What is an anti-profit provision

Proposal for an anti-BEPS directive from the EU Commission - an important cornerstone

| On January 28, 2016, the EU Commission presented a proposal for a directive on the results of the OECD initiative on BEPS (Base Erosion and Profit Shifting), which aims to tailor the corporate tax systems of all 28 member states to efficiently combat the aggressive tax planning strategies of multinational companies. The proposals show strong parallels to German tax regulations. The present article analyzes whether there is still a need for selective improvement for the German legislator. |

1. About the background

On October 5th, 2015, the OECD published the final reports with its recommendations for combating profit reduction and profit shifting (base erosion and profit shifting - BEPS). During the development process it became clear that an intensive exchange of ideas between the OECD and the EU was being proactively promoted. On June 17, 2015, the EU Commission published an action plan for fair and efficient corporate taxation in the EU (COM (2015) 302 final). In order to combat abusive tax avoidance strategies and also to create more transparent conditions for the member states, the Commission identified five key areas, the further development of which should ensure fair and efficient corporate taxation within the EU. The discussion on the BEPS issue is thus closely linked between the two institutions. With the publication of a proposal for an anti-BEPS guideline (hereinafter: BEPS-RL) an important foundation stone is laid for this.

2. Overview of the policy provisions

First, Articles 1 to 3 of the BEPS Directive deal with general provisions: In order to ensure the broadest possible scope of application, Article 1 of the BEPS Directive stipulates that the provisions should apply to all corporation taxpayers within the EU as well as to their permanent establishments in third countries.