The European Union Economic and Financial Affairs Council (the Council) announced on June 20 that the Council has reached unanimous political agreement on an amendment to Directive 2011/96/EU, the EU parent-subsidiary directive. The Council was concerned that the directive, intended to prevent double taxation, currently allows corporate groups to exploit mismatches between national tax rules so as to avoid paying any tax on some types of profits distributed within the group through hybrid loan arrangements. Following the Council’s political agreement, the legislative text will be finalized and adopted at a forthcoming Council session. This change had previously been suggested by the Organization for Economic Co-operation and Development’s Action Plan on Base Erosion and Profit Shifting.
At the meeting, the Council also approved a measure for the European Commission to begin an investigation into the use of so-called “patent box” tax legislation—adopted by some EU members, notably the UK, to attract high-tech companies—and announced that Switzerland, after more than two years of negotiation, has agreed to adopt the EU Code of Conduct for business taxation.
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The press statement can be accessed via:http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/143274.pdf