Peter Clements and May Smith review the two proposed changes that the European Commission has recently made to the Parent-Subsidiary Directive, following its action plan on tackling base erosion and profit shifting, and what the implications are for the UK and other member states.
On 25 November the European Commission published a proposal (COM(2013) 814) for changes to the Parent-Subsidiary Directive (2011/96/EU) (‘the PSD’).
The proposal targets base erosion issues arising from ‘hybrid’ instruments and suggests a general anti-abuse rule (GAAR) to safeguard against abuse of the PSD.
According to the EC the proposal means ‘companies will no longer be able to exploit differences in the way intra-group payments are taxed across the EU to avoid paying any...
