EU Anti-Tax Avoidance Directive (ATAD) comes into force
03 Jan 2019

New rules designed to combat corporate tax avoidance in the European Union have kicked in.

As of 1 January 2019, all member states shall apply new legally binding anti-abuse measures which will see authorities tax profits moved to low-tax countries where the company does not have any genuine economic activity (controlled foreign company rules).

In addition, to discourage companies from using excessive interest payments to minimise taxes, member states will limit the amount of net interest expenses that a company can deduct from its taxable income (interest limitation rules).

Member states will also be able to tackle tax avoidance schemes in cases where other anti-avoidance provisions cannot be applied (general anti-abuse rule).

Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “The Commission has fought consistently and for a long time against aggressive tax planning. The battle is not yet won, but this marks a very important step in our fight against those who try to take advantage of loopholes in the tax systems of our Member States to avoid billions of euros in tax.”

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