The new anti-abuse measures entered into force on January 1, 2019.
From January 1, 2019, EU member states will apply new anti-abuse measures to tackle certain kinds of corporate tax avoidance strategies employed by certain multinational corporations.
The new rules build on the OECD’s base erosion and profit shifting recommendations and are aimed at preventing companies from diverting profits outside the European Union.
From January 1, 2019, EU member states will apply the new controlled foreign corporation rules to tax profits moved to low-tax countries where the company does not have any genuine economic activity.
Additionally, new interest limitation rules will limit the amount of net interest expenses that a company can deduct from its taxable income.
Finally, under a new general anti-abuse rule, EU member states will seek to tackle tax avoidance schemes in cases where other anti-avoidance provisions cannot be applied.
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.”
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable at editor@transferpricingnews.com