OECD's BEPS Action Plan Driving Change to Tax Laws

OECD's BEPS Action Plan Driving Change to Tax Laws

The Organisation for Economic Co-operation and Development (OECD) and their 15 Point Action Plan will drive massive reforms on tax laws across Europe.

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  • Many European countries already making changes

Tax laws across Europe are undergoing massive reforms with one key component being the ongoing work of the Organisation for Economic Co-operation and Development (OECD) and their Base Erosion and Profit Shifting (BEPS) 15 Point Action Plan.

According to a new report (PDF 1.81 MB) from KPMG International, many European governments have expressed their commitment to address BEPS and many have already made changes to their tax codes in anticipation of current and future OECD recommendations.

Entitled The View in Europe, this KPMG International report examines the OECD’s BEPS 15 Point Action Plan and its current and expected impact on 10 European countries (Austria, Belgium, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Switzerland, and the UK).

“The reality is that most tax systems were set up a quarter of a century ago and international business has changed significantly since then,” says Jane McCormick, Head of Tax and Pensions at KPMG in the UK. “Countries need to consider how they will update their tax administrations to reflect life in the 21st century.  Just this weekend, the UK government announced it will be the first of 44 countries to formally commit to implementing a new Country by Country reporting template unveiled recently by the OECD and further change is set to follow both here in the UK and around the world.”

So what will the European tax landscape look like in future? While specific answers are not yet possible, The View in Europe discusses a number of areas of particular interest such as:

Country-by-country (CbyC) reporting

Even companies that already take a cautious approach are performing impact evaluations to determine the skills and resources they will need to comply with CbyC reporting. CbyC will require that results from several different jurisdictions be translated into a single standard.

Substance requirements

Current tax treaties, put in place to prevent double taxation, are now proving ineffective in preventing double non-taxation. It is expected that most countries will eliminate structures that permit companies to claim their profits in jurisdictions where they have no substance in terms of office space, tangible assets or employees.

Hybrid mismatches

There is widespread acceptance among European countries examined that tax planning based on hybrid mismatches will be curtailed. Switzerland and the United Kingdom have already moved to prevent companies from using hybrid structures for the sole purpose of gaining tax advantages.

Transfer pricing

Many countries in Europe have already indicated their intention to tighten transfer pricing rules in accordance with changes to the OECD guidelines.

“The reactions we report on from country-to-country are enlightening,” says Vinod Kalloe, Head of International Tax Policy, KPMG Meijburg & Co. “Some countries are forging ahead at full speed while others are taking a more cautious approach. With reputations at stake, ultimately for senior business leaders it will be a question of watching the developments and planning for a potential dialogue with all stakeholders on their tax matters.” 


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For more information please contact:

Margot Cowhig, KPMG Corporate Communications

T: +44 (0)207 694 4246

M: +44 (0)7920 274 856

E: margot.cowhig@kpmg.co.uk

KPMG Press office: +44 (0)207 694 8773


About KPMG

KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with approximately 11,500 partners and staff.  The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

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