European Parliament Agrees on Hybrid Mismatch Amendments

EU Economic and Monetary Affairs Committee MEPs have voted in favor of amendments on EU’s anti-tax avoidance directive on Hybrid Mismatch with regards to third countries by 44 votes to 0 with 2 abstentions. 

Background: Hybrid Mismatch

Multinational companies involved in international tax planning use hybrid mismatch arrangements to achieve lower taxation. By using hybrid mismatches, companies avoid double taxation or lower taxes by taking advantage of the differences in classification and tax treatment between two or more jurisdictions.

Hybrid Mismatch Amendments

The amendments that had been agreed on February 21, 2017 relate to the different tax rules in third countries which give rise to hybrid mismatches and allow firms to escape tax in both jurisdictions, the Parliament reported in a press release.

“These arrangements are frequently used by the largest companies with the sole purpose of reducing corporate taxation. We have seen it in both the Apple case and in the McDonald’s case. It is about time that these corporations pay their fair share of taxes,” said rapporteur Olle Ludvigsson (S&D, SE).

The report now goes to the Council for its consideration.

Source: EU Parliament - Press Release, TPA - Hybrid Mismatch Amendments (21 February)

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