Direct Application of EU General Anti-Abuse Rule
By Dr Sergio Finulli; COMMA 10 Chartered Accountants & Lawyers
The EU ATAD (European Union Anti-Tax Avoidance Directive) No. 2016/1164 introduced a general anti-abuse rule in Article 6 that not only replaces and standardises the anti-abuse rules included in the three directives which regard corporate income tax (company mergers, parentsubsidiary, interest and royalties), but also extends the scope in the national legislations of the member states.
The Directive entered into force on 1 January 2019 and intends to ensure that the general anti-abuse rules are applied uniformly in national situations, within the Union and in relation to third countries, so that the scope of application and the results of the application in national and cross-border contexts are identical.
The legislation is new because, while the discipline regarding corporate income tax remains the competence of the member states, the anti-abuse clause becomes the only rule: all the member states must implement the EU regulation in the national legislation and this regulation must be applied in all the cases regarding corporate income tax.
In practice, application problems will need to be addressed, because in order to perform an assessment of the possible tax benefits prohibited by anti-abuse legislation, Article 6 of the Directive requires a verification to be carried out regarding the possible conflict with the subject matter or purpose of the applicable tax law, namely, that of the single member states. Therefore, the anti-abuse legislation becomes the only legislation, but for its practical application in each case it is necessary to consider the context of the law of each member state.
The general Italian implementing provision, Art. 10-bis of Law No. 212/2000 (“Taxpayers’ Statute”) is already in line with the provisions set out by the Directive and the way it can be applied will need to be verified in the light of the interpretation that the Court of Justice of the European Union will give. However, some specific anti-abuse rules, as for example the one requesting CFC the inversion of the burden of proof, do not seem to be in line with the provisions of the EU Directive.
Dr Sergio FinulliGGI member firm
COMMA 10 Chartered Accountants & Lawyers
T: +39 02 481 9258
COMMA 10 is a firm built on the cornerstone of professional collaboration between chartered accountants and lawyers. The firm provides its clients with comprehensive accounting, corporate and tax services, as well as legal support, corporate restructuring, and bankruptcy services in multiple industries. COMMA 10 is based in Milan and provides integrated services to individuals and private and public companies, as well as non-profit organisations.
Dr Sergio Finulli is a Founding Partner of COMMA 10, a GGI member since 1997. He is a chartered accountant and legal auditor, and currently Regional Vice Chairperson Europe of the GGI International Taxation Practice Group (ITPG).
Published: International Taxation Newsletter, No. 11, Autumn 2019 l Photo: Kavalenkava - stock.adobe.com