EU tax rules against tax avoidance: Effective—but highly complex

In recent years, the European Union has introduced numerous measures to curb tax avoidance by multinational companies. A recent study by the ZEW – Leibniz Centre for European Economic Research now shows that these regulations are generally having an effect. At the same time, the findings make it clear that tax regulations within the EU have become extremely complex and vary significantly from country to country.

The study was conducted jointly by the ZEW – Leibniz Centre for European Economic Research, the University of Mannheim, and the tax consulting firm Ernst & Young. The aim of the analysis was to systematically compare the implementation of European anti-tax avoidance rules in the individual member states.

Anti-Tax Avoidance Directive: Implementation with Major Differences

The study focuses on the so-called Anti-Tax Avoidance Directive (ATAD). This EU directive requires all member states to introduce minimum standards against aggressive tax planning. These include, among other things, rules on add-back taxation, the interest shield, and regulations against abusive tax structures.

However, the study shows that the implementation of these requirements varies greatly within the EU. Although all member states have formally implemented the directive, the specific arrangements differ considerably. There are significant differences, particularly regarding exceptions, thresholds, and detailed regulations.

For internationally active companies, this means:
Administrative burdens are increasing, and tax planning is becoming more complicated. At the same time, legal uncertainty is growing because identical situations may be treated differently in different countries.

According to the study, this development is leading to increasing regulatory fragmentation in the European single market—that is, to a fragmentation of the tax framework.

Global Minimum Tax as an Additional Factor

In addition to the ATAD, the so-called global minimum tax now also plays an important role in international tax law. It is intended to prevent companies from deliberately shifting profits to low-tax countries.

However, the study shows that this regulation overlaps with existing anti-tax avoidance measures in many cases. In countries with particularly extensive national regulations, it is therefore possible that the same situation could be regulated multiple times.

The authors of the study see this as a potential problem: multiple parallel sets of rules could lead to unnecessary complexity and increase the administrative burden for companies and authorities.

Against this backdrop, the study’s authors propose placing greater emphasis in the future on further developing existing European rules—in particular, on a coordinated improvement of the ATAD regulations.

Extensive Data Basis for the Study

For the first time, all anti-tax avoidance regulations of the 27 EU member states were systematically recorded and compared for the analysis. The study was based on an extensive survey of local tax experts in each EU country.

Data collection took place in the spring and summer of 2024 and was conducted in collaboration with Ernst & Young’s international network. Among other things, the following topics were examined:

• specific national implementation of the ATAD rules
• measures related to the EU blacklist for tax havens
• Implementation of the global minimum tax
• additional national anti-tax avoidance instruments

Based on this comprehensive data set, the study provides, for the first time, a detailed overview of how differently European countries actually apply anti-abuse tax rules.

Conclusion: Effective rules—but increasing complexity

The study’s findings show that the EU has significantly expanded its measures against aggressive tax planning. At the same time, differing national implementations are making European tax law increasingly complex.

For internationally active companies in particular, it is therefore becoming increasingly important to closely monitor tax developments at the European level and incorporate them into their own tax strategy at an early stage.

As tax advisors in Düsseldorf and Oberhausen, we have been assisting companies, entrepreneurs, and private individuals with complex tax issues since 1979. Thanks to our many years of experience and our specialization in national and international tax law, we possess in-depth expertise and always keep a close eye on current tax developments. Our firm sees itself as a reliable partner for small business owners and medium-sized companies when it comes to tax planning, compliance, and strategic consulting.