As already mentioned on several occasions, the original proposal of the Commission provides for six measures against tax avoidance practices:
Final Directive – Council of the European Union
The deductibility of interest shall be based on earnings before interest, tax, depreciation and amortisation (EBITDA). Interest depreciation shall be at 30 % (the OECD proposal provides for a scope of 10-30 %) or in some circumstances at a value of 3 million euro (the original proposal of the Commission referred to 1 million euro). Standalone entities may be excluded from the interest limitation rule, as well as all loans, which were taken out before 17 June 2016 and which are intended for long-term infrastructure projects within the EU. This Article of the Directive will only come into effect in 2024 for those Member States, which already adopted similar regulations.
With regard to taxing removed/deducted locations and/or assets, those transfers of assets and cash are excluded, which were carried out between parent company and subsidiary. The right to taxation shall be defined at national level.
In respect of assigning income of foreign subsidiaries to the parent company, those corporations will be excluded, which do not generate more than 750,000 euro in profit.
An important point, which is not included in the final version of this Directive, is the so-called “switch-over” clause (see point 3).