Parent Subsidiary Directive Archieven — KC Legal

Amendments To The Parent Subsidiary Directive Adopted

By Legal, Tax

The EU-Council of Economic and Finance Ministers have adopted the amendments to the Parent Subsidiary Directive, challenging hybrid financial instruments which have the characteristics of both debt and equity.

A payment on hybrid financial instruments could be eligible for tax deduction in the state of source, and at the same time, be tax exempt in the state of residence (double non-taxation). The adopted amendments provide for a mandatory limitation of the exemption in the state of residence, to the extent the (interest) payments are deductible in the state of source.

All EU member states are required to implement the amendments in their domestic legislation no later than 31 December 2015.

ECOFIN Council Approved Anti-Abuse Amendment To EU Parent Subsidiary Directive

By Tax

On 9 December the ECOFIN council approved an amendment to the EU parent subsidiary directive. The amendment introduces a general anti-avoidance rule, requiring member states to refrain from granting the benefits of the directive if (one of) the main purpose(s) of an arrangement is to obtain a tax advantage that defeats the object and purpose of the directive and additionally, is not “genuine”.