Background

Over the last twenty-five years the European Union has instigated two major initiatives aimed at producing a more coherent direct tax framework for Europe in order to support its key objective of creating a single economic market.

In 1990 the European Commission asked a Committee of Independent Experts on Company Taxation, under the chairmanship of Onno Ruding (Ruding Committee) to determine whether differences in business taxation among Member States led to major distortions which might affect the functioning of the single market, and to examine possible remedial measures. The Report, which was produced in 1992, made a large number of recommendations for improvements in the functioning of business taxation across the EU, including such then far-reaching ideas as cross-border loss relief, but for a variety of reasons, many of them perhaps associated with the desire for the retention of sovereignty over direct tax policy prevalent in many Member States, very little progress was made on any of the key recommendations.