geen week later werd ik gebeld om eens op gesprek te komen
en daarmee ging het balletje rollen.
De belangrijkste reden voor de keuze voor KPMG is heel
cliché, maar dat zijn echt de mensen. Binnen Corporate
Finance is iedereen bereid hard te werken maar tegelijkertijd
is er ook een grote waarde voor een leuk sociaal leven, inclusief
de feestjes, uitjes, sport, etc. die daarbij komen kijken. Daar-
naast sprak mij al direct aan dat KPMG de meeste deals doet
in Nederland. Hierdoor werk je meestal aan meerdere
opdrachten tegelijk in plaats van een lange tijd aan één grote
opdracht. Hierdoor kom je dus met veel verschillende bedrijven
en processen in aanraking in een korte tijd, wat het werk heel
veelzijdig maakt.
Hoe was je start bij KPMG?Vrijwel direct nadat ik begonnen was, werd ik aan een
waarderingsopdracht gezet welke uiteindelijk uitliep tot een
mooi verkoopmandaat. Zo kwam ik dus al snel in een volledig
verkoopproces terecht, wat achteraf een ideale manier is
geweest om snel in te werken. Daarnaast werd ik ook binnen
het team snel goed opgenomen. Je wordt hier niet beschouwd
als ‘een nieuweling’ maar meteen als volwaardig teamlid en
naarmate je meer verantwoordelijkheid aan kan, krijg je die
ook. Met andere woorden: ik mag niet klagen als ik terug kijk
op mijn start bij KPMG.
Wat waren je verwachtingen van KPMG en voldeed KPMG aan je verwachtingen?Zoals uit bovenstaande al blijkt, ben ik erg blij met mijn
keuze voor KPMG. Het werk bevalt me erg goed, maar met
name de mensen hier en de gezellige en tegelijk hele profes-
sionele werkomgeving maakt het een mooi bedrijf om bij te
werken. Vooraf verwachtte ik met name veel achter de com-
puter te zitten en weinig buiten de deur te komen bij de
klant, ook dat viel heel erg mee, met name doordat ik meteen
in een opdracht terecht kwam. Ook het harde werken en
tegelijk tijd voor een sociaal leven is geen probleem. Natuurlijk
moet je hard werken en zijn er weken bij dat het niet lukt om
te sporten of te stappen maar over het algemeen is dat prima
te combineren.
Welke tips kun je tenslotte geven aan Accountancy / Finance studenten?Als je kijkt naar het werk binnen M&A zal dat vrijwel hetzelfde
werk zijn, bij welk Corporate Finance kantoor je dat ook gaat
doen. Ben je bereid 100+ uur in de week te werken en dus een
paar jaar van je werk en collega’s je sociale leven te maken?
Ga dan naar bijvoorbeeld Londen. Ben je wel bereid hard te
werken maar is het werk niet alles, kijk dan eens bij een
aantal van de Nederlandse spelers. Ga naar inhousedagen of
spreek gewoon eens af om te lunchen met een aantal van de
collega’s daar. Uiteindelijk gaat het dan namelijk om de
mensen waarmee je werkt, want het werk zelf zal niet heel
veel verschillen tussen de verschillende bedrijven.
Companypresentation • 27
© 2011 KPMG N.V., alle rechten voorbehouden. W W W.GA A AN.NU
Kijk voor meer tips op facebook.com/kpmgscriptiecoach.Of beter nog: schrijf je scriptie bij KPMG.
Scriptietip # 2:
“Niets werkt zo frusterend als het onderbreken van schrijfwerk voor extra onderzoek.”
EERST GRAVEN,DAN SCHRIJVEN
-04445_210x297mm_adv_Scriptanten_alle.indd 2 16-11-2011 13:09:44
Interview with Jan van de StreekAssistant-professor of corporate income taxes
Petra van den Akker, Maaike Lanphen en Roija Rasuli
Jan van de Streek (1976) studied fiscal economics and business economics at the Erasmus University Rotterdam and he also studied fiscal law on the Uni-versity of Leiden. He works currently at the Tax Knowledge Office of Ernst & Young. Besides this he is also an assistant-professor of corporate income taxes at the UvA. For the former, his research also reaches beyond borders, focusing on the interna-tional aspects of corporate taxation.
fsrforum • volume 15 • issue #1
28 • Interview
»
What is common consolidated corporate tax base?It is a harmonized tax base for companies in Europe. Cur-
rently, we are faced with 27 different tax systems, so for a
company wanting to do business within Europe it has to con-
sider and comply with maximum 27 different taxes. This
causes a variety of problems, the European Commission has
now launched the CCCTB. Fully stated: the Common Corporate
Consolidated Tax Base. The word explains what the CCCTB
contains: it is ‘common’ as it is applicable to the profits of the
companies, ‘corporate’ again for the to be taxed (large) firms
and the ‘tax base’ indicating the nature of the mechanism, so
the added element is the ‘consolidated’ part to the whole tax
base. Within the current system, a loss incurred by a company
established in the EU and which is part of a European group
of companies, cannot be offset against profits made by its
parent, sister or other group companies established in other
EU member states. The loss is locked in. However, within the
CCCTB the loss can be relieved cross border due to the con-
solidation mechanism. Every EU country is entitled to
charge their own tax rate to the companies but the rules of
determining the taxable base and compliance with these
rules will be harmonized. The consolidated tax bases is shared
among the member states by a formula apportionment.
What are the advantages?There are four advantages attached to the CCCTB:
1) Less administrative procedures as we will be dealing with
only one tax base. In effect, tax issues relating to determine
the at arm’s-length transfer price of intra-group transactions
will disappear. Within the CCCTB the internal transactions
are not recognized anymore in the consolidated tax base.
2) Cross border loss relief is possible. Due to the consolidated
nature of the CCCTB companies recognizing a loss can net
this out with the profits they have made in other countries.
However, this may be of big concern for small countries
such as the Netherlands or Belgium as they cannot tax
international firms on the profits they have made in their
countries, as the loss from different countries may be
netted out with the profits.
3) Tax free reorganizations are possible. Currently, reorgani-
zations within companies would in general be taxed but
this will change with the introduction of the CCCTB.
4) Another major advantage of the CCCTB is that it will make
the European Union more transparent. This can be seen as
a remedy required to solve the problems caused by the
crisis. Due to the crisis the member states are facing budg-
etary deficits, so they are unable to meet their budgets set
by the EU. As a consequence they try to lobby and get more
business to their countries by offering tax exemptions or
attractive tax offers (lower effective tax rate). This so-
called tax competition between member states leads to a
rat race to the bottom. At the end of the day the member
states are faced with even more budgetary problems. How-
ever, during the crisis the members signed a petition
agreeing to support each other, so we have on one side
countries competing for more business and on the other
side support for each other. The introduction of the
CCCTB would make the system more transparent.
What are the disadvantages?Under the current proposal companies can choose whether
or not to apply the CCCTB system. This optionality feature is
important or even crucial to support the CCCTB project of the
business community. As soon as companies are obliged to
apply the CCCTB, a series of consequences could be attached
to it, which has its disadvantages. There is a serious risk
turning the CCCTB project into a mandatory system. The
European Parliament is campaigning to apply the CCCTB on
a mandatory basis for multinationals. Only SME’s are carved
out.
Member states are exposed to a disadvantage of a budgetary
nature. I will illustrate this effect with an example: If we
assume the consolidated profit of a multinational is the pie
which is subsequently apportioned to all member states in
which it is active, the question here becomes which piece
should be given to each member state to tax at its own rates?
The answer of the European Commission is apportionment
by a simple formula. This formula contains three economic
factors: labour, fixed assets and sales.
The weight of these three together determines which subsid-
iary gets the largest piece of pie. For the Netherlands this
would mean that, since it is a smart economy thus its ratio of
assets would be small, the pie piece would be relatively small.
The assets factor does not consider the intangible assets such
as goodwill. Most Dutch internationals, for instance Philips,
Unilever and Heineken have situated many factories in Eastern-
Europe. The labour factor and asset factor will allocate most
of the consolidated profit to this part of Europe. The sales
factor will probably not be able to compensate this effect by
pushing back the power of taxation to the Netherlands. The
The consolidated tax bases is shared among the member states by a formula apportionment.
Interview • 29
Dutch market is only a small home market for Dutch multi-
nationals to sell their products. Applying the CCCTB would
mean that the Netherlands would tax a relative small share of
the pie compared to the Eastern countries. Basically, the
CCCTB system - and the sharing mechanism in particular -
implies a major shift in the allocation of taxing rights between
member states.
What are the consequences on the macro economical level for the Netherlands?If the CCCTB would be applied as proposed by the European
Commission, the Dutch treasury will incur a loss of tax revenue
of approximately E 5 billion. As said, the cause is the shift in
the allocation of taxing rights between member states. This
budgetary effect is the main reason why the official Dutch
policy is that the CCCTB is a bad idea and should not be
implemented in Europe. I can understand this. However, in
my opinion it would be impossible for the Netherlands not to
participate in the CCCTB project if others do, because this
will have a negative impact on the Dutch climate to attract or
to keep international companies. I think most policy makers
would agree with this. The only way to (partial) compensate
for the loss of E 5 billion is in theory to increase the Dutch
corporate income tax rate. Currently this rate is 25%. But
increasing this rate would also have a negative effect on the
Dutch investing climate.
How is this budgetary loss of e 5 billion calculated? It of course is a rough estimation. The simplified calculation
is as follows:
1. The European Commission has calculated that the Nether-
lands currently taxes 6.4% of all profits of companies estab-
lished in the EU.
2. Introduction of the CCCTB would mean according to the
European Commission that the Netherlands would only
get to tax 4.2% of the total European tax base. This is a
decrease of 2.2 percentage points.
3. The reduction of 2.2 percentage points represents a relative
reduction of up to 34.38%.
4. The current Dutch corporation tax yield is approximately
E 14 billion.
5. A straight forward calculation leads to the tentative conclu-
sion that the Dutch corporate income tax revenue under
the CCCTB system decreases by more than a third, namely
a decrease of approximately E 5 billion.
In your article “Headlines of the CCCTB” (Hoofdli-jnen van CCCTB) you mentioned that the Dutch tax base is principle based and the CCCTB is rule based. What is the difference?In the Netherlands the rules on tax profit calculation are
not stated in the corporate income tax act or any other act.
The taxable profit is determined through the principle of
‘sound business practice’ which sets a few guidelines on the
basis, of which profits can be determined. These guidelines
include the matching principle, realization and prudence.
However, there is no weight attached to each one of these so
within a dispute the Dutch Supreme Court has to decide
whether and how these three guidelines are complied to for
each individual dispute. This system would be impossible
for European countries and that’s why the CCCTB is rule
based. It can be compared to a fiscal IFRS where many
details are recorded.
Would you recommend introducing CCCTB globally?Yes, it would be very good in fact, in the US they already apply
a somewhat similar CCCTB mechanism through their federal
tax system.
Is it possible that the CCCTB can be misused? Since one country can end up with more profit than the other.As within every classical corporate income tax system, there
are within the CCCTB two major weak points. First, groups
of companies can put passive income, for instance income
earned from investments in bonds and shares, outside the
CCCTB in a tax haven company. As a consequence, income
from these mobile assets cannot be taxed by member states.
The European Commission has developed a set of measures
to prevent this. Second, since dividend is not tax deductible
and interest is, groups of companies can transform equity
easily into debt. So, to sum up a potential tax evasion sce-
nario within CCCTB: a company established in Europe could
place a huge sum of cash on the Cayman Islands as equity
and take a debt on this amount back to Europe enabling the
company to deduct interest from the common tax base. The
Council of the European Union and the European Commis-
sion are still working on the design of anti-abuse rules to
combat such tax planning. An import weapon is the so-called
GAAR (General Anti-Abuse Rule). Under this rule a wholly
artificial construction set up for tax purposes is simply being
fsrforum • volume 15 • issue #1
30 • Interview
It is hard to say whether the member states can reach consensus on this ambitious and controversial proposal.
ignored. I would not be surprised if the final CCCTB Directive would contain some additional
interest deduction limitations.
Are you afraid that if nine member states apply the CCCTB and the rest will not, the EU will be divided?It would be good for the nine countries to try the CCCTB, when this goes well the rest will probably
follow. The countries that are most certain to be participating are Germany and France as these
two are quite in favor of the CCCTB. Besides that I assume that the southern member states
may take part as well because they are facing a somewhat weak tax system. The CCCTB would
mean a boost to their tax revenue as these countries hold large part of the fixed assets, offer
labour and can be huge markets for sales.
How do you see the future of CCCTB? Will it ever be reality?It is hard to say whether the member states can reach consensus on this ambitious and contro-
versial proposal. At the end of the day it is a political question. In 1990 the EU adopted already
two Directives on corporate income tax tackling some specific problems. They were adopted
quite suddenly without it being part of a planned process. I presume we need such a ‘political
momentum’ like the one in 1990 to make the CCCTB proposal ready for a compromise between
at least nine member states. Currently, the CCCTB Directive proposed by the European Com-
mission is on the agenda of the European Council and incrementally plans have been drawn up
to improve the proposal. However, under the current financial crisis it can go either way. I am
convinced, however, that the CCCTB will be introduced sooner or later in whichever form.
Interview • 31
Ik vrees dat hier geen ethiek-cursus zal helpen. En van een
gesprek over de “Toon aan de top” verwacht ik ook niet veel.
Zeker niet als een kwart van de managers zonder enige dwang
of noodzaak bekent waartoe het bereid is. Een vermanend
woord zal dan niet veel helpen. En zouden die resterende 75
procent die nu niet heeft bekend, zich wel goed gedragen?
Nog steeds in datzelfde NRC Weekend schreef Marike Stel-
linga haar column. Marike schreef daarin niet over corruptie,
maar over de kredietcrisis waarbij “die honderden miljarden
euro’s aan niet genomen verliezen als een zwaard van
Damocles boven Europa hangen”. Zij zoekt ons aller heil bij
“chagrijnige accountants”. Nu ken ik die beroepsgroep als
buitengewoon opgewekt, om niet te zeggen vrolijk. En ook
Marike Stellinga ziet daar een ‘bottle neck’: “De chagrijnige
accountant is moeilijk te vinden, uiteraard”. Dat laatste
woordje is dodelijk. Uit welke aard? Volgens Marike is het zo
dat “deze beroepsgroep zich te vaak laat kneden”. Maar zij
heeft vertrouwen: “Ze zijn er. Het enige wat we moeten doen
is ze vinden en ze vervolgens op pad sturen met een zo slecht
mogelijk humeur”.
Misschien is dat ochtendhumeur iets waaraan ze bij Nijenrode
voor de vernieuwde opleiding van Robuuste Accountants nog
niet hebben gedacht. Daar leren ze juist te communiceren.
En als ik Marike Stellinga goed begrijp is dat het laatste wat
ze moeten doen. Zij zoekt iemand die “als die topman klaar
is met zijn ik-ga-de-wereld-veroveren-praatjes, zegt: “Ja,
laat me eerst maar even de boeken zien”. Daarbij denk ik aan
het type Sacco van der Made. Dus niet zoals bij Marike,
iemand die op spekzolen loopt, hoewel dat wel mooi kan zijn
meegenomen.
Maar het kan ook niet allemaal van de accountant komen. In
het discussierapport van de NBA staat dat accountants de
integriteit van leidinggevenden en sleutelfunctionarissen
moeten gaan beoordelen. En desnoods moeten ze hun
opdracht beëindigen. In wezen zou dat in 25% van het MKB
dus daadwerkelijk de conclusie moeten zijn. Ik denk dat de
externe accountant hier wordt overvraagd.
De accountant (auditor) heeft als wettelijk taak om bij financiële
jaarrekeningen op grond van onderzoek een verklaring te
geven. Die jaarrekening moet getrouw, duidelijk en stelselmatig
zijn. Ik sluit niet uit dat ondanks corruptie de jaar rekening
Accountants zijn van oudsher vertrouwensmannen en –
vrouwen in het maatschappelijk verkeer. Th. Limperg althans
zag in zijn vertrouwenstheorie de grondslag voor het accoun-
tantsberoep. En Jan van de Poel noemde de accountant een
handelaar in risico. Agency-theorie gaat uit van de gedachte
dat de agent niet altijd zal handelen in het belang van zijn
principaal. Eigenlijk komt het er op neer dat we als principaal
betrouwbaar zijn, maar als agent toch ook worden geacht
ons eigen belang in het oog te houden. In het bedrijfsleven
zijn bonussen en winstdelingen, Stock Appreciation Rights
(SAR) en opties bedoeld om de belangen van de agent parallel
te schakelen met die van de principaal. En zijn we niet alle-
maal iemands agent? Als dat zo is, is niemand voor iedereen
helemaal betrouwbaar.
Natuurlijk weten we van onszelf dat we heel erg betrouwbaar
zijn. Als al die anderen dat nu ook zouden weten, zou de
wereld er heel anders uitzien. Sommigen laten zich overtuigen.
Soms tot hun schade. Maar het is evenmin in je voordeel om
niemand te vertrouwen. Dus worden mechanismen ontworpen
om dat toch te kunnen doen. Een van die mechanismen heet
toezicht en controle. Accountants worden geacht daar goed
in te zijn. Maar wie controleert de accountant en ziet op hem
toe? Welke flitspaal houdt die flitspaal in het oog?
Is controle nodig? NRC Weekend (29-30 september 2012)
geeft cijfers over enkele misstanden. Ernst & Young heeft
onderzoek gedaan naar “integriteit van ondernemers in het
Midden- en Kleinbedrijf. Wat blijkt? Een op de vier managers
zegt corrupte praktijken te accepteren als dat het bedrijfs-
rendement ten goede komt. Het staat er echt: 25 procent van
de managers heeft geen moeite met omkoping! En 14 procent
van diezelfde managers zegt te geloven dat binnen hun eigen
bedrijf sprake is van omkoping. Jazeker, 14 procent!”.
Drs. Joost G. Groeneveld
RA RV is directeur van
Wingman Business
Valuators B.V. te Breda en
voorzitter van de Stichting
WBO (register van
business valuators).
Hij was hoofddocent aan
de Economische Faculteit
van de Erasmus
Universiteit te Rotterdam.
Vertrouwen of (on)macht
K(r)anttekening | Drs. Joost Groeneveld RA RV1
Ik vrees dat hier geen ethiek-cursus zal helpen.
32 • Vertrouwen of (on)macht
fsrforum • volume 15 • issue #1
aan deze vereisten voldoet. De accountant is – vrees ik - geen betere zedenmeester dan wij zelf
zouden zijn.
Omkoping is niet alles. Nog alsmaar in datzelfde nummer van NRC staat een verhaal over ver-
valste contracten bij Eurocommerce, en financiële instellingen die daar geen onderzoek naar
hebben gedaan. Arno Visser, wethouder Almere: “Je wint informatie in om te kijken met wat
voor een partij je te maken hebt. Dat hebben de banken nagelaten. Het is verbijsterend dat
grote professionele financiële instellingen dat bij zulke grote leningen niet hebben gedaan”. Ik
denk wel dat Arno Visser daarin gelijk heeft.
En dan, na weer een bladzijde te hebben omgeslagen, tref ik een stukje aan van Philip de Witt
Wijnen: “Gevaarlijk vak, dat topmanschap in Nederland”. Ja, als je met de accountant over je
integriteit moet gaan praten … . PdWW verwijst naar een onderzoek van Booz & Company. Dat
advieskantoor “bracht het verloop van CEO’s in kaart en concludeerde dat de duiventil aan het
Damrak het wijdst open staat”. Nu is het Damrak het MKB niet, maar zou het ene iets te maken
hebben met het andere? Zijn de agentschapsverhoudingen zo slecht? Of werken de bonussen
en vertrekregelingen juist averechts? Zijn de agencykosten misschien al te hoog?
28 september 2012 werd in de krant door Bernard Hulsman - met verwijzing naar de Plantagenets
- het koningschap “een bloedlinke job” genoemd. Sinds de middeleeuwen is er in overdrachtelijke
zin dus niet veel veranderd. Dat komt ook naar voren in het beeld dat David Priestland in zijn
boek (Merchant, Soldier, Sage; a new history of power) gebruikt om in zijn kastenstelsel 3
kasten te onderscheiden, al zijn die niet identiek aan de indeling in de 3 standen zoals we die
vanouds kennen: de geestelijkheid, de adel en de rest. Met verwijzing naar de huidige financiële
crisis is hij van mening “dat de kaste van de handelaren hoognodig moet worden beteugeld”.
Uitgaande van Priestland is het geen kwestie van gedrag (corruptie), controle en toezicht maar
van macht. Als dat waar is, helpt zelfs geen chagrijnige accountant meer. Want in dat geval verliezen
vertrouwen en controle hun betekenis. Dan zijn we gewoon een illusie armer.
Uitgaande van Priestland is het geen kwestie van gedrag (corruptie), controle en toezicht maar van macht.
Vertrouwen of (on)macht • 33
START YOUR CAREER IN TRADING APPLY AT WWW.OPTIVER.COMWE ARE SCOUTING FOR BRILLIANT MINDS ONLY
TRADINGBRILLIANTBRILLIANTBRILLIANT
IF YOU CAN ANSWER YES TO ALL 6, YOU’RE READY TO TAKE THE REAL TEST.
I HAVE UNLIMITEDAMBITION
I WORK HARDAND PLAY HARD
I DON’T CRACKUNDER PRESSUREI HAVE EXCELLENT
NUMERICAL SKILLSI DON’T LIKE TO
WASTE TIMEI THINK FASTER
THAN MOST PEOPLE
YES NO
IF YOU CAN ANSWER YES TO ALL 6,YOU’RE READY TO TAKE THE REAL TEST.IF YOU CAN ANSWER YES TO ALL 6,YOU’RE READY TO TAKE THE REAL T
CCCTB: high priority for the EU
Prof. dr. P. Kavelaars
For years, if not decades, the European Committee (EC) has
put effort in pulling tax revenues towards itself. Despite the
principle of subsidiary (art. 5 VEU) the European Committee
apparently does not deem the individual member states of
the European Union capable of forming their own taxation.
The question is why the EC puts so much effort in pulling the
control of fiscal policy towards itself, as it seems much more
economically ‘’healthy’’ if member states can go their own
way in organizing their fiscal system. On the one hand,
because the system can be adapted to national needs and on
the other hand because it allows for a healthy competition
between member states. Although a harmful competition
between member states should be avoided. This would not be
beneficial for the member states as well as the EU. The long
standing Code of Conduct serves a valuable purpose in this
respect, because it empowers the EC to force member states
to answer for their actions in case they take fiscal measures
that are harmful to fiscal competition. Over a decade ago,
this Code was put to the test and its enactment ensured that
fiscal policies undermining competition have more or less
disappeared. Since then, the sole existence of the Conduct has
proven enough to stop new measures undermining competition
in fiscal policies from taking place. On top of this there is the
act of state aid, art. 107VwEU, that prevents competitive laws
from being implemented. Finally, the last few decades the Court
of Justice has adequately applied its jurisdiction to prevent
disruptions between fiscal policies of member states. Altogether,
there seems no reason for the EC to mingle in fiscal policies.
However, this was only one side of the coin. A side that is of
great importance because the principle of subsidiary is given
way too little content: ‘’Brussels’’ organizes a lot more than
necessary. But still. If we look at the global position of the
EU, I argue that it is losing an economic battle with the rest
of the world. Although the U.S. are forced to pass off some of
their historically leading position, the country is still a
superpower in economic and financial perspective en will
unquestionably remain to be so. On the other hand, we see
developing economies –China, India, Latin-America- and at
some distance Africa, where China is strongly investing and
developing. These areas are surpassing the EU in economic
perspective. The most important reason that the EU is losing
this battle, is the disunity between member states of the EU
that restrict it from forming a strong power block. The way
we have been dealing with the financial crisis in southern
member states for the last few years has been characterizing:
keeping the holes plugged and not doing anything to change
the situation. It puts the EU in a huge backlog compared to
the rest of the world. From this perspective, it is necessary
for the member states to not fight each other but bundle
powers to –as was meant by the Lissabonagenda in 2000-
become the most competitive economy in the world. This did
not happen at all. Developed areas of the EU are dangling on
the bottom as for economical perspective. And this is only
getting worse.
From this perspective of competitiveness, there is much to
say in favor of a fiscal arrangement that does not operate on
the member-states level, but rather on a European level,
where the EU will operate as a unity. With tax on goods and
services this has basically already happened a long time ago,
with the introduction of customs duties and of course the
more or less harmonized VAT rates. This is and has been nec-
essary because transportation of goods and services is often
transnational and without harmonization the system would
easily disrupt. Another area that is highly transgressing con-
cerns the activities of large cooperations that increasingly
trade and invest transnationally. When these cooperations
are faced with a diversity of fiscal policies for profit distribu-
tion, this obviously is highly disruptive. On the one hand
because of the elaborate administrative burdens; on the
other hand because company results cannot be pooled
between countries in case the operations in one country are
profitable and operations in the other country are not: for
such companies it is all about the total result. Besides, there
is the competition in fiscal policies between countries which
causes companies to shift –solely based on fiscal considera-
tions- with investments, goods- and service-transactions and
streams of financing. When such activities occur only
because of fiscal reasons, this is not a good development.
From this perspective it is a good thing that the EC proposed
a CCCTB; rightfully, by the way, on an optional basis instead
of a compulsory one. Keeping in mind what I argued earlier
about the importance to strengthen Europe as an economic
power, it is a bad thing that many member states –including
the Netherlands- are resisting the implementation of CCCTB:
a situation that will hopefully turn around soon. A side-note
to this being that the proceeds- as is now also documented in
the proposal for a CCCTB- will keep benefiting the member
states and not –as a proposal for a Financial Transaction Tax
by the EC suggests- the EC. For the EC autonomously to
receive tax revenues is in my view highly undesirable.
fsrforum • volume 15 • issue #1
CCCTB: high priority for the EU • 35
START YOUR CAREER IN TRADING APPLY AT WWW.OPTIVER.COMWE ARE SCOUTING FOR BRILLIANT MINDS ONLY
TRADINGBRILLIANTBRILLIANTBRILLIANT
IF YOU CAN ANSWER YES TO ALL 6, YOU’RE READY TO TAKE THE REAL TEST.
I HAVE UNLIMITEDAMBITION
I WORK HARDAND PLAY HARD
I DON’T CRACKUNDER PRESSUREI HAVE EXCELLENT
NUMERICAL SKILLSI DON’T LIKE TO
WASTE TIMEI THINK FASTER
THAN MOST PEOPLE
YES NO
IF YOU CAN ANSWER YES TO ALL 6,YOU’RE READY TO TAKE THE REAL TEST.IF YOU CAN ANSWER YES TO ALL 6,YOU’RE READY TO TAKE THE REAL T
Dear reader,
This is the first edition of the FSR Forum of the academic year 2012-2013. This is also the first
edition coming out of the hands of the XVth FSR board. The new board finally took official con-
trol since the first week of September. We are very confident that we will upgrade the FSR again
this year in many ways. As the chairman of the board I have the great pleasure to try to describe
the wonderful events that will take place this year. I would like to give my compliments to
Maaike Lanphen who is the responsible editor of the FSR Forum this year. She and the editorial
committee will take the coming five editions of the fifteenth volume to the next level, including
the most recent developments in Finance, Accountancy and Controlling.
At the start of the summer the XVth board was elected. After an extraordinary informative
weekend in the first week of July, it was our turn to staff the FSR-room: H14-06. With the daily
help of the XIVth board we quickly learned almost all the ins and outs of all events that will
occur. Therefore I would like to thank the XIVth board for their effort and trust in the past few
months. Then, I would like to welcome all the new active members of the FSR. We had the
chance to compose a wonderful group of dedicated students who wanted to take the extra step.
I am looking forward to working with them and make the ‘Actievenweekend’ one to remember.
The academic year started with the Master Kick-Off Day on September 3rd. Next to the masters
‘Financial Economics’ and ‘Accounting, Auditing and Control’ on the ESE faculty, for the first
time we were given the opportunity to introduce ourselves at the masters ‘Finance & Invest-
ments’ on the RSM faculty and ‘Quantitative Finance’ on the ESE resulting in a record break-
ing number of new members. Later on in the magazine you can find a detailed report of this
event together with the Minor Kick-Off Day on September 6th. Recently, the prestigious Inter-
national Banking Cycle has been taking place in Rotterdam and Amsterdam. During this event
ten of the world’s best investment banks came to both universities to give workshops, presenta-
tions and take interviews for summer-internships and fulltime positions. This event offers the
perfect opportunity for finance students to get acquainted with the dynamic world of invest-
ment banking.
But there is more happening at the moment, especially for the accounting students as the Big
4 Cycle is taking place simultaneously. During four in-house days, the largest accountancy
firms open their doors to welcome the selected members. The days usually start with a case
study and always ends with an informal diner to get to know the employees and employers per-
sonally. You can imagine this is a busy period for both the new board and our committee mem-
bers. Not to forget, that after a hard day’s work nothing is more rewarding than looking back
on a successful day and seeing the product of all the time spend on preparation.
As with the International Banking Cycle companies come to the Netherlands to meet our mem-
bers, we also go abroad to widen our horizon. Firstly, we will travel to the ‘Northern Capital’ of
China (Beijing) after a series of in-house days with the International Research Project. This
year the project will be in cooperation with a charity for the first time: Right to Play. Together
with this charity we will investigate the opportunities for Right to Play to increase their cover-
age in Asia, especially in and near Beijing. In this way they will be able to create more places for
children to play and get education about ‘fair play’ and diseases. Secondly, this year’s edition of
Word of the chairman
Sep Vermeulen
fsrforum • volume 15 • issue #1
36 • FSR news
FSR News
40
41
48
49
Column Anna Nijdam
Column Jan-Matthijs de Berg
Erasmus Banking Congress
Big 4 Cycle
the European Finance Tour will depart to Zurich, the financial capital of Switzerland. Zurich
suits the European Finance Tour as it is the largest city of Switzerland and the capital of gold
trading. Here the participants will enjoy many company visits and will discover the city in an
informal way.
Also when you stay in the Netherlands, the FSR offers many events in the upcoming year. For
instance the first round of the Traders Trophy is already taking place on 22 November at the
Erasmus Campus. Only five days later we come back to you with the first in-house day of the
Financial Business Cycle. In 2013 we will continue with the Multinational Battle, Corporate
Finance Competition and many other events and activities.
I would like to invite you once again to participate in our events, as a participant or a partner.
The XVth board is most dedicated to get the FSR to the next level. I am looking forward to have
the honor to welcome you at one of our events, battles, cycles, master classes and social drinks.
Kind regards,
Sep Vermeulen
Chairman
FSR Board 2012-2013
FSR news • 37
FSR Former board member
Anna Nijdam
Although a number of years have passed, I vividly remember
the moment I got welcomed with champagne in the FSR
Office on the 15th floor of the H-building at the Erasmus
University. A little bit nervous and excited, I just heard that I
had been selected as the new FSR Commissioner for External
Relations! I met the other new board members, with whom I
would form the VIIIth FSR board. Although we knew nothing
about each other, we soon would. I couldn’t yet imagine that
this was the start of a journey, a journey which had such a
positive impact on my further life.
Seven different people, all very motivated and enthusiastic,
with the same goal: ,,To bring the FSR to a higher level”. As
the Commissioner for External Relations I spend my sum-
mertime by visiting the relations of the FSR. During these
acquisition meetings we made new appointments for the
year. This was a great opportunity to get to know more about
these companies, to see their offices, to meet the employees
and to develop myself in a commercial aspect. Additionally,
and I hadn’t really realized this before starting my year on
the board: ,,I noticed that it was pretty important for companies
that students are active besides their study (a board, committee,
study abroad).The most challenging part of my job was to get
connected with new companies and to extend the contacts
with existing relations. In the end, the important thing was
that FSR members would get a good and clear overview of
which companies they could work for after their study, and
what their most important characteristics were. In order to
achieve this, we organized a number of great events: both
recurring ones (which we developed more) and new events
like the Controlling Competition. And for an association with
such great events, it is important to publicize them. That’s
why we started with extensive promotion activities, such as
renting billboards at the Erasmus Campus. (That was also
right when Cubord, initial the bill board rental company, lost
their rental contact at the Erasmus University... sorry for
that Cubord!) Towards the end of our board year, we rented
the billboards from the Erasmus University for a quarter of
the initial price… Besides the billboards, the achievement of
the first mention of FSR in Dutch media, ‘pimped’ cars at the
campus, we really introduced FSR and our activities at the
RSM Faculty. This is how many RSM students got acquainted
with FSR, and we were able to assist, besides economics stu-
dents, RSM students in their post-university careers as well.
We also presided over several committee for the organization
of our events. As I was the only accountancy student, it was
PassPort
Name
Anna Nijdam
age
30 years
residence
Rotterdam Centrum
Employed at
Ernst & Young
Current position
Senior Staff Audit
Which Fsr Board
VIIIth Board
Board function
Commissaris Externe
Betrekkingen
study
Economics – Account-
ing, Auditing and
Control
Year of graduation
2009
Which car do you
drive
Volkswagen Polo
What do you drink
on a Friday night
White wine, Vodka Lime
Life Motto
Carpe diem
logical that I was the person who organized the accountancy
events. I thus got a really good impression of all accountancy
firms. I really liked the internal atmosphere at Ernst & Young,
the international opportunities, the technical knowledge, as
well as the (many) employees I met. I started working at
Ernst & Young in Rotterdam more than four years ago, after
an internship period at Ernst & Young Auckland (NZ). And I
still work at Ernst & Young in Rotterdam, as a senior staff
auditor. The clients that I serve are pretty diverse, from oil and
gas companies, to traders, to large media and entertainment
companies. I am busy with finalizing my RA (Register
Accountant) post master’s degree, of which I finished the
theoretical part already. I am also a member of the recruit-
ment team. As such, I help and advice students with writing
their thesis. As well, I help organizing the recruitment events
at Ernst & Young. So it is not unlikely that we meet at one of
our upcoming recruitment events! Which is even better,
since I still can tell you a lot about my job and about working
at Ernst & Young.
Besides the fact that you learn a lot from a board year , and
the fact that you get a good impression about the opportunities
for your further career, I started to build up a great network
and made a lot of friends. As earlier said, I didn’t know the
other board members at the start of our board year, but we
became good friends. And not just friends, but friends for life.
We still have dinner and drinks once a month, and have our
yearly city trip. At the moment of writing, I am organizing ‘a
mystery trip’ in cooperation with Geert and Tycho from the
VIIIth board. Marijn, Robert and Willemijn still don’t know,
but we are going to Rome next weekend, to celebrate ‘their
30 birthdays’. Additionally, Willemijn and I, aka ‘the pink
ladies’, became really close friends in our board year when we
went skiing together in our Pink FSR Board jackets on the
white slopes of Valtho. We are still going skiing every year
but now we also invite our field hockey team, as we both
started playing field hockey after our board year.
I just can conclude that my board year was fabulous, one of
the best years of my life. As you can read, I got and took the
opportunity to develop myself, to build up a network, to
make real good friends, and last but not least to get con-
nected with my present employer Ernst & Young. Therefore
I can strongly advise you, to take the opportunity and to
become active at the FSR!
fsrforum • volume 15 • issue #1
38 • FSR news
FSR Member
Jan-Matthijs de Berg
How did you come in contact with the FSR?When you study Financial Economics it is hard not to get
into contact with the FSR! The first contact was through the
Financial business cycle in my Bachelor.
In which FSR event did you participate?The European Finance Tour to Milan
How have you arranged your internship?I became interested in Shell because of a research project in
which I participated. After that I started talking to the people
I knew there, to get more information and tips for the appli-
cation process. The first step in the process is the online
application. If you are selected for an interview, the next step
is a telephone interview of an hour. This actually was a
strange experience, because you cannot see someone’s reaction
to your answers. If you are selected, the recruiter looks for a
suitable project. Then you are invited to discuss the project
with a manager, to see if it meets your wishes and skills. I had
the luck to get a project in a brand new department (it existed
only six months), and really liked the project itself!
Please describe your experiences at the internship in general (corporate culture, assignments, col-leagues, etc.)Overall I would say that the culture is very professional and
open-minded. There is a lot of diversity and I work with
people from all sorts of backgrounds and nationalities. You
also get a true international experience. Right from the start
I had conference calls with people in Houston, Beijing and
Vancouver! What I like about the internships at Shell in general
is that you get your own project with a so-called “deliverable”.
You get access to the resources you need, but apart from that
it is up to you to take the lead and do what is necessary for a
good end result. In short, you get a lot of freedom and
responsibility.
What do you consider to be your best performance during the internship?Hopefully at the final presentation of the project, but this is
yet to come!
Which moment of your internship will you never forget?The moment, after about a week, that you suddenly realize
how quickly you become integrated in the way the company
works. You start using all the abbreviations, and start talking
about “what the business needs” etc. It is amazing how fast
this process works.
Have you been offered a job?Since I am still doing the internship, I don’t know yet!
PassPort
Name
Jan-Matthijs de Berg
age
25 years
residence
Rotterdam
study
Financial Economics
Fsr event
European Finance Tour
Internship
at/job at
Shell
Department of
Internship
Shell Technology
Ventures (Venture
Capital fund of Shell)
fsrforum • volume 15 • issue #1
FSR news • 39
Introduction committees
Accountancy CommitteeThe first accountancy event, the Big 4 Cycle, took place in
the beginning of the year. During this cycle, students had the
chance to meet KPMG, Deloitte, PwC and Ernst & Young.
With the case during the inhousedays the students got a
sneek preview into the life of an accountant. The informal
dinner at the end of the day gave the students the chance to
get to know the company and their employees from a total
different angle. The other event of this committee, The
Accountancy Firms Day, is more focused on the smaller com-
panies and during this day you will meet four different com-
panies.
These events together will give students a better picture of
the accountancy world.
CleanTech ChallengeThe CleanTech Challenge Committee will work closely
together with Yes!Delft Students and the Energy Club in
organizing one of the biggest entrepreneurship events in the
Netherlands. These three study associations will bring
together financial and technological students that like to
develop and value innovative ideas, with a focus on clean
technology. In several rounds they will present their ideas
and develop them further with the help of companies that
operate or advise in the industry. The winner will travel to
London to compete with other countries. Our committee
will support them and guide them in winning the worldwide
finals of the CleanTech Challenge, just like last year!
Samantha Kompanje, Maaike Lanphen, Margriet van der
Lubbe, Nick Tanis
Gijs Romer, Taco Smit, Tim Geuns
fsrforum • volume 15 • issue #1
40 • FSR news
»
Corporate Finance Competition CommitteeDuring the Corporate Finance Competition you will meet a
variety of companies from the financial sector. Each of these
companies will challenge the students with a case during the
day which they have to solve in teams. The final winner will
be announced afterwards. With these cases you will meet dif-
ferent facets of the financial world, with a main focus on
Mergers & Acquisitions. After these cases you will have a
diner with the companies where you can get to know them in
an informal setting and make a lasting impression. The com-
mittee will work closely together with these companies to
make this three day event an unforgettable experience!
Editorial CommitteeOur drive for this year is to set a milestone for the FSR
Forum by providing our readers with the depth of knowledge
and inspiration. There will be five forums published this year,
with five different themes, each enriched with articles, col-
umns and interviews from industry professionals. The com-
bination of financial and accounting together will enhance
the content so that our reader gets a complete package.
Moreover, the FSR Forum will provide information on all
FSR activities.
On behalf of the FSR we wish you a pleasant time reading our
FSR Forum.
Tijmen van Paasen, Gemma van der Hoeven, Joost Vlot,
Jean-Paul Gobel
Roija Rasuli, Petra van den Akker, (not on this picture
Maaike Lanphen)
FSR news • 41
Introduction committees
European Finance Tour CommitteeAs a committee with an international character, the Euro-
pean Finance Tour Committee will organize a week full of
financial and cultural activities in the Netherlands and a
European city. This year we will visit Zurich, a prominent
city and financial hotspot. During this week (6-10 May) the
students will get to know leading companies through inhouse
days and presentations. Of course there will be informal activities
as well to get to know the city and culture. Before the start of
this week the students will visit several outstanding companies
in the Netherlands, each operating in the field of finance.
The committee will organize this whole trip from begin till
end, doing their utmost to give you an amazing week!
FAN CommitteeThe FAN Committee will organize events together with the
study associations of other universities that are members of
the Financial Study Association Netherlands (FAN). The
Traders Trophy will give students a glimpse of the trading
world, whereas the Multinational Battle will focus on the
leading multinationals. Through different rounds you will
compete with other teams from universities, guided by lead-
ing companies in the industry.
Jan-Willem Boer, Joost Vlot, Justin Toet, Britt Mulder Berre Simonse, Sep Vermeulen, Gonda de Graaff
fsrforum • volume 15 • issue #1
42 • FSR news
Female Business Tour CommitteeAs the name suggests, this committee is for women only. The
ladies of this committee will organize a two day event where
the female participants will meet three different companies.
Last year they had the chance to meet ING, BCG and Deloitte.
Each company had a challenging case where the ladies
showed their skills and the company showed its career
opportunities. At the end of the first day there will be a
dinner with all three companies and afterwards the night will
be spent in a hotel in Amsterdam. The next day, participants
gain insights in the life of a successful business woman,
teaching the next generation of women how to find their way
to the top.
Finance CommitteeThe biggest event of this committee is the Financial Business
Cycle. This year two multinationals, two bankers, two con-
sultants and two traders will be visited through inhouse days
for Erasmus students. These inhouse days are a great oppor-
tunity to explore the variety of the financial sector. The
Finance Committee will also organize the Investment Banking
Masterclass (IBM), a two-day event for 40 students with a
course on corporate valuation. Beside these two events they
organize different company dinners as well.
Abeda Hasanzadah, Margriet van der Lubbe, Patroesjka
Zuurhout
Jules de Vrijer, Joost Vlot, Joanne Berntsen
FSR news • 43
Introduction committees
International Banking Cycle CommitteeThe International Banking Cycle serves to give students a
clear view on the operational practices and the career oppor-
tunities at ten of the most prestigious international invest-
ment banks. Taking into account the number of applicants,
participating banks and the number of participants that are
offered an internship or fulltime position, the International
Banking Cycle is by far the largest recruitment event for
international banks in the Netherlands.
This year, ten prominent investment banks gave workshops
with a real life case focusing on Mergers & Acquisitions and
in some cases also Sales & Trading. Following their work-
shop, each bank gave a presentation and an informal drink
reception in the Faculty Club, providing students the oppor-
tunity to get familiar with the corporate culture, meet
employees and learn about the career possibilities at the larg-
est financial institutions in the world. The International
Banking Cycle committee acquainted students with this
challenging and rapidly changing investment world and
ensured that every participant got the opportunity to meet
their company of interest, either by participating in the
workshop, visiting company presentations or joining to the
drinks reception afterwards.
International Research Project CommitteeEach year, the International Research Project provides students
the opportunity to use their theoretical knowledge in academic
research and travel to an international location. This year we
will visit the growing metropolis Beijing! For the first time
this year, the IRP will cooperate with the charity Right To
Play, which aims to provide children in developing countries
with the opportunity to learn while playing.
The 20 selected Finance and Accountancy students will have
several inhouse days in the Netherlands starting in January
and lasting until April. After these inhouse days the students
will go on a two-week visit to Beijing (at the end of April 2013)
to do field research including company visits and consults.
Afterwards, students have the possibility to continue trave-
ling for an additional two weeks. The committee will set up a
balance between formal and informal activities to give you an
unforgettable experience!
Sydney Cranen, Sep Vermeulen, Taco Smit, Floris Bos, Hugo
van der Wal
Monique Berlee, Edwin van Vliet, Margriet van der Lubbe,
Bas Molenkamp, Anne Duindam
fsrforum • volume 15 • issue #1
44 • FSR news
FSR Activity report
Master Kick-Off DayAfter a few weeks of preparation, the first event of the aca-
demic year 2012-2013 was planned on September 3rd. The
Master Kick-Off Day used to take place in cooperation with
the Erasmus School of Economics. This year we have
extended the cooperation and joined the kick-off of Finance
& Investments (RSM) and Quantitative Finance (ESE) as
well. For all Masters, we have organized this day to give them
a clear view on the possibilities they have at the FSR.
The day started with some general information about the
program during the Master’s program. Furthermore, there
was an introduction from the lecturers and they gave a pres-
entation about their own courses and possible seminars.
Afterwards, on behalf of the FSR Sep Vermeulen (chairman)
informed the students about the possibilities. After a stunning
presentation, students were interested in becoming member
of the FSR. We have recommended the students to participate
in the events and have shown them the profits of being an
active member.
After all, the Faculty Club was available for a drink, so students,
lecturers and the FSR Board could meet each other. With
some quiet jazz music on the background, the day has come
to a successful end. At the end we could welcome a marvelous
number of new FSR members.
Minor Kick-Off DayThe next day, the Minor Kick-Off took place for third year
Bachelor students to make them known with the FSR and
the possibilities to join a committee or maybe in the future
as a board member.
After the lecture of the minor “Ondernemen en Belastingen”
and Behavioral Finance, our chairman gave a presentation
about the FSR and afterwards there was a social drink in the
L-building.
General Member AssemblyOn September 6th the XVth FSR Board was announced to be
officially in charge. After a few months, the period of orientation
was over and the entire board was ready for the challenge.
After a long discussion about the minutes of the last GMA,
the moment of fame for the fifteenth board was there and the
institution was successful.
Ernst & Young DrinkOn September 20th the Ernst & Young drink was planned.
About 35 student interested in accounting, tax or advisory
were invited and after a first drink Marcel de Kimpe, currently
partner at E&Y, introduced himself and gave a short intro-
duction about working at E&Y and his track from starter to
partner. He told about working at E&Y, the corporate culture
and an average working day as a partner. After a short break
we had a special workshop called: “Fit for studying”. For
studying and working as well, he had some eye-openers
about concentration and the influence of sleeping on our
concentration. For instance, our concentration depends for
80 percent on a good night’s sleep. For an hour we were
informed about the best way of living during studying and
work. At the end there were drinks and snacks available while
meeting Ernst & Young employees.
fsrforum • volume 15 • issue #1
FSR news • 45
Erasmus Banking Congress
On Wednesday 12 September 2012 the first congress organized by the FSR was a fact. This congress,
held in the Forum-room in the M-building, was an interactive afternoon with 200 participating
students and lecturers. During this congress the banking sector with its numerous drawbacks
in the recent years was discussed. The opening of the congress was by Prof.Dr. I.J.M. Arnold. As
the vice dean of the Erasmus School of Economics he was well suited for introducing the subject
in this high-potential environment.
After this introduction the moderator of the congress, Arjen Mulder of the RSM faculty, took
over the stage. He presented Dr. H.O.Ch.R. Ruding: the former minister of Finance and former
vice-chairman of Citicorp. His main subject was the present monetary policy. With the current
crisis many things in the financial environment have changed and new quantitative easings are
the subjects of many meetings. Also the size of the by ECB created fund to defuse the European
crisis was one of the subjects Dr. Ruding spoke of.
The second speaker was former director of ‘De Nederlandsche Bank’, Dr. L.H. Hoogduin. His
topic was supervision on financials, which has increased rapidly, with banks abiding to the
rules of the Basel III Accord and the insurance companies adhering to the Solvency II Accord.
Also the possible separation of retail banking activities from the commercial banking activities
was one of his topics, which lead to heated discussions in the second round of debates.
During the first two presentations the participants sent in their questions via the SMS service.
The best questions were selected by the moderator so that they could be asked in the collective
debate session of Dr. Ruding and Dr. Hoogduin.
After a short break we continued the congress with professor in Finance of the Tilburg Univer-
sity, Harald Benink. He told us about the current situation of the banking sector and how to
ensure the stability of banks. A big subject here was the capital/asset ratio differences between
the banking sector and for example the multinationals. Also, the lower capital/asset ratios of
banks and the perception of guarantees and bail outs increasing the risks that banks took were
discussed.
fsrforum • volume 15 • issue #1
46 • FSR news
Next, Head of Commercial Banking at ING, Annerie Vreugdenhil presented to us in an interactive
way. First she quickly clarified the expected extra regulations and the direct adjustments on
political interventions. Then she gave us four multiple-choice questions to see what the overall
consensus was of European regulation, size of future banks, splitting universal banks and the
degree of lending. The opinions were split, so she concluded mainly with her own view that
universal banks should stay.
Last but not least, founder of ‘Alex Beleggersbank’, Peter Verhaar covered the story of the present
risks within banking. One of these risks is the possibility that because of the numerous scandals
that took place, the trust in banks will be completely diminished for a long time. Another risk
is that the banking sector in the Netherlands is too small with only three and a half bank. That
is why he specifically pleads for more and smaller banks.
These conflicting opinions gave a perfect basis for the second debate sessions with prof. Benink,
ms. Vreugdenhil and mr. Verhaar. With Peter Verhaar as an entrepreneur of a small bank,
Annerie Vreugdenhil as a high ranked worker of one of the biggest Dutch banks and Harald
Benink with his profound academic knowledge this led to a great discussion that could have
lasted for hours.
Unfortunately we had only limited time, so a few minutes over time everyone was asked to join
us for a drinks reception, where the participants had the chance to talk personally to the speakers
while enjoying some drinks and snacks.
FSR news • 47
Big 4 Cycle
In recent years, more and more students have become interested in the world of accountancy,
a world full of numbers and intriguing companies. For those that have the ambition to work for
one of the four biggest accounting firms, the Big 4 Cycle is a great opportunity to get familiar:
with there companies. These four accountancy firms offer students inhouse days to experience
the challenging and rapidly changing world of accountancy. During the Big 4 Cycle, in Septem-
ber and October 2012, students get the chance to find out more about the opportunities at the four
leading accountancy firms and get to know the company cultures better.
For each inhouse day, a group of students was selected with a background in Business Economics
or Business Administration at the Erasmus University Rotterdam. Together they visited the
headquarters in Rotterdam of KPMG, Deloitte, PwC and Ernst & Young. These four leading
companies opened their doors for the students to give a glimpse into the working life of an
accountant.
These inhouse days started with an exclusive lunch, where the students had the first chance to
meet some employees (including all levels of management) and ask their questions. After the
lunch, the companies presented themselves and their specific career opportunities for graduated
students. Students worked on different cases in small groups where they could bring their
theoretical knowledge in practice and work out the different problems presented to them.
Topics that were discussed during these cases were innovation, business & accounting risks
and several other accounting issues of fictive firms. Students discussed these problems and
gave short presentations about what they found out and how they could solve this. By doing
these cases, students could get an idea about what accountants do in their working hours.
fsrforum • volume 15 • issue #1
48 • FSR news
After the presentations, it was time to have dinner. One of the firms organized a cooking work-
shop, where the students and the accountants had to show their cooking skills to make their
own meal. The other firms organized a dinner at various locations in the heart of Rotterdam.
For the students this was a great setting to get to know the employees of the firm in an informal
way and to get a feeling of the firm’s culture. The company culture is a decisive factor for many
students and is therefore one of the most important experiences during the day.
The accountancy committee, hopes that we succeeded in helping students to get to know the
Big 4 better, so that they are closer in making their choice for a future employer. Finally, we are
proud that the Big 4 Cycle has once again been a successful event, not only for the accounting
firms but also for the accountancy students!
FSR news • 49
News UpdateNew swathe of difficulties as Dublin abstains from tax plan
A total of nine European countries have joined Germany and
France in the push for a common European tax on financial
transactions.
Dublin will not be participating, but the initiative heralds
more discomfort for the Government in its relations with its
EU partners. The development could yet have major implica-
tions for the defence of Ireland’s corporate tax regime.
The idea behind the tax is simple. With taxpayers throughout
Europe supporting stricken banks to the tune of hundreds of
billions of euro, the objective is to ensure that a volatile
financial system makes a greater contribution to society at
large.
Irish banks are the beneficiaries of some e64 billion in capi-
tal from the increasingly indebted, cash-strapped State, so
many observers might see many good moral and financial
reasons for Ireland to take part. That’s not how the Govern-
ment sees it, however.
Britain is abstaining from the tax. Therefore, Minister for
Finance Michael Noonan fears financial institutions would
move their business to the City of London from the Irish
Financial Services Centre if Ireland joined while Britain
stayed out.
Noonan’s overriding concern is to avoid doing anything that
would threaten the employment of 33,000 people in the Irish
financials sector. Amid soaring unemployment, this is a
forceful argument.
The Minister also says Ireland already charges a 1 per cent
stamp duty on all share deals, a charge smaller in scope than
the proposed European tax because it is levied on transac-
tions in derivatives.
But the plan agreed yesterday still presents a new swathe of
complications to the Government. For one thing, it puts Ire-
land in the opposite camp to most euro zone countries at a
time when Noonan is facing acute difficulty in his long cam-
paign for bank debt relief.
To say this is politically inconvenient for Noonan is to put it mildly, although it is noteworthy
that “core” euro zone countries such as the Netherlands and Luxembourg are not joining. It is
no coincidence that they too operate big-league financial centres.
There is more. The participants will deploy new measures in the Lisbon Treaty which allow a
coalition of at least nine countries to proceed with a European legislative initiative even if
unanimous support among the 27 EU member states cannot be achieved.
The big issue for Dublin is that the transaction tax via enhanced co-operation may create a
precedent for adopting a common business tax system by a group of member states.
Although the Government is pledged to engage constructively in talks on an EU-wide common
consolidated corporate tax base (CCCTB), no less a man than Taoiseach Enda Kenny once dis-
missed the initiative as a “back door” route to tax harmonisation. In a fundamental sense, this
is a no-go area for the Government.
The drawback for Ireland if a group of countries push ahead with their own CCCTB is clear. In
short, this would dim the lustre of the storied 12.5 per cent corporate tax rate by making it
more difficult for global companies to maximise the profit they book in Ireland for tax reasons.
Numerous technical questions also arise.
A part of this text was written by Arthur Beesley and published in
the Irish Times on October 10th 2012
fsrforum • volume 15 • issue #1
FSR Alumni AssociationThe multiplier which leads you to synergy!
Dear FSR Alumni or Future Alumni,
The new academic year has begun and after almost a decennium
the FSR Alumni Association finally has a female chairman.
According to the Finns female leadership will lead to higher
profits, according to McKinsey & Company female leadership
could create that competitive edge to tackle global challenges
and according to the Dalai Lama there is less danger of violence
under more matured female leadership.
If we all survive 21 December 2012 this could become a great
year.
Together with my fellow board members Anne, Maaike and
Taco we will organize new activities for our alumni members
this year to keep you involved and engaged within the FSR
network. This last decennium more and more FSR alumni
have started to work and live in Amsterdam. Therefore, we
thought it would only be just to claim Amsterdam as our city
as well. Our first activity was the FSR Alumni Amsterdam
drink on 19 October. The conciseness of the Rotterdam culture
has colored this evening.
Currently we are also in the process of organizing a Friday
afternoon drink in Rotterdam. Most probably this will be a
look-a-like of the successful Ketel 1 drink of last year. Defi-
nitely an event you do not want to miss. Furthermore, also
this year the tradition of the FSR Golf Tournament will be a
highlight for most of our alumni members.
With this first issue of the FSR Forum I would especially like
to encourage all our former active members of the FSR, as
well as Pecunia and Pacioli which are not a member yet, to
subscribe for the FSR Alumni Association. Not only because
you will get our magazine ‘Kroonrede’ with all kinds of nos-
talgic stories, or a great network which has already many
times led to new career opportunities; but because the
common factor ‘FSR’ that binds us will make us relive the
joyful moments of the past again and create new ones for the
future. All it takes is sending one e-mail to [email protected].
Concluding, my fellow board members and I look very much
forward to meet with you and discuss topics varying from
building the best cash flow model to my recent experiences
with the Lukashenka regime in Belarus. You are cordially
invited!
On behalf of the IXth FSR Alumni Board,
Ashmita Krishna
Chairman FSR Alumni Association
Connect with us on LinkedIn on
‘Financial Study Association Rotterdam Alumni’
fsrforum • volume 15 • issue #1
FSR news • 51
FSR Activity Agenda 2012-2013
September/October/November Erasmus Banking CongressThe official kickoff of the International Banking Cycle
BIG 4 CycleGet to know the 4 leading accounting firms
International Banking CycleThe investment in your career
November Accountant Firms DayGet familiar with the world of accounting at a top class
location in Rotterdam!
Traders TrophyCan you handle the pressure?
Finance DayWant to know what finance is all about…
November/December Financial Business CycleExplore the financial opportunities
January Multinational DinnerGet in touch with the multinationals
Finance DinnerGet acquainted with the world of banking
January-April CleanTech ChallengeGrow your green ideas!
February Investment Banking MasterclassLearn to valuate, like an investment banker
March Multinational BattleFour multinationals, five battling cities, are you part of it?
Corporate Finance CompetitionFive star event: hotel, companies and participants!
April Female Business TourIt might be a men’s world but it would be nothing without women
April/May International Research ProjectUsing your intellect for a charity!
May Bachelor Accountancy DayWill you choose for a career in accounting?
European Finance TourExploring European financial world
fsrforum • volume 15 • issue #1
52 • FSR news
ℜς ϓ℘ ΞΒ⇓ ∗ ∨ ⎥⎦W.we∼kΨn bij mΕzars. ⇔ ←.
Mazars is ontstaan uit een fusie tussen Mazars en Paardekooper&Hoffman
Ga verder met Mazars.
0475.00.596 WT Niets BS_210x297_FC.indd 1 21-08-2008 11:14:10
Blijkt de universiteitineens een vooropleiding.
Een succesvolle carrièrestart is meer dan een goede cijferlijst. Het begint met karakter en inzicht in jezelf. Ontdekken wie je bent, weten waar je naartoe wilt groeien én hoe je dat voor elkaar krijgt staat altijd aan de basis. Ernst & Young coacht jou actief op weg naar jouw succes. We bieden je volop kansen in de wereld van assurance, tax, transaction en advisory. Ontdek ze op ey.nl/carriere
Diederik van de ScheurConsultant TAS
Piet-Hein TouwStaff FSO
E&Y_210x297mm_potentials.indd 2 23-09-10 14:50