The Directive 2016/1164 applies the principles of the OECD against international tax evasion in Europe
The Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market was enacted concerning tax avoidance. The new legislation follows the directions of the OECD against international tax evasion.
This organization is leading an international project since 2013 in this regard: the Base Erosion and Profit Shifting (BEPS) project. The aim is to fight tax evasion. To this end, the Directive focuses on measures such as limiting the deductibility of interests and departure taxes, among others.
To avoid paying taxes, companies charge excessive interest on their inter company loans arrangements in order for these expenses to be accounted for as losses. The new European legislation aims to discourage this practice.
Regarding exit tax (levied on the transfer, delivery or shifting of assets abroad), the taxpayer will be charged proportionally to the value of the assets moved abroad once the corresponding deduction is applied (Article 5).
Narrowing the field of tax evasion and removing loopholes are the goals of these measures sponsored by governments and international organizations.
If you have legal questions regarding BEPS, please feel free to contact us and we will advise on firstname.lastname@example.org.
Del Canto Chambers’ Editorial Board