The EU Anti-Tax-Avoidance Directive: Taxing Payments to U.S. S Corps
On January 1, 2020, the EU’s second anti-tax avoidance directive (ATAD 2, 2017/952/EU) became effective.1 ATAD 2 addresses nontaxation arising out of hybrid mismatches with companies or permanent establishments in third countries (that is, countries outside the EU). This article explores how payments from EU companies to U.S. subchapter S corporations will be affected by ATAD 2. It also examines the impact of the implementation of ATAD 2 in Dutch law for a hypothetical structure whereby a U.S. corporate entity taxed as a subchapter S corporation (U.S.Inc.) conducts business in the Netherlands through a Dutch BV (limited liability company).
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