TaxCorporate TaxEurope plans to scupper cross-border ‘hybrid’ tax schemes

Europe plans to scupper cross-border ‘hybrid’ tax schemes

Europe looks to tackle disparity between different nations' tax regimes that allows companies to avoid tax

Europe plans to scupper cross-border ‘hybrid’ tax schemes

BRUSSELS has drawn up plans to foil tax loopholes used by multinational companies in cross-border financing structures as it looks to raise billions more in revenues in corporate taxes across the EU.

The move follows increasing public pressure over tax avoidance and would impinge on one of the most common forms of avoidance activity used by large businesses, the Financial Times reports.

The ‘hybrid’ structures targeted allow companies to take advantage of mismatches between different countries’ tax regimes in order to avoid taxation. OECD plans to combat the practice – among others – are being provided to various tax authorities around the globe.

Investment bank Citigroup warned investors in September that many could expect tax bills to rise “significantly” using the hybrid structures.

The plans could have implications outside Europe, too. University of Southern California law professor Edward Kleinbard told the FT the existing system essentially provided a subsidy to European companies for the acquisition of US businesses.

“The result is global inefficiency and a very large shortfall in tax revenues around the world,” he said.

Related Articles

‘Google tax’ nets HMRC £281m

Corporate Tax ‘Google tax’ nets HMRC £281m

1w Emma Smith, Managing Editor
Autumn Statement: Investment and tax avoidance highlighted in Hammond's speech

Corporate Tax Autumn Statement: Investment and tax avoidance highlighted in Hammond's speech

10m Kevin Reed, Writer
Colin: Tell them about the money, mummy

Business Regulation Colin: Tell them about the money, mummy

10m Taking Stock
Economic activity carried out in the UK must be taxed accordingly

Corporate Tax Economic activity carried out in the UK must be taxed accordingly

1y Accountancy Age, Reporters
EU competition head Vestager defends Apple tax ruling

Corporate Tax EU competition head Vestager defends Apple tax ruling

1y Richard Crump, Writer
Five key tax and business burdens the chancellor must ease in Autumn Statement

Business Regulation Five key tax and business burdens the chancellor must ease in Autumn Statement

10m Kevin Reed, Writer
Friday Afternoon Live: Making Tax Digital; CIMA prez's new role; tax conduct guidance

Corporate Tax Friday Afternoon Live: Making Tax Digital; CIMA prez's new role; tax conduct guidance

11m Kevin Reed, Writer
European Commission told to draft financial transaction tax by year-end

Business Regulation European Commission told to draft financial transaction tax by year-end

11m Keith Nuthall, Reporter