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Hybrid mismatches with third countries [EU Legislation in Progress]

Written by Cécile Remeur (1st edition),

Two scissors with the word tax on the wooden background

© eskay lim / Fotolia

Hybrid mismatch is a situation where a cross-border activity is treated differently for tax purposes by the countries involved, resulting in favourable tax treatment. Hybrid mismatches are used as aggressive tax planning structures, which in turn trigger policy reactions to neutralise their tax effects.

When adopting the Anti-Tax Avoidance Directive in July 2016, the Council requested that the Commission put forward a proposal on hybrid mismatches involving third countries. The amendment proposed by the Commission on 25 October broadens the provisions of the directive accordingly. It seeks to neutralise mismatches by obliging Member States to deny the deduction of payments by taxpayers or by requiring taxpayers to include a payment or a profit in their taxable income.

As this is a tax measure, Parliament is consulted only, and the proposal will be adopted by the Council. The Economic and Monetary Affairs Committee is preparing Parliament’s opinion.

Interactive PDF

Proposal for a Council Directive amending Directive (EU) 2016/1164 as regards hybrid mismatches with third countries
Committee responsible: Economic and Monetary Affairs (ECON)

COM(2016) 687
25.10.2016

2016/0339(CNS)

Consultation procedure – Parliament adopts only a non-binding opinion

Rapporteur: Olle Ludvigsson (S&D, Sweden)
Shadow rapporteurs:

 

 

 

 

Sirpa Pietikäinen (EPP, Finland)

Pirkko Ruohonen-Lerner (ECR, Finland)

Nils Torvalds (ALDE, Finland)

Matt Carthy (GUE/NGL, Ireland)

Eva Joly (Greens/EFA, France)

Next steps expected: Committee vote

Stage: National Parliaments opinion

Discussion

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The content of all documents (and articles) contained in this blog is the sole responsibility of the author and any opinions expressed therein do not necessarily represent the official position of the European Parliament. It is addressed to the Members and staff of the EP for their parliamentary work. Reproduction and translation for non-commercial purposes are authorised, provided the source is acknowledged and the European Parliament is given prior notice and sent a copy. Copyright © European Union, 2014. All rights reserved

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