On 21 February 2017, the Council agreed its position on rules aimed at closing down 'hybrid mismatches' with the tax systems of third countries.

The draft directive is the latest of a number of measures designed to prevent tax avoidance by large companies.

It seeks to prevent them from exploiting disparities between two or more tax jurisdictions to reduce their overall tax liability. Such arrangements can result in a substantial erosion of the taxable bases of corporate taxpayers in the EU.

The directive will contribute to implementation of 2015 OECD recommendations addressing corporate tax base erosion and profit shifting.

The directive is one of a package of corporate taxation proposals presented by the Commission in October 2016.

Agreement was reached at a meeting of the Economic and Financial Affairs Council. The Council will adopt the directive once the European Parliament has given its opinion.

Member states will have until 31 December 2019 to transpose the directive into national laws and regulations.

The directive requires unanimity within the Council, after consulting the Parliament.

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