Brussels, 19/05/2016 (Agence Europe) - The talks among EU member states' permanent representatives to the EU (COREPER) on Wednesday 18 May demonstrated the extent of divergences that still need to be overcome in order to reach agreement at the Economics and Finances Council on 25 May on the draft anti-tax evasion directive. Several sources quizzed about this on Thursday did not dare speak of an agreement being likely.
At COREPER, the sharpest views were expressed by Ireland and the United Kingdom, which regretted that the measures on hybrid schemes boil down to four line sin the most recent Dutch Presidency of the Council compromise proposal. The British representative said this would provide “illusory protection”. He added that the question of hybrid schemes was the domain where the OECD had produced the most tangible proposals in its BEPS action plan for tackling aggressive tax evasion. A sourced who attended the discussions said that the British representative had said the Presidency's text would amount to legitimising tax evasion rather than opposing it.
According to a European source, Ireland and the United Kingdom “noted highly political impossibility to agree” to the text (tax decisions are taken unanimously). According to another European source, “If the ECOFIN reaches an agreement, it would testify of the frontrunner role in fighting tax evasion”. The Dutch Presidency seems to be aiming to reach agreement cost what may. A technical meeting was held on Thursday and new talks will take place at COREPER on Tuesday 24 May, in theory with a new text. The Irish and British delegations say that the current text doesn't cover enough hybrid scheme situations, such as those involving non-EU countries, which the Commission had left to one side, saying that more work was needed on them. The British put forwards proposals in this connection, however.
The first European source says that the talks at COREPER showed that the “shared commitment to fight tax avoidance is understood very differently by each” delegation. Belgium has expressed concerns that international partners such as the United States and countries in Asia will refuse to implement some of the BEPS principles.
Some delegations are calling for transition rules either for the legislation or for special measures (such as exit taxation), namely the Czech Republic, Ireland, Lithuania, Malta and Slovenia. Other member states still oppose the switchover clause, which is not part of the OECD's BEPS plans. It is still being opposed by Sweden, the United Kingdom, Ireland, Poland, Estonia, Lithuania and Latvia.
Finally, the division among countries over the two approaches for rules on foreign-controlled companies, described in EUROPE 11552, is still present, with the German representative at COREPER reiterating his opposition to the British approach. (Original version in French by Élodie Lamer)