EBIT · Trade and business associations · BE
EBIT www.ebit-businesstax.com To: European Commission, DG TAXUD, submitted online EBIT’s Comments on the EC’s Anti-tax Avoidance Directive (ATAD) – evaluation (31 July 2024 – 11 September 2024) Brussels, 10 September 2024 Dear Mr. Thomas, EBIT’s Members1 thank the European Commission for the opportunity to provide comments on its public consultation “Anti-tax Avoidance Directive (ATAD) – evaluation (31 July 2024 – 11 September 2024)”. EBIT’s Members welcome the initiative of the European Commission to focus and enhance a level playing field on competition in the EU’s Single Market, with particular attention on tax decluttering. We consider that ATAD has been instrumental in the effective and streamlined implementation of some of the BEPS actions.
…consider that ATAD has been instrumental in the effective and streamlined implementation of some of the BEPS actions. EBIT’s Members believe that fostering a more business-friendly environment, promoting investment in the EU and a better alignment of recent developments in the international tax scene, such as Pillar Two, will be beneficial. The ATAD evaluation exercise could be a useful tool in that respect. The European Commission has also proposed several new Directives that may impact ATAD, for example the proposal for DEBRA or the UNSHELL Directive, although their adoption remains uncertain at this moment in time.
…the proposal for DEBRA or the UNSHELL Directive, although their adoption remains uncertain at this moment in time. Nevertheless, although discussions may still be ongoing in the EU’s Council or some EU draft Directives may be dormant for the time being, provisions embedded in those draft Directives may still be interesting to consider in reviewing ATAD and due account should also be taken of other EU legislative projects still in the pipeline (e.g., BEFIT, Transfer Pricing Directive, …). To better achieve the goals of a business-friendly environment fostering investment, several points require attention and certain amendments on the ATAD are needed, in particular in light of the recent developments in the international tax scene.
…amendments on the ATAD are needed, in particular in light of the recent developments in the international tax scene. EBIT’s Members also wish to remind the European Commission that over the last couple of years, the administrative burden for multinational groups has increased further. Some recent examples are the amendments made to the Directive on Administrative Cooperation, the Foreign Subsidies Regulation, the Pillar Two Directive, the EU Public Country-by-Country reporting Directive, which have a direct or indirect impact on taxation.
Directive, the EU Public Country-by-Country reporting Directive, which have a direct or indirect impact on taxation. ATAD applies to corporate tax payers (or their permanent establishments) and can be subdivided into five major parts: - Interest limitation rule (ATAD Article 4); 1 EBIT’s Members include AIRBUS GROUP, BP, CARLYLE, CARRIER CORP., CATERPILLAR, GSK, HUAWEI, INTERNATIONAL PAPER, JOHNSON AND JOHNSON, the LEGO GROUP, PEPSICO, PFIZER, PROCTER AND GAMBLE, PROSUS/NASPERS, RELX, RTX and SCHRODERS. For more information on EBIT, please see: www.ebit- businesstax.com Ref. Ares(2024)6398654 - 10/09/2024 EBIT’s Comments on the EC’s Anti-tax Avoidance Directive (ATAD) – evaluation 2 - Exit taxation (ATAD Article 5); - General anti-abuse rule (ATAD Article 6); - CFC-rules (ATAD Articles 7, 8); and - Hybrid mismatches (ATAD Article 9).
…anti-abuse rule (ATAD Article 6); - CFC-rules (ATAD Articles 7, 8); and - Hybrid mismatches (ATAD Article 9). General issues with regard to the ATAD evaluation EBIT’s Members consider that the approaches under ATAD and other tax Directives, in particular Pillar Two, should be aligned with the aim to reduce or minimise complexity and compliance. In particular, the Pillar Two Directive has significantly reduced the possibilities for tax arbitrage vis-à-vis low tax countries. Hence, the review of ATAD should analyse and evaluate whether certain provisions under ATAD should be adapted (or even abolished), for example the rules on CFC. EBIT’s Members also consider that a thorough evaluation of the ATAD's effectiveness, efficiency, and implementation is crucial.
…also consider that a thorough evaluation of the ATAD's effectiveness, efficiency, and implementation is crucial. Specific provisions, such as CFC rules and the interest deduction limitation, need to be reassessed in light of the new global tax landscape and current economic conditions (see also further discussion below). EBIT’s Members wish to emphasize the importance of consistency across the EU, in particular taking into consideration that EU Member States can be expected to exercise a degree of flexibility in implementation. Indeed, Directives can be seen as a minimum standard, even containing certain elements where countries can opt in (or out). This approach, however, does not guarantee a full uniform application throughout the EU Single Market.
…opt in (or out). This approach, however, does not guarantee a full uniform application throughout the EU Single Market. A recent example thereof can be found under DAC6 where different EU Member States have used alternative options to transpose the Directive and as a result come to different results. The same holds true for the implementation of ATAD. See below for a further discussion. Specific issues with regard to the ATAD evaluation Interest Limitation Rule The interest limitation rule under Article 4 of ATAD is largely based on OECD BEPS Action 4. According to the wording of Article 4, § 6, EU Member States may provide rules to implement a carry forward (and back) mechanism on exceeding borrowing costs and thus allow the elimination of double taxation.
…carry forward (and back) mechanism on exceeding borrowing costs and thus allow the elimination of double taxation. The wording used indicated an optionality for Member States and ATAD does not provide guidance on how to relief double taxation when said article is not implemented. Taxpayers have no possibility or access to relief of double taxation if article 4, § 6, is not implemented. Even if Article 4, § 6, is implemented, there is no guarantee that double taxation is effectively relieved if the taxpayer is not in a position to use the amounts carried forward, for example in the case of continuing losses. EBIT’s Members consider that the issue of double taxation under the interest limitation rule must be resolved.
…losses. EBIT’s Members consider that the issue of double taxation under the interest limitation rule must be resolved. Exit Taxation Under the ATAD exit taxation rules, unrealised gains on the transfer of assets abroad (e.g., transfer to a permanent establishment or a headquarters situated in another state, transfer of EBIT’s Comments on the EC’s Anti-tax Avoidance Directive (ATAD) – evaluation 3 tax residency or transfer of a business abroad) should be taxed, with a possible deferral of five years if transferred within the EU (or EEA). The ATAD imposes the exit tax at the moment of the transfer and not at the moment of the actual realisation of the gain. The exit tax is due (possibly deferred), notwithstanding that the gain may never be realised.
…realisation of the gain. The exit tax is due (possibly deferred), notwithstanding that the gain may never be realised. In particular, for transfers within the EU, and in light of the exchange of information procedures that are available between the EU Member States, it could be envisaged that exit taxation would only be levied at the moment of actual realisation or transfer to a third state. Also, consider the following example. Assets of the headquarters situated in the EU are transferred to a permanent establishment in another EU Member State. Exit tax (possibly deferred) should be levied in this case. However, in cases where the headquarters transfers the same assets to another establishment withing the same EU Member State, exit taxation would not be due. The question is whether this approach does not hamper the cross-border transfer of assets.
…taxation would not be due. The question is whether this approach does not hamper the cross-border transfer of assets. General Anti-Abuse Rule Under Article 6, § 1 of ATAD, the general anti-abuse rule (GAAR) is defined as follows: For the purposes of calculating the corporate tax liability, a Member State shall ignore an arrangement or a series of arrangements which, having been put into place for the main purpose or one of the main purposes of obtaining a tax advantage that defeats the object or purpose of the applicable tax law, are not genuine having regard to all relevant facts and circumstances. […]. Although the first part of the sentence refers to the corporate tax liability, what is meant under corporate tax liability is not precisely defined. For example, unlike under the EU’s Parent- Subsidiary Directive, the directive does not contain a list of the taxes that are in scope.
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EBIT www.ebit-businesstax.com European Commission, DG TAXUD, submitted online EBIT’s Comments on the EC’s public consultation on the possible recast of the Directive on Administrative Cooperation in Direct Taxation (DAC) Brussels, February 2026 Dear Benjamin, EBIT’s Members1 thank the European Commission for this opportunity to provide feedback on the Commission's public consultation on a possible recast of the Directive on Administrative Cooperation in the field of direct taxation (DAC), as part of its REFIT agenda and broader efforts to simplify EU law and reduce administrative burdens. EBIT’s Members are supportive of initiatives to improve the efficient collection of data required for and proportionate to compliance with the law and the (automatic) exchange of information between Tax Administrations within the EU.
…to compliance with the law and the (automatic) exchange of information between Tax Administrations within the EU. Whilst we view the DAC as an important framework to address the complexities of cross-border taxation within the EU, we believe there is much-needed room for improvement. In view of the recast of the DAC, EBIT’s Members would welcome that the following identified concerns for businesses would be addressed. Simplification and reducing the overall compliance burden The breadth and volume of data having to be gathered and reported by taxpayers and assimilated by Tax Administrations has grown exponentially, both under DAC and otherwise. There is little doubt that the behaviour of taxpayers has changed and is continuing to change in response to the need to be more transparent through both voluntary and mandatory reporting regimes and initiatives.
…in response to the need to be more transparent through both voluntary and mandatory reporting regimes and initiatives. One might suggest that while new DACs may be argued to be justifiable in particular areas, earlier DACs have served their purpose and may no longer be necessary as a matter of practice or having been made otiose by the adoption of different rules and practices. Analysis of the extent of use of the shared data by Tax Administrations should enable existing rules to be simplified or removed altogether. The publication of the results of this exercise would also help to build trust between taxpayers and Tax Administrations (see further below. Overlap between reporting obligations under different DACs In the experience of EBIT’s Members duplication of reporting obligations arise under different DACs.
…different DACs In the experience of EBIT’s Members duplication of reporting obligations arise under different DACs. As an example, under DAC3, EU Member States are obliged to 1 EBIT’s Members include AIRBUS GROUP, BP, CARLYLE, CARRIER CORP., GSK, HUAWEI, INTERNATIONAL PAPER, JOHNSON AND JOHNSON, the LEGO GROUP, PEPSICO, PROCTER AND GAMBLE, RELX, RTX and SCHRODERS. For more information on EBIT: www.ebit-businesstax.com Ref. Ares(2026)1784415 - 17/02/2026 EBIT’s Comments on the EC’s public consultation on the possible recast of the Directive on Administrative Cooperation in Direct Taxation (DAC) 2 automatically exchange advance tax rulings (ATRs) or advance pricing arrangements (APAs).
…in Direct Taxation (DAC) 2 automatically exchange advance tax rulings (ATRs) or advance pricing arrangements (APAs). Although this obligation to exchange information rests with the tax authorities, EBIT’s Members have experienced that there is duplication between reporting under DAC3 and other areas of DAC resulting in an unnecessary administrative burden and cost for taxpayers (once to request the ATR/ APA and once for informing under other DACs). Specifically, there can be an overlap with requesting an ATR or APA with cross-border arrangements that could be considered potentially harmful under DAC6. Taxpayers want to increase certainty in a way that is fully transparent with the tax authorities by requesting an ATR or APA.
…want to increase certainty in a way that is fully transparent with the tax authorities by requesting an ATR or APA. The fact that the same cross-border transaction – which should be shared between the tax authorities – should be reported again under DAC6 increases the compliance burden and costs without adding additional information or value. In this example, we consider that once information on relevant tax rulings has been shared between tax authorities under DAC3, there should be no further obligation to share the same information another time, either by the taxpayer, or by a tax intermediary.
…be no further obligation to share the same information another time, either by the taxpayer, or by a tax intermediary. EBIT’s Members believe that any existing duplications of reporting obligations under different DACs should therefore be addressed urgently (decluttered and simplified), as such duplications are not only unnecessary, ineffective and inefficient, but also frankly unacceptable in that this impinges on basic principles/criteria supposed to guide sound EU- level tax policy-making such as consistency with existing and other Union policies, legal basis, subsidiarity, proportionality, choice of instrument and ensuring legal certainty and predictability. In addition, it could be argued that the validity of these criteria for sound EU policymaking themselves will have to be reviewed as well.
…be argued that the validity of these criteria for sound EU policymaking themselves will have to be reviewed as well. With regard to the criterion of proportionality for instance, based on today’s experience and realities, it seems probable that the measures may not be proportionate to the objective anymore (at least for DAC6). More practically, for MNEs in the EU, duplication of DAC reporting obligations means higher compliance costs and administrative burdens, which does not improve the EU’s overall competitiveness and business-friendliness. Inconsistent interpretation of DAC across EU Member States As another consideration, inconsistent interpretation across Members States could be mitigated by the publication of guidance or FAQs. For example, under DAC4, Country-by- Country Reporting obligations are introduced for MNEs meeting certain standards (i.e.
…example, under DAC4, Country-by- Country Reporting obligations are introduced for MNEs meeting certain standards (i.e. an annual consolidated group revenue of €750 million or more in the preceding fiscal year). EBIT’s Members have established that the implementation of these obligations, however, varies from Member State to Member State, thus creating burdensome work for in-scope enterprises to effectively comply. Even when the costs of compliance in terms of FTEs may not be very significant, it is important to streamline compliance, avoid duplications, and limit notifications to guarantee the effectiveness of DAC4. Furthermore, merging reporting schemas to prevent possible overlaps and double reporting would be beneficial, particularly between DAC4 and DAC9 requirements.
…to prevent possible overlaps and double reporting would be beneficial, particularly between DAC4 and DAC9 requirements. Inconsistent interpretation is also one of the areas for potential improvement of DAC6, which is discussed separately below Alignment of DAC with other EU tax transparency measures The alignment of DAC with other EU tax transparency measures would prevent disagreement and disputes while reducing the administrative burden for both taxpayers and Member States. For instance, Directive (EU) 2021/21013 introduced public Country- EBIT’s Comments on the EC’s public consultation on the possible recast of the Directive on Administrative Cooperation in Direct Taxation (DAC) 3 by-Country Reporting, yet this has led to differences in Member States’ implementation.
…in Direct Taxation (DAC) 3 by-Country Reporting, yet this has led to differences in Member States’ implementation. EBIT’s Members understand that this is an amendment to the EU’s Accounting Directive, but the information to be reported is very similar to DAC4. But Member States, when transposing Directive (EU) 2021/2101, have established different reporting rules from the rules under DAC4, and both have been implemented differently by each Member State. Member States could be discouraged, through guidance or FAQs, from adding additional reporting requirements, both in terms of scope and the methods of reporting potentially hindering the overall automation of compliance.
…both in terms of scope and the methods of reporting potentially hindering the overall automation of compliance. Arguments about the quality of data shared under DAC4 should be mitigated by further guidance from the OECD and the use of qualifying Country-by-Country reports to provide a transitional safe harbour under the Inclusive Framework’s Pillar II GloBE rules. Specific issues relating to DAC6 EBIT’s Members are particularly concerned about DAC6, which focuses on cross-border arrangements that meet specified hallmarks, being administratively burdensome for those in scope. Narrowing the scope of DAC6 could potentially enhance its effectiveness and at the same time reduce the burden for taxpayers and intermediaries.
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