At the Economic and Financial Affairs Council meeting on 20 June the ministers agreed an amendment to EU tax rules that will close a loophole which had allowed cross-border corporations to profit from double non-taxation.
According to the agreed text the member state of the parent company would
Base erosion and profit shifting
Tax planning strategies that exploit loopholes in the international tax system to artificially shift profits to places where there is little or no economic activity or taxation, resulting in little or no overall corporate tax being paid.
A written statement issued by a tax authority, setting out in advance how a corporation’s tax will be calculated and which tax provisions will be used. They are legal but may, under the EU rules, involve state aid and thus be subject to scrutiny from the European Commission. Tax rulings have sometimes been criticized when multinationals are found to pay less in taxes than ordinary tax payers.
Using legal instruments in order to pay the lowest amount of tax possible. It is different from tax evasion, which consists of illegal and deliberate acts to pay less in taxes or even no taxes at all.