Parent-subsidiary directive: Council agrees to add anti-abuse clause against corporate tax avoidance

Padoan : “it will enable member states to better fight aggressive tax planning by groups of companies”

The Council approved an amendment to an EU directive with the aim of preventing tax avoidance and aggressive tax planning by corporate groups. To this end, it agreed that it would introduce a

binding anti-abuse clause as a “de minimis” rule1 in the EU’s parent-subsidiary directive. The anti-abuse clause is aimed at preventing misuses of the directive and ensuring a greater consistency in its application in different member states. It requires governments to refrain from granting the benefits of the parent-subsidiary directive to an arrangement, or a series of arrangements, that are not “genuine” and have been put in place to obtain a tax advantage, while not reflecting economic reality.

The amending directive will be adopted at a forthcoming Council session without further discussion.

“The agreement on a binding anti-abuse clause in the parent-subsidiary directive will enable member states to better fight aggressive tax planning by groups of companies, thereby ensuring fairer corporate taxation in the European Union,” said Pier Carlo Padoan, minister of economy and finance of Italy and president of the Council. “This amendment will oblige member states to provide for, at least, a minimum level of protection of the directive against abuse.”