On June 21, the European Council agreed on a draft directive addressing tax avoidance practices commonly used by large companies. The directive is part of a set of January 2016 proposals aimed at strengthening the rules against corporate tax avoidance, and builds on 2015 Organization for Economic Cooperation and Development (OECD) recommendations to address tax base erosion and profit shifting (BEPS).

The directive sets forth anti-tax-avoidance rules in five specific areas: interest limitation, exit taxation, controlled foreign company rules for profit-shifting, hybrid mismatches, and general anti-abuse rules to cover gaps in a county’s local rules.