European Council closes a double non-taxation loophole

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2014-06-22

At the Economic and Financial Affairs Council meeting on 20 June the ministers agreed an amendment to EU tax rules that will close a loophole which had allowed cross-border corporations to profit from double non-taxation.

The agreed amendment to the parent-subsidiary directive (2011/96/EU) will put an end to the situation whereby cross-border corporate groups could exploit differences between national tax laws and profit from double non-taxation by means of hybrid loan arrangements.

According to the agreed text the member state of the parent company would only refrain from taxing profits from the subsidiary to the extent that such profits are not deductible by the latter.

The amendment is part of the EU's wider effort and international commitment to fight tax evasion and aggressive tax planning.

Next steps

Member states would have to transpose the amending provision into national law by 31 December 2015.

Source: European Union

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