EU Direct Tax Policy

Read our second review of the EU Direct Tax Initiatives: helping you keep up to date with what is in the pipeline and how it may impact your business.

Sasha Kerins and Monique Pisters discuss current issues impacting EU direct tax initiatives, including the UN’s potential future role in international taxation, Pillar I & DST’s and the HOT, TP and FASTER proposals.

Navigate the changes in EU tax regulations with BEFIT and Transfer Pricing proposals, aiming for harmonisation, fair taxation, and reduced compliance burdens.

DAC8 enters into force on 13 November 2023 and for the most part will come into effect for all EU Member States from 1 January 2026. Read the key measures introduced to enhance tax compliance and improve transparency.

The European Commission (EC) are committed to introducing a common corporate income tax system across the EU. The previous iterations - the Common (Consolidated) Corporate Tax base (CCCTB) 2011 and Common Corporate Tax Base (CCTB) are now withdrawn and replaced with the BEFIT Proposal. It remains to be seen if BEFIT will achieve the unanimous support required from Member States.

The European Commission has been revising the Securing Activity Framework of Enablers (SAFE) Directive, with intentions to implement the Directive in due course. The proposed policy carries a number of implications for tax intermediaries, which the Commission refers to as “enablers”.

On 22nd March 2021, the EU Council introduced "DAC7”, or the 7th Directive (2011/16/EU), on Administrative Cooperation, which enables EU Member States to address some of the perceived negative aspects of the digital economy, by extending the scope of existing exchange of information provisions between Member States, and thus ensuring greater transparency on cross border transactions.

The European Parliament has published its approval of the European Commission’s draft proposal for Anti-Tax Avoidance Directive III (ATAD III) with recommended amendments.

The European Commission held a public consultation in respect of a new proposed corporate tax system referred to as Business in Europe: Framework for Income Taxation (“BEFIT”). According to the Commission, the initiative aims to introduce a single corporate tax rulebook for the EU, based on a common tax base and allocation of taxable profits to Member States based on a pre-defined formula. Once allocated, the taxable profits would be subject to the corporate income tax rates of the relevant Member States.

EU business taxation policy has developed in recent years, and continues to evolve, in response to initiatives by the OECD and EU to reform international tax systems, the impact of the COVID-19 pandemic, and the current energy and cost of living crises. Sasha Kerins (International tax partner Grant Thornton Ireland) and Monique Pisters (International tax partner Grant Thornton The Netherlands), guide us through the EU Tax Maze and what it means for international businesses.

In December 2021, the European Commission (EC) published its proposal for Anti-Tax Avoidance Directive III (ATAD III) which aims to discourage the misuse of shell companies within the EU.

The European Commission recently published a proposal for a new EU Directive creating a debt-equity bias reduction allowance (‘DEBRA’) and further limitation of the deductibility of interest for corporate tax purposes. This initiative is part of the “EU strategy on business taxation”.