The General Anti-Abuse Clause in the EU Parent-Subsidiary Directive

In recent years, combating tax avoidance has become a pivotal issue for both the OECD and the European Union. This includes preventing EU tax directives and treaties for the avoidance of double taxation being abused. To this end, the European Union reached a political agreement in December 2014 on the inclusion of a general anti-abuse clause in the EU Parent-Subsidiary Directive (hereinafter PSD), which gave rise to the amending Directive of 27 January 2015, which had to be implemented by 1 January 2016. On 5 November 2015, as part of Action 6 of the BEPS Action Plan (the prevention of treaty abuse), the OECD published a report that included a proposal for a principal purpose test (hereinafter PPT). In this chapter, we will discuss the background, the scope and the implications of applying the general anti-abuse provision contained in the PSD. With regard to the scope of its application, a comparison is also made to the PPT proposed by the OECD.