ATAD II proposal: Maltese Presidency compromise
Deloitte Malta Tax Alert
On 21 February 2017, the Council of the EU under the Maltese Presidency agreed on the compromise text of the proposal of the Directive amending Directive (EU) 2016/1164 as regards hybrid mismatches with third countries (‘ATAD II proposal’).
The ATAD II proposal is aimed at combating hybrid mismatches with regard to non-EU countries, given that intra-EU hybrid mismatches are already addressed by the Anti-Tax Avoidance Directive adopted in July 2016 (‘ATAD I’).
Following the initial proposal dated 25 October 2016 and building on the outcome reached under the Slovak Presidency, the Economic and Financial Affairs (‘ECOFIN’) Council reached compromise on the following issues:
- Limitation of the scope: a carve-out for hybrid regulatory capital (limited in time till 31 December 2022) and financial traders; and
- Date of implementation: a longer timeline for coming into force as of 1 January 2020 (with certain exceptions for reverse hybrid mismatches rules that must come into force as of 1 January 2022).
The ultimate adoption of the ATAD II will require unanimity within the Council of the EU, after consulting the European Parliament.
Following the adoption of the ATAD II, Member States will be required to transpose the directive into domestic law by 31 December 2019 (or, in case of the reverse hybrid mismatches provisions, by 31 December 2021).
The text of the ATAD I can be found here.
The text of the ATAD II proposal can be found here.