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Legislation
The Anti Tax Avoidance Directive
What is it, how has it been implemented in Gibraltar and will it survive Brexit? Francis McGowan, PwC, discovers
The Anti Tax Avoidance Directive (ATAD) is a direct result of the work of the OECD’s Base Erosion and Profit Shifting (BEPS) Action Plan. ATAD aims to eradicate loopholes created by differences between national tax policies in the EU. To do this ATAD seeks to facilitate convergence of the differing national tax policies relating to anti- avoidance measures and abusive tax practices within the EU. The measures covered in ATAD relate to deductions for interest costs, hybrid mismatches, exit taxes, controlled foreign companies (CFCs) and a general anti-abuse rule (GAAR).
ATAD legislates on tax avoidance measures in the field of direct taxation across the Member States of the EU. This is an unprecedented step by the EU because direct taxation is generally a matter of national competence as it
relates to the fiscal sovereignty of Member States.
Background
The Anti Tax Avoidance Directive was presented in January 2016 by the European Commission and adopted by the European Council later the same year as the “Council Directive (EU) 2016/1164 of July 2016” (the ATAD Directive).
Article 11 of the ATAD Directive provides that Member States are required to adopt and publish the necessary national laws to comply with the Directive by 31 December 2018 and these national measures must apply from 1 January 2019.
Gibraltar transposed the ATAD Directive into domestic law on 20 December 2018 with the Income Tax 2010 (Amendment No.3) Regulations 2018 (the Gibraltar ATAD Regulations).
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