On May 24, 2015 the European Parliament issued a press release announcing that on May 23, 2016 the European Parliament’s Economic and Monetary Affairs Committee (Hereafter: ECON) approved the text (and amendments made to it) of a Draft Report on the proposal for a Council directive laying down rules against tax avoidance practices that directly affect the functioning of the internal market (COM(2016)0026 – C8-0031/2016 – 2016/0011(CNS)) (rapporteur: Hugues Bayet). ECON approved the text of the report by 20 votes to 15, with 21 abstentions. According to the press release issued by the European Parliament, this outcome was closer than expected because at the last minute - during the voting - the EPP group decided to vote blank due to the large number of amendments by centre-left groups backed by small majorities. By approving, the report ECON welcomed the European Commission's proposal for an EU anti-tax avoidance directive. However, it should be noted that in some cases ECON calls for even stricter Anti Tax Avoidance measures than those proposed by the European Commission.

According to the press release ECON calls for stricter limits on interest payment deductions. Where the European Commission proposes that the maximum amount of interest that companies are allowed to deduct should be maximized at 30% of their earnings, ECON says the deductible interest should be maximized at 20% of the earnings or Euro 2 million (whichever of the two is the highest). According to the press release ECON also calls for a limitation on the period for which unused interest costs can be carried forward. Where the European Commission proposes an unlimited carry forward, ECON suggests to limit the carry forward period to five years.

With respect to the switch-over clause, the European Commission proposes that this clause comes into play if non-EU income was taxed at a rate lower than 40% of the statutory tax rate that applies in the country of residence of the EU-shareholder. ECON however favours using a fixed minimum rate of 15%.

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