On 25 October 2016 the European Commission presented 3 new proposals for Council directives. The first proposal amends the anti-tax avoidance directive (ATAD) as regards hybrid mismatches with third countries, while the other two have relaunched the Common Consolidated Corporate Tax Base proposal of 2011 which has been split into 2 parts: a proposal for a Common Corporate Tax Base (CCTB) and a proposal for a Common Consolidated Corporate Tax Base (CCCTB).
The CCTB/CCCTB proposals are at the early stage of the legislative process and may be subject to further amendments. However, these initiatives clearly show the determination of the European Commission to thoroughly reform the EU tax system for consolidated groups. Attention must be paid to the scope of the directive in order to assess your eligibility in relation to the new provisions.
The new provisions contained in the ATAD II are in line with current developments in the OECD’s BEPS project and their implementation should be closely monitored since they may impact taxpayers with a presence in Luxembourg in different ways. We therefore recommend adopting a prudent approach and observing the following steps:
1. Review existing structures to assess potential impacts of the CCTB/CCCTB and ATAD II;
2. Analyse potential amendments and practical consequences;
3. Implement the appropriate adjustments and determination of the necessary internal procedures (e.g. tax reporting).