As the economy becomes increasingly global, so the response to tax avoidance is also moving onto an international stage, with the OECD emerging as the leading organisation for creating new standards. Supporting its position, the EU is also taking action to address aggressive tax avoidance and improve global tax good governance.
The Anti-Tax Avoidance Directive (ATAD I) was adopted in 2016 and implements three of the OECD BEPS standards in the EU. It introduces rules on interest deductibility, exit taxation, a general anti-abuse provision, controlled foreign companies and hybrid mismatches. In May 2017, the EU amended the Anti-Tax Avoidance Directive to extend its scope to hybrid mismatches involving third countries.
ATAD I and ATAD II are key for private equity, as the rules have an important bearing on interest deductibility. As a result of ATAD II rules in particular, some funds could become taxable contingent on how investors treat them from a tax perspective in their country. The impact of ATAD II provisions could be primarily relevant for fund structures which are funded with shareholder debt.
Action 6 of the OECD Base Erosion and Profit Shifting (BEPS) project released in summer 2013 identified tax treaty abuse, and in particular tax treaty shopping, as a major concern. In December 2017, the OECD released the updated OECD Model Tax Convention, which included three examples that provide guidance on how the Principal Purposes Test (PPT) will apply to alternative investment funds.
Although targeted at the aggressive tax policies of large multinational corporations, the OECD BEPS standards have the potential to change existing tax rules more generally. This could alter the tax environment for private equity funds as they raise capital and invest internationally. Specifically, changes to the rules on treaty abuse may pose risks to the continuing ability of private equity funds to access tax treaties that prevent double taxation when a fund invests cross-border.
A detailed briefing for Invest Europe members on regulation affecting the private equity industry.
The monthly members’ policy call explores the latest EU policy developments and are a chance for members to discuss them directly with the Public Affairs team.
Senior Public Affairs Manager
Senior Public Affairs Officer
Senior Public Affairs Officer
Most PCs automatically accept them but you can change your browser settings to restrict, block or delete cookies if you want. Each browser is different, so check the 'Help' menu of your particular browser (or your mobile phone's handset manual) to learn how to change your cookie preferences. Many browsers have universal privacy settings for you to choose from.
Cookie settings in most versions of Internet Explorer can be found by clicking the tools option and then the privacy tab.
Cookie settings in Firefox are managed in the Options window's Privacy panel. See Options window - Privacy Panel for information on these settings.
Click on the spanner icon on the toolbar, select settings, click the under the bonnet tab, click on content settings in the privacy section.
You can manage cookies in Opera if you Click on settings, then Preferences, then Advanced and finally Cookies
Choose Safari, then preferences and then click security. You should then be able to specify if and when Safari should accept cookies.
To manage cookies on your mobile phone please consult your manual or handbook.
If you decline cookies, some aspects of Invest Europe site may not work on your computer or mobile phone and you may not be able to access areas you want on the website. For this reason we recommend that you accept cookies.
If you delete all your cookies you will have to update your preferences with us again and some aspects of our site may not work.
If you use a different device, computer profile or browser you will have to tell us your preferences again.
If you'd like to learn more about cookies in general and how to manage them, visit aboutcookies.org.
We can't be responsible for the content of external websites.Opt-out of cookies