The bill of law n° 6847 (the “Bill of law”) was submitted to the Parliament on 5 August 2015. The objective is, amongst others, to implement the directives 2014/86/EU and 2015/12/EU modifying the directive 2011/96/EU relating to the common system of taxation applicable to parent companies and subsidiaries of different Member States (the “PSD”) in domestic law.
- Changes to the tax regime relating to parent companies and subsidiaries
The introduced changes are part of the context of anti-BEPS (Base Erosion and Profit Shifting) measures. They aim at tackling tax fraud and tax evasion as well as abuses of the current PSD. The new tax measures focus on two aspects:
- Introduction of measures putting an end to double non-taxation situations that result from the mismatch of tax treatment applicable to an income distribution between two Member States. This is the case whenever a hybrid arrangement is treated as a borrowing in the source-state and thus generating deductible interest and as equity in the recipient-state.
- From now on, income deriving from an eligible participation is no longer exempt and must be taxable in the state of the parent company to the extent that such income was deductible in the state of the subsidiary company.
- Introduction of a General Anti-Abuse Rule or GAAR common to all Member States preventing any abuse of the PSD.
- A transaction is regarded as abusive when it is about “an arrangement or a series of arrangements which, having been put into place for the main purpose or one of the main purposes of obtaining a tax advantage that defeats the object or purpose of this Directive, are not genuine having regard to all relevant facts and circumstances. For the purposes of the present provision, an arrangement that may comprise more than one step or part or a series of arrangements shall be regarded as not genuine to the extent that they are not put into place for valid commercial reasons which reflect economic reality.”
- Entry into force
The changes relating to the parent subsidiary tax regime should concern income distributed and/or received after 31 December 2015.