Brussels aims to level playing field for EU's 'honest' businesses
The European Commission is seeking to tackle mismatches between different countries’ tax systems that allow companies to minimise tax using “hybrid” instruments such as convertible preference shares or profit participating loans, which are treated as equity in some countries and debt in others.
Keith O’Donnell, Taxand Luxembourg, said the move was likely to face resistance because it broke new ground by telling member states what they should tax. He said the initiative could hand a competitive advantage to companies based outside the EU or to private equity funds, which would not be affected by the change.
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Full article first published in the Financial Times, 25 November 2013
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The Commission said its plans – which take the form of a proposed revision of the parent-subsidiary directive – would be an important contribution to the international work on tackling base erosion and profit shifting launched by the G20 group of countries “as it would represent a best practice in fighting base erosion”.