EU Gateway: ATAD I and II overview

01/05/24

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 November 2022, and includes information on implementation of the ATAD I & II rules in EU Member States’ national laws up until 15 January 2024.

The Anti-Tax Avoidance Directive, commonly known as ATAD, is an EU Directive that mandated EU Member States to incorporate five anti-tax avoidance measures into their national laws.

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 overview

The publication includes information available on the national implementation of the ATAD I and II rules known as of 14 January 2024. 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.

ATAD’s EBITDA rule fully implemented in EU27

The overview indicates that as of 1 January 2024, all EU Member States have implemented an interest deduction limitation (EBITDA) rule in accordance with the ATAD. The ATAD allowed five EU Member States to maintain their national interest deduction limitation rules until the end of 2023. However, not all five EU Member States utilized this option; some implemented an EBITDA rule earlier (Greece and France). It was Spain and Slovakia that revised their domestic EBITDA rules, effective from 1 January 2024, to align them with the ATAD’s EBITDA rule. Furthermore, Slovenia has introduced a new EBITDA rule, also effective from 1 January 2024.

Changes to existing ATAD measures

Given the options provided in the ATAD, EU Member States can, after the initial implementation of the rules, amend these rules by adopting another option provided in the ATAD. This is the case of Belgium which amended its CFC rules. As a result, as per 1 January 2024, Belgium switches from Model B to Model A for the application of its CFC rules.

In addition, Germany amended its EBITDA rule and tightened the standalone exception to align it with that of the ATAD.

European Commission oversees correct ATAD implementation in EU27

The European Commission plays an active role in overseeing the correct implementation of ATAD rules of the EU Member States. Therefore, it decided to refer two EU Member States with allegedly incorrect implementation to the European Court of Justice (ECJ). More specifically, it referred Belgium to the ECJ for incorrectly implementing its (previous) ATAD CFC rules due to the lack of credit for the CFC tax in Belgium. The European Commission also referred Luxembourg to the ECJ for failing to properly transpose ATAD, particularly for exempting securitization entities from the EBITDA rule.