July 31
2021
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A Guide to the Anti-Tax Avoidance Directive

Werner Haslehner, Katerina Pantazatou, Georg Kofler, and Alexander Rust (Eds.)

review by

Violeta Pina Montaner

The Anti-Tax Avoidance Directive (ATAD) was adopted by the Council of the European Union on 20 June 2016 and further amended on 25 October 2016. ATAD contains five legally-binding anti-abuse measures, which all Member States should apply in their domestic laws, against common forms of aggressive tax planning. These measures include an earnings stripping rule, a general anti-avoidance rule (GAAR), a controlled foreign company rule (CFC) – to be implemented before 1 January 2019, and an exit tax and rules on hybrid mismatches – to be implemented before 1 January 2020.

ATAD constitutes a milestone in the evolution of European Union tax legislation and represents a significant contribution of EU secondary law in the field of direct taxation. The broad content of the ATAD rules raises lots of questions that have not yet been resolved, for instance, how to treat the creation of situations of double taxation.

This book tries to explore the answers to these questions, and presents them in an excellent way, from both a technical and practical point view. Naturally, its well-thought-out structure helps to achieve this task. It begins with three chapters in which it undertakes an overview of the origins and evolution of anti-avoidance in EU tax law and reflects on how ATAD will interact with EU fundamental rights and freedoms as well as tax treaties and national laws. In this regard, the reference in the book to all the matters that will require a judgment from the Court of Justice is of particular interest.

The next eight chapters are devoted to a comprehensive analysis of each of the five measures of ATAD. Special attention should be given to the chapters on GAAR (chapter 6) and hybrid mismatches (chapters 8 and 9). As explained in chapter 6, the concerns regarding this rule lay in the fact that it is full of vague terms and that the threshold for compliance is relatively low. Chapter 6 provides a guide which tries (and succeeds) to assist in finding a reasonable interpretation of the terms of the GAAR in line with EU primary law. On the other hand, hybrid mismatches are one of the most complex rules of EU secondary law and there can be no doubt that its application will represent a challenge for the EU Member States. Nevertheless, the authors have managed to unravel the content of these rules step by step and by using practical examples, making this book an excellent choice for those seeking to understand the potential application of the hybrid mismatch rules.

Finally, the last chapter makes reference to the state of play of the Common Consolidated Corporate Tax Base and offers an interesting deliberation on how the ATAD provisions are regulated by the proposal of the Commission for the Common Consolidated Corporate Tax Base in its current drafting.

To sum up, this book should be considered an excellent guide for European and international tax practitioners in need of in-depth knowledge of the ATAD world. Moreover, it is  highly recommended reading for those who want to be able to follow the resolutions of the conflicts that will arise in the future as a consequence of the implementation and the application by the tax authorities of the domestic ATAD rules.

 

Violeta Pina Montaner is a Senior Associate in the Tax Department of a commercial law firm. 

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