On July 12, 2016, the Council of the European Union (EU) adopted the Anti-Tax Avoidance Directive (ATAD I) Council Directive (EU) 2016/1164. The Directive is a separate and distinct initiative from the OECD’s Base Erosion Profit Shifting (BEPS) plans; however, the Directive is designed to implement and build on the proposals announced as part of the BEPS initiative in October 2015, in an attempt by the European Union to harmonize the adoption of anti-BEPS measures into local laws across EU Member States.
On May 29, 2017, the Council of the EU adopted a Directive (ATAD II – Council Directive (EU) 2017/952) to amend the hybrid mismatch measures in ATAD I. The Directive extends Article 9 to include hybrid mismatches between EU Member States and third countries and introduces rules on hybrid permanent establishment (PE) mismatches, hybrid transfer, hybrid financial instrument mismatches, dual resident mismatches, reverse hybrid mismatches and imported mismatches.
ATAD I and II contain five specific measures:
- Article 4: Interest Limitation Rules
- Article 5: Exit Taxation Rules
- Article 6: General Anti-Abuse Rules (GAAR)
- Articles 7 & 8: Controlled Foreign Company (CFC) Rules
- Article 9: Anti-Hybrid Mismatch Rules
Across the EU, Member States had a deadline of January 1, 2019 to introduce the interest limitation*, GAAR and CFC measures. A deadline of January 1, 2020 applied in relation to exit taxation and the majority of the anti-hybrid mismatch provisions.
KPMG’s EU Tax Centre conducted a survey of our member firms in August 2024 to ascertain whether each of the five ATAD measures had been fully transposed by Member States. The survey also sought to understand the approaches taken by Member States when incorporating the ATAD measures into domestic law. A summary of the findings of this survey are included in our EU Anti-Tax Avoidance Directive – Member State Implementation Overview report.
Please note that the information included in this report is of a general nature and is subject to change.
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* An extension to January 1, 2024 was available for the transposition of interest limitation rules if a Member State could demonstrate that it had equally effective measures already in place locally.
