21 April 2016

EBF commented on the proposed Anti-tax Avoidance Directive

The EBF is concerned that the EC’s proposal go way beyond the agreed measures at OECD level and the stated objective of coordinating the implementation of these measures within the EU. In fact, the EC’s proposal also cover a number of areas in which the OECD has made no recommendation at all in the first place, while certain “best practice recommendations” laid down by the OECD have been upheld as binding standards and/or have been conferred a more far-reaching scope in the EC’s proposal. The EBF believes that any deviation from, or over-implementation of, internationally agreed upon measures will put the EU at a competitive disadvantage vis-à-vis its major trading partners, starting with the United States.

Further, by deviating from international agreements reached at OECD level, the EU is at risk of creating double or multiple standards undermining the consistency of the international tax system while adding a layer of complexity and legal uncertainty for taxpayers operating in an international context. The EBF is very concerned that double taxation will be one of the unintended consequences of such disparities, an outcome that would be particularly detrimental to smaller Member States with an open economy. Given the potentially serious implications of the Directive, the EBF is particularly concerned about the lack of impact assessment at EU level.

In addition to these general considerations, the attached paper includes comments and recommendations on a number of specific topics such as interest deductibility limitation, exit tax, switch-over clause, general anti-abuse rule, Controlled Foreign Corporations rules and hybrid mismatches.

Since this new legislation may have an important impact on the investment climate in the EU, a thorough impact assessment should be made at EU level. The EBF also urges the EC and Member States to take appropriate steps to ensure a consistent implementation of the BEPS actions on a global basis. Furthermore, the EBF believes that the implementation of the BEPS measures within the EU should be conditioned to an effective implementation of equivalent measures by the EU’s major trading partners. In addition, proper mechanisms (e.g. efficient dispute resolution systems) to prevent international double taxation resulting from the proposed Anti-Tax Avoidance Directive (ATAD) should be implemented together with the ATAD and not separately. Finally, consistent carve-outs or deeming rules applicable to financial institutions should be contemplated considering existing regulatory requirements and business models.  

Full comment letter

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