The Maltese Presidency of the Council of the EU has managed to secure a fairly delicate balance on the second version of the 'anti-tax avoidance' directive (ATAD).
After the meeting of the permanent representatives of the member states to the EU on Wednesday 15 February, it was not easy to say whether the finance ministers will be able to reach a political agreement at the 'Economy/Finance' Council of 21 February. The Franco-British clash over the exemptions to be granted to the banking sector, in any case, seems to have been ironed out.
Readers may recall that in November of last year, the Commission presented a proposal to respond to hybrid mismatch situations between a member state and a third country. These mismatches play on the difference in definition that may exist between countries of a product or entity and give rise to situations of double non-taxation. The first version of the directive, which was the subject of an agreement between the member states in May, dealt with hybrid mismatch situations that may arise between two member states. The Commission subsequently added to the rules by proposing to include situations with third countries as well.
France is not overly enthusiastic about the exemptions from the banking sector called for by the United Kingdom. The text finally provides for voluntary exemptions ('a member state may include...') until 31 December 2022 (the date is in brackets). This 'sunset clause' also provides for the Commission to evaluate the consequences of these exemptions. The British permanent representative said that this was a “delicately poised” compromise, but went on to say that these exemptions should remain in force for enough time to allow the Commission to assess them properly. France, on the other hand, said that these exemptions should remain in place “for a limited period”. Austria is also reported to have said that the sunset clause timeframe should be as short as possible. Austria, incidentally, also has certain misgivings as to the implementation dates of the text - 2020 for the text in general and 2022 for reverse hybrids. The year 2022 appears to be important to Sweden, which called for it to be taken out of brackets. Finland and Denmark expressed the opposite view.
The Maltese Presidency said at the end of the Coreper meeting that its approach was balanced. It went on to stress that it does not want any more changes to the dossier and called upon the governments of the member states to work to allow a ministerial agreement on 21 February. (Original version in French by Élodie Lamer)