The EU Directive against Tax Avoidance (ATAD-1)

The Anti-Tax Avoidance Directive (ATAD-1) is perhaps the most important achievement so far by the European Union in the struggle against international tax avoidance and evasion: it makes the most of the findings and recommendations by the OECD as summarised in the Base Erosion and Profit Shifting (BEPS) Action Plan. The goal of this paper is to compare the solutions adopted by the EU in the Directive with the domestic provisions already in force in some member states, including Italy and the UK. The methodology chosen is comparative in its nature. Qualified anti-avoidance provisions – such as General Anti-Abuse Rules (GAARs) and Diverted Profits Tax (DPT) – already in force on a national scale have been tested to see whether they are compatible with the new European guidelines and rules. The first findings allow the interpreter to draw different conclusions depending on the national rules tested. While for some, such as the DPT, the consistency with OECD recommendations and EU law is uncertain, others, such as most of the national GAARs, appear to already be compliant with the new European standards. In the latter case, however, the influence of EU law will arguably be essential in terms of interpretation of the rules, and the widening or narrowing of its scope, together with the need to counterbalance the power of the tax administration with the protection of the fundamental rights of the taxpayer, rights that some administrations are reluctant to grant while making use of GAARs. The conclusions also stress the ‘double standards’ approach of the EU legislation which has made use of different provisions, some more or less aggressive towards the taxpayer, depending on whether the tax structure is European or also involves third-party countries.