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European Commission to publish proposal on closing more corporate tax loopholes

The proposal is part of a wide range of measures planned by the EU to tackle tax evasion.

Image: Sébastien Bertrand via Flickr/Creative Commmons

THE EUROPEAN COMMISSION will today publish a report aimed at clamping down on corporate tax avoidance.

The proposal will amend the Parent/Subsidiary Directive, adopted in 1990 and which was originally intended to allow companies operating across different member states to avoid double taxation.

However, this created a loophole which has resulted in some companies being able to avoid paying tax completely.

The Commission is to propose the introduction of a “common anti-abuse rule”, allowing companies to be taxed on the “basis of real economic substance” and to ignore artificial arrangements.

It also plans to amend the Directive to close loopholes and tighten up tax exemption regulations.

The measures today are part of a wide range of plans announced last December by the Commission aimed at tackling the issue of the tax evasion in the European Union.

Read: VAT receipts down for tenth month in a row >

Explainer: How do Irish companies legally avoid paying billions in corporate tax? >

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Nicky Ryan

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