After the lapse of the silence procedure Monday night, EU finance
ministers agreed on new EU anti-tax avoidance legislation (ATAD). The
measures included in the final compromise of the Dutch presidency are
far behind the proposals of the European Commission which were watered
down by Member States in the last months. In some important points the
new compromise proposal is even weaker than OECD's BEPS (base erosion
and profit shifting) package already agreed by the G20. In tax matters,
the Council adopts legislation by unanimity. The European Parliament
can only send its opinion.

MEP Sven Giegold, financial and economic policy spokesperson of the
Greens/EFA group, commented:

"This bad deal is a shame for the Netherlands. Contrary to Luxembourg,
the Dutch government has not shown any serious effort during its
presidency to leave behind the image as tax haven in the core of the
European Union.
The directive against tax avoidance does not live up to the promise of
its name. An already limited proposal from the European Commission has
been further weakened by EU finance ministers. In some important
points, the ATAD compromise proposal is even weaker than the decision
of the G20 against tax avoidance ("BEPS"). By this, the European Union
is inviting other countries like the United States to transpose BEPS in
an equally insufficient way. The avoidance rules for controlled foreign
companies (CFC) shall only apply to the home state of the parent
company. The limitation on interest deduction shall not include loans
already granted. This shows EU governments are not taking the problem
seriously.

One step forward compared to BEPS would have been the introduction of a
"switchover clause" which ensures that funds entering the EU from tax
havens have been properly taxed before moving freely into the internal
market. However, Malta, the United Kingdom, Sweden, Cyprus, Latvia,
Poland, Ireland and Estonia succeeded in getting rid of this provision.

Malta, Belgium, Austria, Slovenia and Lithuania together hindered that
strict rules for the limitation of the deduction of interest from intra-
group loans enter into force before 2019. The Commission had proposed
binding rules becoming effective already one year ahead in 2018.
Countries which already have "equivalent" rules in place even have time
until 2024 to adapt their national laws.

However, also Germany and France are responsible for the failure of
today's negotiations as they did not manage to convince the other
countries to accept the necessity of immediate and practical measures.
Smaller Member States such as Malta and Belgium tweak the nose of
German's finance minister Wolfgang Schäuble who inactively watches tax
dumping going on right in his own backyard. CFC rules as badly written
as in ATAD and BEPS allow that subsidiaries do not need 'commensurate'
staff or equipment. 1 person, 1 desk, 1 computer could be enough to
justify substantive economic activity.

At Friday's ECOFIN Member States accepted that France and the
Netherlands are undermining last year's agreement on patent boxes. Both
social democratic finance ministers don't want to make their tax
advantages granted to MNCs compliant with international and European
arrangements in time ("modified nexus approach")."

Comparison of BEPS recommendations versus ATAD final compromise as of
17 June 2016:
http://www.sven-giegold.de/wp-content/uploads/2016/06/Comparison-BEPS-vs-ATAD.pdf

Detailed briefing of the Greens/EFA on the state of play of the Anti-
tax-avoidance directive as of 13 June 2016:
http://www.sven-giegold.de/briefing-on-atad-as-of-13-june-2016/

EU Commission's draft proposal from 28 January 2016:
http://eur-lex.europa.eu/legal-content/de/TXT/PDF/?uri=CELEX:52016PC0026&from=EN

Compromise proposal of the Dutch Presidency as of 13 June 2016:
http://data.consilium.europa.eu/doc/document/ST-10039-2016-INIT/en/pdf

Final compromise of the Dutch Presidency as of 17 June 2016:
http://data.consilium.europa.eu/doc/document/ST-10426-2016-INIT/en/pdf

Code of Conduct Council Conclusions as of 17 June 2016:
http://data.consilium.europa.eu/doc/document/ST-10459-2016-INIT/en/pdf