20 May 2016

EBF: Comment letter on the proposed Anti-Tax Avoidance Directive

The general tenor of the present submission is that a premature implementation of the Anti-Tax Avoidance Directive (the ATAD) bears the risk of causing severe disruptions within the Internal Market and may create a significant competitive disadvantage vis-à-vis the EU’s major trading partners. The EBF is particularly concerned by the lack of impact assessment regarding specific EU measures foreseen in the ATAD. The EBF notes that certain provisions remain at this stage very vague and would certainly need to be further refined in order to ensure consistency and legal certainty.

The EBF is supportive of the development of new standards and measures which aim to create a simpler, fairer and more coherent international tax system with a view to preventing double non-taxation and double taxation and enhancing tax transparency. Financial institutions across Europe are still undergoing extensive adaptations to comply with a vast array of regulatory initiatives aimed at increasing financial transparency and responsibility. These notably include the OECD Common Reporting Standard, which was recently transposed into EU law by a revision of the Directive on administrative cooperation. A coordinated and coherent implementation of the OECD’s recommendations regarding base erosion and profit shifting (BEPS) at EU level, which would enhance a single uniform market, is another initiative the EBF would support. However, the EBF firstly says that achieving such a coordinated implementation does not necessarily need a Directive, and that the approach required in a Directive may have the undesirable effect of eliminating some of the features of the OECD’s recommendations that sought to enable effective implementation in national tax systems which are not identical in their approach. Secondly, for the reasons explained below, it is doubted that the ATAD may achieve the goal of coordinated and coherent implementation in the current state of the drafting.

The EBF notes that the EC was part of the OECD’s discussions on the BEPS project, a two year process of detailed consultation with OECD member states and other interested parties. The EBF recommends that any final Directive aligns with the OECD’s final recommendations. Where the Commission and the Council consider that EU specificities require the introduction of elements beyond the agreed OECD approach, the EBF believes that the EC should carry out a proper impact assessment of any proposals and take time to consult with business and other stakeholders. This should help to avoid any unintended consequences of the EC’s proposals for the business community and ensure that the EU is not placed at a competitive disadvantage relative to its trading partners, which may otherwise result from a premature implementation of the anti-avoidance package. The merits of further harmonization within the EU, an item that is not on the BEPS agenda, should be to the EBF´s view subject to separate discussions between Member States.

Full comment letter

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