This document summarizes initiatives related to international tax compliance, including the OECD's BEPS project and the EU's Anti-Tax Avoidance Directive (ATAD). It outlines key provisions of the ATAD regarding controlled foreign companies (CFCs), interest limitations, anti-hybrid rules, and a principal purpose test. The presentation notes that some ATAD provisions take effect in 2019, others in 2020-2022. It also discusses the Multilateral Instrument implementing BEPS treaty-related measures and the principal purpose test for denying tax treaty benefits.

1. Eliminate Tax Risks
as regards structuring
Russian capital abroad
BEPS-MLI, ATAD
International Tax Advice.
Tax Compliance.
Indirect Tax Services.

2. Agenda
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1
•Check BEPS and EU Initiatives
2
•Uncover ATAD
3
•Eliminate PPT Risks

3. Agenda
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1
•Check BEPS and EU Initiatives
2
•Uncover ATAD
3
•Eliminate PPT Risks

4. EU BEPS
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OECD BEPS Actions EU Coverage
Action 1: Digital Economy EC VAT Action Plan
EC Proposals on taxation of digital economy
Action 2: Hybrids Parent-Subsidiary Directive
Anti-Tax Avoidance Directive
Action 3:CFC Anti-Tax Avoidance Directive
Action 4: Interest Limitation Anti-Tax Avoidance Directive
Action 5: Rulings Directive on Administrative Cooperation -EOI
Action 6: Treaty Abuse ATAP Recommendation
Action 7: PE ATAP Recommendation
Actions 8-10: TP JTPF to follow up
Action 11: BEPS Data NA
Action12: Mandatory Disclosure Rules Directive on Administrative Cooperation -EOI
Action 13: CBCR Directive on Administrative Cooperation -EOI
Action 14: Dispute Resolution Directive on Double Taxation Dispute Resolution
Action 15: MLI NA

5. BEPS Action Plan example
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6. Agenda
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1
•Check BEPS and EU Initiatives
2
•Uncover ATAD
3
•Eliminate PPT Risks

7. ATAD – Effective Dates
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1st of January 2019: CFC, General Anti Abuse
Rule (GAAR), Interest Limitations Rules
1st of January 2020: Anti Hybrid, Exit Tax
1st of January 2022: Reverse Hybrid

8. What is a CFC?
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 The parent (in)directly controls entity (or owns
PE)
That is, more than 50% of capital or voting rights or
profits.
 Entity/PE is “low taxed”(no EU minimum rate)
Less than 50% of tax due (not statutory rate) on all
entity/PE’s income under parent’s tax rules
CFC Income “tainted” income

9. CFC Exemptions
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Optional de minimis exemptions (1/3 of active
income is passive)
UNLESS: substantive economic activity (EU CFCs
and option for non-EU)

10. Substance as regards CFC
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Cadbury and Schweppes: ECJ’s Decision (C196/04)
“Wholly artificial arrangements” expression is of importance
Cadbury Schweppes
United Kingdom
Cadbury Schweppes
Treasury Services
Ireland
Cadbury Schweppes
Treasury International
Ireland

11. Agenda
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1
•Check BEPS and EU Initiatives
2
•Uncover ATAD
3
•Eliminate PPT Risks

12. BEPS Multilateral Instrument (MLI)
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Signed in Paris June 2017
84 jurisdictions covered (including Russia)
More than 1.200 matched treaties
1st July 2018 Enters into force for Slovenia, Austria, Isle of
Man, Jersey, Poland
1st October 2018 Enters into force for the UK, New Zealand,
Serbia and Sweden

13. BEPS Multilateral Instrument (MLI)
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Hybrid Mismatches
Treaty abuse
 Principle Purpose Test (PPT) - Similar to ATAD GAAR
 LOB
 Dividend Transfer Transactions
 Capital Gains on Immovable property
 PE situated in third jurisdictions

14. Principal Purposes Test
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“Notwithstanding the other provisions of this Convention, a benefit
under this Convention shall not be granted in respect of an item of
income or capital if it is reasonable to conclude, having regard to all
relevant facts and circumstances, that obtaining that benefit was
one of the principal purposes of any arrangement or transaction that
resulted directly or indirectly in that benefit, unless it is established
that granting that benefit in these circumstances would be
in accordance with the object and purpose of the relevant provisions
of this Convention.”

15. Agenda
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1
•Check BEPS and EU Initiatives
2
•Uncover ATAD
3
•Eliminate PPT Risks

16. Thank you!
Christos A. Theophilou
MSc Tax (Oxon)
Partner
Tel: + 357 22 875720
E: ctheophilou@taxatelier.com.cy
W: www.taxatelier.com.cy
Delfon Street 10, 5th floor
1101, Nicosia, Cyprus
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