ATAD I & II Updated Implementation Overview
18/11/22
PwC Netherlands has published an updated version of the ATAD I & II implementation overview. This version serves as an update to the overview published in July 2021, and includes information on implementation of the ATAD I & II rules in EU Member States’ national laws up until 8 August 2022.
The publication includes various infographics for the visualisation of several elements of the following ATAD I & II rules: 1) Interest deduction limitation rule/EBITDA rule, 2) Exit taxation rules, 3) General Anti-Abuse Rule (GAAR), 4) Controlled Foreign Companies rule and 5) Anti-hybrid rules.
What does this mean for you?
The implementation of ATAD rules in the EU Member States needs to be carefully considered by corporate taxpayers. Taxpayers should consider whether and how these rules might impact them. Your PwC tax advisor can help you in that regard.
ATAD I and II in a nutshell
On 12 July 2016, following a difficult negotiation process, the ECOFIN adopted the Anti-Tax Avoidance Directive (ATAD I). The adoption of this Directive represented a milestone in the efforts to tackle base erosion and profit shifting (BEPS) within the EU. The EU Directive introduced five sets of rules of minimum standards of which four (interest limitation rule, GAAR, CFC and hybrid mismatches) are largely consistent with the OECD’s BEPS recommendations in BEPS Action Plans 2, 3, 4, and 6. The fifth (exit taxation) goes beyond the scope of the OECD’s BEPS project. Importantly, subsequent rules relating to hybrid mismatches were finalised on 29 May 2017 when ECOFIN adopted ATAD II.
ATAD sets a minimum level of protection and therefore EU Member States can adopt stricter rules when transposing the ATAD rules into their national laws. At the same time, if EU Member States already apply stricter rules in the five areas covered by the ATAD, they do not have to amend their legislation. Only EU member states that a) do not apply rules in the areas covered by the ATAD, or b) apply more lenient rules in the areas covered by the ATAD, must implement the ATAD rules or amend their existing laws, respectively, until a certain date, as indicated in the ATAD.
The updated overview
The overview shows almost all EU Member States have introduced or amended their EBITDA rule. Currently, Slovakia and Slovenia need to implement ATAD’s EBITDA rule considering that they received an exception until 1 January 2024. Furthermore, the EU Member States appear to be divided as to the application of the EBITDA rule to standalone companies. Some do so, some others not.
Additionally, all EU Member States have introduced exit taxation rules or revised existing ones in line with ATAD’s exit taxation rules by 31 December 2019. Most EU Member States exempt temporary transfers.
Although most EU Member States were already applying a General Anti-Avoidance Rule prior to 31 December 2018, many EU Member States have nevertheless chosen to implement ATAD’s GAAR.
Almost all EU Member States have implemented the ATAD’s CFC rules or adjusted their existing ones in line with ATAD’s CFC rules. There is a degree of variation as to the date of the application or amendment to existing CFC rules (2018, 2019, 2021, 2022).
All EU Member States have implemented ATAD II’s hybrid rules, including the reverse hybrid rule.
The publication includes information available on the national implementation of the ATAD I and II rules known as of 8 August 2022.
The publication is available here. While any effort has been made to ensure the accuracy of the information contained in this publication, please always contact your usual PwC contact for detailed and up-to-date information on the implementation of the ATAD I and II rules in the jurisdiction of your interest.
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