The European Commission published its Anti Tax Avoidance Package on 28 January 2016. This package consists of the following main elements:

Anti Tax Avoidance Directive

The provisions of a proposed Anti Tax Avoidance Directive have been published as part of the package. This would enable EU member states to implement important recommendations of the OECD package on base erosion and profit shifting (BEPS) into their national law. The Directive includes provisions on an interest limitation rule, exit taxation, a general anti-abuse rule, controlled foreign company (CFC) rules and a hybrid mismatch rule.

The proposed Directive also contains a provision that income of a permanent establishment or profits distributed from a jurisdiction where the tax rate is less than 40% of the tax rate that would be payable in the home country should not be exempt from tax in the home country but should be taxable with a credit for the foreign tax paid.

A staff working document published as part of the package explains the consultation process, analyzes key drivers of tax avoidance and possible solutions, and looks at the main features of the policy proposals.

Country by Country Reporting

The Anti Tax Avoidance Package also contains an amending Directive on automatic exchange of information that would provide for country by country reporting as recommended in the report on Action 13 of the OECD project on BEPS. The information would be shared between the tax authorities of EU member states.

External Strategy for Effective Taxation

The Communication on an External Strategy for Effective Taxation is a strategy paper containing an action plan that would improve the cooperation between EU countries in dealing with non-cooperative third countries.

Measures against Tax Treaty Abuse

The recommendation on the implementation of measures against tax treaty abuse contains recommended measures that member states could take in their double tax treaties with third countries, including measures to prevent the exploitation of cross-border mismatches and measures to counter tax treaty shopping.

In addition to the above elements of the package the European Commission has published a study on Structures of Aggressive Tax Planning and Indicators. This examines the existing practices within member states in relation to aggressive tax planning.