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(BRUSSELS) – Member States formally adopted new EU rules to prevent tax avoidance via non-EU countries Monday, closing down so-called ‘hybrid mismatches’ with the tax systems of third countries.
The new directive is aimed at putting a stop to one of the key ways multinational companies have devised to reduce their tax bills, where they exploit the disparities between two or more tax jurisdictions to reduce their overall tax liability.
“The directive adds to the rules we adopted last year to tackle the most common forms of tax avoidance,” said Malta’s finance minister Edward Scicluna, for the EU presidency: “It will also ensure implementation of the OECD’s recommendations.”
The agreement completes the Anti Tax Avoidance Directive (ATAD) which ensures that binding and robust anti-abuse measures are applied throughout the Single Market, according to the Commission. Commissioner Pierre Moscovici welcomed the deal, saying “it is another victory for fair taxation and another blow against those companies that try to escape paying their fair share.”
The new rules will come into force on 1 January 2020, with a longer phasing-in period of 2022 for one provision.
May 2017 directive on hybrid mismatches with third countries
