Anti-tax-avoidance directive [Legislation in progress]

Written by Cécile Remeur (1st edition),

The proposal for a directive on ‘Rules against tax avoidance practices that directly affect the functioning of the internal market’ is one of two legislative proposals of the 28 January 2016 European Commission ‘anti-tax-avoidance package’.

Linked with the OECD/G20 Base erosion and profit shifting action plan (BEPS), it targets schemes where corporate taxpayers operating businesses in several countries take advantage of disparities and loopholes to reduce their tax bills. The objective is to realign corporate taxation with the relevant business substance (income) of the corporate taxpayer, fighting against aggressive corporate tax avoidance.

The proposed directive sets legally binding minimum standards for six practices. Three of these are included in the BEPS action plan (interest limitation rules, controlled foreign company rules, and rules on hybrid mismatches). The other three (a general anti-abuse rule, exit taxation rules and a switch-over clause came out of discussions on the common consolidated corporate tax base (CCCTB) proposal. As a tax measure, Parliament is only consulted, with the proposal to be adopted by the Council.

Versions

• June 2016:  ‘Anti-tax-avoidance directive‘ (1st edition)