The EU Commission Agrees on Hybrid Mismatch Rules

The EU Commission Agrees on Hybrid Mismatch Rules
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The EU Commission Agrees on Hybrid Mismatch Rules
February 22nd, 2017
On February 21, the European Commission welcomed the agreement reached on hybrid mismatches with regard to non-EU countries. A day earlier, the Council of the European Union has released two documents addressing the general approach and presidency compromise with respect to hybrid mismatches with third countries.

On February 21, the European Commission welcomed the agreement reached on hybrid mismatches with regard to non-EU countries. A day earlier, the Council of the European Union has released two documents addressing the general approach and presidency compromise with respect to hybrid mismatches with third countries.

Background: The Anti-Tax Avoidance Directive

The new provisions build on the Anti-Tax Avoidance Directive (ATAD) agreed on July 2016. The agreement reached today (ATAD 2) will ensure that hybrid mismatches including third countries cannot be used to avoid tax in the EU.

"Step by step, we are eliminating the channels used by certain companies to escape taxation," said Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs.

ATAD 2 Provisions

The Council reached a compromise on the following issues:

  • for hybrid regulatory capital, a carve-out from the rules is established for the banking sector. The carve-out will be limited in time, and the Commission will be asked to present a report assessing the consequences;
  • for financial traders, a delimited approach is followed in line with that followed by the OECD;
  • as regards implementation, a longer timeline is foreseen than that set for the July 2016 directive. Implementation is set for 1 January 2020 (one year later), and for 1 January 2022 as concerns one specific provision (Art. 9a).

Sources: EU Commission - Press Release, EU Council - Press Release, ATAD 2 - Presidency Compromise
 

The EU Commission Agrees on Hybrid Mismatch Rules
; posted on
February 22nd, 2017
On February 21, the European Commission welcomed the agreement reached on hybrid mismatches with regard to non-EU countries. A day earlier, the Council of the European Union has released two documents addressing the general approach and presidency compromise with respect to hybrid mismatches with third countries.
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