European Commission to publish corporate tax plan

25 November 2013 06:25

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European Commission to publish corporate tax plan

The European Commission is to publish a plan later today that aims to eliminate opportunities for corporate tax avoidance.

Officials said a directive aimed at preventing double taxation has actually enabled some companies to avoid paying any tax at all.

The European Commission said what is known as the Parent Subsidiary Directive needs to be changed.

The aim of the original directive was to prevent companies based in different member states from being hit by double taxation.

What are called hybrid loans are considered to be a deductible interest expense in one member state, but as a tax-free distribution or dividend in another.

The new plan will mainly have an impact in countries such as Belgium and Luxembourg, but not Ireland, because it has no exemptions for foreign income.

However, before it can become law, it needs the support of EU governments and the European Parliament.

Meanwhile, European Commissioner for Taxation Algirdas Semeta will announce later today that an Irish woman will be one of seven people to be appointed by the EU to a task force to examine taxation in the digital economy.

Source: rte.ie

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