On June 20th 2014, the Council of the European Union has agreed to an amendment to the the EU Parent-Subsidiary Directive 2011/96/EU (the "Directive"), as proposed by the European Commission on November 25th 2013.
As outlined in our newsletter dated January 2014, the proposed amendments focus on closing a loophole deriving from the use of hybrid loan arrangements. The objective of the new rules is to prevent cross-border companies from planning their intra-group payments in such a manner as to benefit from the provisions of the Directive in order to enjoy double non-taxation. In the future, the benefit of the tax exemption to income from a participation in an EU subsidiary will be denied if such income is deductible in the jurisdiction of the subsidiary.
After finalisation of the text, legislation is planned to be adopted at a forthcoming Council session, whereas Member States will have until December 31st 2015 to implement it into national law.
The political agreement reached on June 20th 2014 only concerns the new rules on hybrid loans whereas work is still to be continued on the second aspect described in our Previous Newletter, namely the introduction of a common anti-abuse provision.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
