April 6, 2021
Transition of ATAD 1 and ATAD 2 into German law: more than 15 months after the first draft, the Federal Government's bill follows
The (EU) 2016/1164 Directive dated July 12, 2016, and the (EU) 2017/952 Directive dated May 29, 2017 (EU Anti-Tax Avoidance Directives or ATAD 1 and ATAD 2), should already have been enacted into national law respectively by December 31, 2018, pursuant to Article 11 ATAD 1, and by December 31, 2019, pursuant to Article 2 ATAD 2. In Germany, however, the enactment of both directives is still pending more than 15 months after the first draft of an implementation law from December 10, 2019. At least, the implementation of the regulation on reverse hybrid companies could still be implemented in time by the end of this year.
Within the framework of the legislative procedure for implementation, which has been ongoing for more than 15 months, a comprehensive reform of the CFC rules under the Foreign Tax Act is to take place (implementation of a section of the ATAD 1 Directive) on the one hand. On the other hand, the bill is to eliminate tax incongruities arising from the use of hybrid financial instruments or from the participation in hybrid companies (implementation of the ATAD 2 Directive). This beinformed shows the development of the drafts up to the last bill of the Federal Ministry of Finance dated March 17, 2021, which passed the legislative process unchanged as government bill on March 24, 2021, and will now be submitted to the German Bundesrat for approval.
Note: This newsletter is only available in German language.