The new anti-hybrids directive (‘the Directive’) is the latest step taken by the EU in response to the OECD’s base erosion and profit shifting (BEPS) project. It seeks to implement the principles of Action 2 (hybrid mismatch arrangements), in particular with respect to mismatches between an EU member state and a third country. Agreed by the Council of the EU on 21 February 2017, EU member states will be required to implement most of the provisions of the Directive by 1 January 2020, although the rules governing reverse hybrids will not come into force until 1 January 2022.
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