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Impact of EU BEPS directive
On 28 January 2016 the European Commission presented its Anti Tax Avoidance Package. One of the core pillars of the Commission's agenda is an Anti Tax Avoidance Directive, also known as the EU BEPS directive. Taxand Netherlands focuses on the impact of the proposal on the Dutch tax system.
The release of the proposed anti-tax avoidance directive aims to stop multinationals taking advantage of the fragmented and disparate nature of national tax systems whilst Member States put BEPS into national law. But, on closer inspection, the rules could just be further diluting the sovereignty on tax matters and making the EU a less attractive place to do business. The EU Commission's objective to go further and be more ambitious than BEPS also raises questions of whether "gold plating" BEPS is good for the competitivity of the EU.
Upon approval of the proposed rules, the proposed changes will need to be implemented by each EU Member in its tax law. The Directive provides broad rules but leaves the specific implementation and details up to the different EU Member States. The proposed rules will have a significant impact on how business structure their EU and also international investments and will result in an additional burden for the tax departments of MNEs, which are already stretched by the numerous recent global, EU and local changes to tax laws.
These new rules may affect the investment climate in the EU for foreign investments as foreign MNEs will consider whether EU member states are the best choice for a (regional) HQ in Europe. Exisiting structures may be impacted by the rules and should be carefully reviewed. Especially holding and financing structures will need to be reviewed. The impact of the rules will heavily depend on the implementation of the EU Member States.
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With corporate tax laws in a state of flux, this directive creates an additional layer to a raft of new EU tax rules currently being implemented. With changes to the Parent-Subsidiary directive, exchange of rulings and the new CCCTB proposal already underway, one wonders whether tax departments can cope with this onslaught of further changes and what impact this transition is having on the EU’s appeal as a place to do business.