IN614 The EU Anti-Tax Avoidance Directive (ATAD) and Implementation Across Europe

Measures are increasingly being taken to counteract tax avoidance and EU countries such as Portugal and Malta are fully committed to meeting these obligations, as evidenced by recent tax laws that they have introduced.

Background

ATAD was presented as part of the European Commission Anti-tax Avoidance package, at the start of 2016. The objective is to create a ‘level playing field’ across companies operating in different European countries.

European member states are obliged to introduce minimum corporate anti-tax avoidance rules.

The Four Main Rules

ATAD identifies the following minimum rules to protect against corporate tax avoidance and virtually all of the measures must be implemented by 1 January 2020:

  • Interest deduction limitation, in principle, to 30% of ‘Earnings before Interest, Taxes, Depreciation and Amortisation’ (EBITDA) of a company
  • A General Anti-abuse Rule (GAAR)
  • Controlled Foreign Company legislation (CFC), to apply to both EU and third party countries
  • Anti-hybrid mismatch rules, applicable to EU and third party countries

Portugal and ATAD

On 3 May 2019, Portugal introduced amendments to Portuguese Taw Law, to meet ATAD provisions.

Further details can be found in Article: IN611: Portuguese Tax Law - New Provisions to Meet ATAD. The Dixcart offices in Portugal, in Lisbon and Madeira, can assist with further information as required: advice.portugal@dixcart.com

With the exception of the hybrid mismatch rule, the new measures have already been introduced into Portuguese Law.

Malta and ATAD

As a member of the EU, Malta has implemented ATAD and have incorporated the appropriate measures into domestic legislation.

The measures came into force as from 1 January 2019, with the exception of the exit tax, which will be introduced as from 1 January 2020.

Further details can be found in Article: IN576: Key Measures Relating to EU ATAD Now Implemented in Malta. The Dixcart office in Malta can assist if you have any additional questions: advice.malta@dixcart.com

 

Categories: Malta, Portugal, 2019