Economic and Financial Affairs Council, 06/12/2016

Corporate tax avoidance: Hybrid mismatches

The Council made further progress on preventing corporate tax avoidance, achieving a broad consensus on a draft directive aimed at closing down ‘hybrid mismatches‘ with the tax systems of third countries.

After intensive discussions, the Council agreed to a stable text for most provisions, leaving just two issues to resolve in the coming weeks: rules that would allow member states to apply limited exemptions and the date of implementation.

“This directive will prevent corporate taxpayers from exploiting disparities between tax jurisdictions in order to reduce their overall tax liability”, said Peter Kažimír, Slovak minister for finance and president of the Council. “Such arrangements are widespread and result in a substantial erosion of the taxable bases of corporate taxpayers in the EU”.

“Our work here proves that we are serious about fighting illicit tax practices at the EU as well as global levels, in coordination and cooperation with the G20 and OECD”, he said.

Investment plan for Europe

The Council agreed its stance on a proposal to extend the lifespan of the European fund for strategic investments (EFSI), the EU’s flagship initiative under its ‘investment plan for Europe.

It agreed to extend the fund in terms of both duration and financial capacity, with a half-trillion euro investment target for 2020. The proposal also introduces a number of operational improvements to take account of lessons learned from the first year of implementation.

Talks will start with the European Parliament once the Parliament has agreed its negotiating stance.

To read more on the European Council’s main results click here