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Many EU States Tardy In Adopting Anti-Tax Avoidance Directives

Thursday, February 6, 2020

On January 24, 2020, the European Commission issued formal notices to numerous European Union member states with regards to lapses in the implementation of various EU anti-tax avoidance directives.

The following member states have been given formal notices regarding the implementation of Council Directive (EU) 2018/822 of May 25, 2018 (also known as DAC 6) on the mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements: Belgium, Cyprus, the Czech Republic, Estonia, Greece, Spain, France, Italy, Luxembourg, Latvia, Poland, Portugal, Romania, Sweden, and the United Kingdom.

The following member states have been given formal notices with regards to the implementation of the first Anti-Tax Avoidance Directive (Council Directive (EU) 2016/1164 of July 12, 2016), which lays down rules against tax avoidance practices that directly affect the functioning of the internal market: Germany, Greece, Spain, Latvia, Portugal, and Romania. In particular, ATAD I included provisions requiring EU member states to introduce the EU's exit tax, intended to tackle tax avoidance in relation to intellectual property, from January 1, 2020.

Additionally, seven member states were issued with formal notices regarding the transposition of the second Anti-Tax Avoidance Directive (Council Directive (EU) 2017/952 of May 29, 2017), which deals with hybrid mismatches arrangements with third countries, covering: Cyprus, Germany, Greece, Spain, Latvia, Poland, and Romania.

Furthermore, Belgium was issued with a formal notice concerning the implementation of Council Directive (EU) 2017/1852 of October 10, 2017, on tax dispute resolution mechanisms in the EU.

A letter of formal notice is the first stage of the Commission's five-step infringement procedure. Member states in receipt of a letter of formal notice are required to provide a detailed response to the Commission's concerns within two months.

At the time of writing, no further details on the nature of the EC's complaints was available.