European Parliament Adopts Hybrid Mismatch Rules

The European Parliament adopted a legislative resolution on a proposal for a Council Directive amending the Anti-Tax Avoidance Directive on hybrid mismatches involving third countries (ATAD 2). The report will be considered for final approval by the European Council.


Considering that Directive (EU) 2016/1164 only covers hybrid mismatch arrangements that arise in the interaction between the corporate tax systems of Member States, the ECOFIN Council issued a statement on 20 June 2016 requesting the Commission to put forward by October 2016 a proposal on hybrid mismatches involving third countries in order to provide for rules consistent with and no less effective than the rules recommended by the OECD BEPS Report on Action 2, with a view to reaching an agreement by the end of 2016.

Supporting Developing Countries

The effects of hybrid mismatch arrangements should also be considered from the viewpoint of developing countries, and the Union and its Member States should aim to support developing countries in tackling such effects, the Directive informs.

Role of Member States

The Directive suggests that Member States should ensure that taxpayers declare payments in all jurisdictions involved within a reasonable period of time. The national authorities should, furthermore, look into all the reasons behind hybrid mismatches and should close any loopholes and prevent aggressive tax planning, rather than focusing solely on collecting tax revenue.

The report will be considered for final approval by the European Council.

Source: European Parliament - the Directive


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