EU Seeks to Force Firms to Pay Tax on Hybrid-Loan Payments
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The European Union proposed rule changes that would force companies to pay taxes on cross-border hybrid loan payments, so that firms don’t use accounting loopholes to avoid taxation.
EU Tax Commissioner Algirdas Semeta said changes to the EU’s parent-subsidiary directive would make sure companies pay tax in at least one country on hybrid-loan payments. The EU also wants countries to adopt a “common anti-abuse rule” to discourage aggressive tax planning. Hybrid-loan arrangements are financial instruments that have both debt and equity characteristics and can be used to minimize or avoid taxes, the European Commission said.