Jan 29, 2015
As expected, at its meeting on 27 January 2015 the Council of the European Union adopted a directive amending the EU parent-subsidiary directive (2011/96/EU) by adding an anti-abuse clause aimed at preventing the parent-subsidiary directive from being misused for the purposes of tax avoidance, and achieving consistency in its application in different member states.
The parent-subsidiary directive is intended to ensure that profits made by cross-border groups are not taxed twice. It requires member states to exempt from taxation profits received by parent companies from their subsidiaries in other member states.
The anti-abuse clause will allow member states to deny the benefits of the directive to so-called “artificial” arrangements – that is, arrangements that have been put into place in order to obtain a tax advantage without reflecting economic reality. It takes the form of a "de minimis" rule, allowing member states to apply stricter national rules as long as they meet minimum EU requirements.
Based on the draft published by the European Council in December 2014 the amendments made to the parent-subsidiary Directive are expected to read as follows:
Member states will have until 31 December 2015 to introduce an anti-abuse rule into national law. The same deadline applies for transposition of the July 2014 amendments to tackle hybrid loan mismatches.