European Commission on the brink of anti-tax avoidance directive

21st June 2016

The European Commission is nearing agreement over a far-reaching anti-tax avoidance directive it claims will put Europe “in a leading position in the fight against tax avoidance”.

Last week the Commission’s ECOFIN committee came to an agreement in principle on the anti-tax avoidance directive, first published in January 2016.

The directive calls for EU member states to take a more co-ordinated stance against companies that continually attempt to avoid paying their rightful share of tax and implement international standards against base erosion and profit shifting.

Vice-president, Valdis Dombrovskis, said: “Most of the outstanding issues have been resolved in very fruitful discussions.
“Some of the elements still must be confirmed by Belgian and Czech governments.”

Belgium has yet to confirm its approval of the directive, having indicated its concern that the new rules restrict the amount of interest a company is entitled to deduct could lead to an unfair playing field between EU and non-EU countries if introduced prior to an OECD-wide standard.

Meanwhile, Czech finance minister, Andrej Babis has also threatened to veto the directive amid concerns about the Commission’s failure to address VAT fraud.

The European Commission, which has recently been criticised on its tax avoidance clampdown in the aftermath of the Panama Papers leak, hopes the directive will be adopted from this week; bringing a close to the vast majority of tax avoidance channels used by those looking to minimise their tax bills.

“The compromise which was fleshed out goes a very long way to accommodate Member States’ concerns,” added Dombrovskis.

“But for the commission it is crucial that there is a clear date by when common rules need to apply to everybody to fully implement the OECD BEPS standards.

“We have been emphasising many times that Europe wants to be in a leading position in the fight against tax avoidance and also in implementing global standards.”

The ECOFIN committee also confirmed that the Commission will make a proposal on the revised anti-money laundering directive on 5th July.

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