The EU Council reached an agreement to include an anti-abuse clause in the EU Parent-Subsidiary Directive on December 9, 2014.
The EU Council reached an agreement to include an anti-abuse clause in the EU Parent-Subsidiary Directive on December 9, 2014. This clause is intended to prevent EU countries from granting benefits to an arrangement, or a series of arrangements that have been implemented by corporate groups to obtain a tax advantage. Specifically, the benefits under the Directive will not apply in the case of "artificial arrangements" put in place with the "essential purpose of obtaining an improper tax advantage and which defeats the object, spirit and purpose of the tax provisions invoked". As well, the clause aims to ensure greater consistency in applying the Directive in different EU countries.
The clause is a "de minimis" rule that allows EU countries to put in place stricter or more specific domestic provisions or double tax treaty anti-abuse provisions provided they meet the minimum EU requirements.
Member states must implement the laws, regulations and administrative provisions in their legislation by December 31, 2015. The same deadline applies for transposition of the amendments to tackle hybrid loan mismatches.
The EU Commission issued a proposal to amend the EU Parent-Subsidiary Directive on November 25, 2013 to close perceived loopholes, such as hybrid financial mismatches not taxed in any member state. The Directive was originally designed to prevent double taxation of the same income between parent and subsidiary companies based in different EU member states. The proposal also introduced an anti-abuse provision to ensure that benefits would only be granted on the basis of real economic substance.
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Information is current to January 06, 2015. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.
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