Paul Waine wrote:Here you go, DA,
https://ec.europa.eu/taxation_customs/b ... rective_en" onclick="window.open(this.href);return false;
The Anti Tax Avoidance Directive
On 28 January 2016 the Commission presented its proposal for an Anti-Tax Avoidance Directive as part of the Anti-Tax Avoidance Package. On 20 June 2016 the Council adopted the Directive (EU) 2016/1164 laying down rules against tax avoidance practices that directly affect the functioning of the internal market.
In order to provide for a comprehensive framework of anti-abuse measures the Commission presented its proposal
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••• on 25th October 2016, to complement the existing rule on hybrid mismatches. The rule on hybrid mismatches aims to prevent companies from exploiting national mismatches to avoid taxation.
The Anti-Tax Avoidance Directive contains five legally-binding anti-abuse measures, which all Member States should apply against common forms of aggressive tax planning.
Member States should apply these measures as from 1 January 2019.
It creates a minimum level of protection against corporate tax avoidance throughout the EU, while ensuring a fairer and more stable environment for businesses.
The anti-avoidance measures in the Anti-Tax Avoidance Directive other than the rule on hybrid mismatches, are:
Controlled foreign company (CFC) rule: to deter profit shifting to a low/no tax country.
Switchover rule: to prevent double non-taxation of certain income.
Exit taxation: to prevent companies from avoiding tax when re-locating assets.
Interest limitation: to discourage artificial debt arrangements designed to minimise taxes.
General anti-abuse rule: to counteract aggressive tax planning when other rules don’t apply.
1) We see that these rules apply to corporations.
2) By and large, without getting into the minutia of tax law, the UK has had these, or the equivalent tax laws for a very long time. The "Interest limitation" directive is the equivalent of what's known as the "thin capitalisation" rule: the offshore parent company sets up a UK subsidiary, pays in a little equity and finances the rest with debt. Of course, the interest on the debt takes profits out of the UK company - interest is tax free, whereas dividends are paid to the parent company only after corporation tax has been paid. Thin cap rules put a limit, so that the UK company still pays tax equivalent to the "excess interest" as though it was a dividend payment.
3) Yes, in other EU countries these schemes that the directive rules against, would previously have worked.
4) My guess is that UK tax specialists were included in the group that advised the EU on making these new regs. Who knows, maybe someone who posts on here has been involved in the debates concerning the development of these regs.
