Member States in the Council of the European Union (EU) recently gave their final approval of the Anti-Tax Avoidance Directive (ATAD), which targets what the EU considers tax avoidance practices that directly affect the function of the internal market and applies to all taxpayers subject to corporate tax in one or more Member States. The arrangements addressed include permanent establishments that may be subject to corporate tax in EU Member States.
Implementation of ATAD likely will limit tax planning opportunities and increase compliance costs for many industrial products and services multinational companies (MNCs) investing in the EU. These MNCs may face additional uncertainty if Member States enact different laws based on the ATAD minimum standards. Therefore, it is important for these MNCs to monitor developments with respect to ATAD, as they may be significantly impacted if these or similar provisions are enacted by Member States.