Updated ATAD I and II implementation overview

22/07/21

PwC Netherlands has published an updated version of the ATAD I & II implementation overview (July 2021 version). This version serves as an update of the July 2020 version and includes information on national implementation of the ATAD I & II rules in Member States’ domestic laws as of 13 July 2021. Since the ATAD directives leave room for choices in implementation, the overview illustrates the choices each country has made.

More specifically, the publication includes infographics for the visualisation of elements of the following ATAD I and II rules: 1) Interest deduction limitation rule/EBITDA rule, 2) Exit taxation rules, 3) General Anti-Abuse Rule (GAAR), 4) Controlled Foreign Companies rules and 5) Anti-hybrid rules. In addition, the current version contains an overview of ATAD implementation trends.

The research work has been conducted by PwC Netherlands based on the input provided by the members of PwC’s EU Direct Tax Group (EUDTG).

What does this mean for you?

On 12 July 2016, following a difficult negotiation process, the ECOFINadopted 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 the ECOFIN adopted ATAD II.

ATAD sets a minimum level of protection and therefore Member States can adopt stricter rules when transposing the ATAD rules into their national laws. At the same time, if Member States already apply stricter rules in the five areas covered by the ATAD, they do not have to amend their legislation. Only 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 implementation of the ATAD rules in the Member States needs to be considered carefully by taxpayers, particularly taxpayers that are part of multinational groups of companies. Taxpayers should consider whether and how these rules might impact them. Your PwC tax advisor can help you in that regard.

The updated ATAD I and II overview

The publication includes information available on the national implementation of the ATAD I and II rules known as of 13 July 2021. Developments taken place following this date will be included in the next version of the overview.

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.

It follows from the overview that most Member States have adopted and currently apply the ATAD I rules. These rules should have been implemented by 31 December 2018 into Member States’ domestic legislation. The implementation of the ATAD I rules differs from one Member State to another, given that ATAD I provides several options to the Member States.

Regarding ATAD II: all Member States have already implemented ATAD II’s anti-hybrid rules. In addition, the reverse hybrid rule of ATAD II will apply in most Member States as of 1 January 2022.