On 17 June 2016, the EU Economic and Financial Affairs Council (ECOFIN) reached broad agreement on a revised draft of the Anti Tax Avoidance Directive, subject to a silence procedure that will end at midnight on 20 June 2016. The two main revisions include:

• Regarding the interest deduction limitation rules, EU Member States would be allowed to introduce a five-year grandfathering period for existing loans;
• Regarding the CFC rules, one of the conditions for a company to be treated as CFC is changed from being subject to an effective tax rate lower than 50% of what the effective tax rate would be in the Member State, to the actual corporate tax paid by the foreign company being less than the difference between the corporate tax that would have been paid in the Member State and the actual corporate tax paid.

It has also been reported that ECOFIN agreed to remove the switch-over clause, which provides that an EU Member State may not exempt certain income from third countries if the tax rate in third country is lower than 40% of the Member State's tax rate, although a credit would be allowed.

The directive will be adopted at a future meeting.

Click the following links for the Outcome of the Council Meeting and the Anti Tax Avoidance Directive Revisions.