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On 17 June 2016, the Council’s presidency put forward a compromise text regarding the Commission’s proposed Anti-Tax Avoidance Directive, subject to a silence procedure that ended at midnight on 20 June 2016. The draft Directive covers all taxpayers that are subject to corporation tax in a Member State as well as the subsidiaries of such companies based in third countries.

The compromise text, which reportedly drops the switch-over clause from the ambit of the draft Directive, lays down rules in the following five specific fields:
According to the Council, the draft directive will ensure that the OECD anti-BEPS measures will be implemented by all EU Member States, including non-OECD members.

• Interest limitation rules: which will curtail the amount of interest that taxpayers will be allowed to deduct within a tax year and discourage the transfer of interest to low-tax jurisdictions;
• Exit taxation rules: which will prevent tax base erosion when assets are transferred to a low-tax jurisdiction;
• General anti-abuse rule: which will cover any gaps that are not covered by a country’s specific anti-abuse rules;
• CFC rules: which will deter corporate groups from shifting profits to controlled subsidiaries in low-tax jurisdiction and re-attribute the income of the low-taxed foreign subsidiaries to the parent company;
• Hybrid mismatches rules: which will stop companies from taking advantage of disparities between national tax systems and reduce their tax burden.

As the silence procedure expired today without any objections, the draft Directive will be submitted to the Council for adoption at an upcoming meeting.