Exeter 2016 - Draft version And Yet It Moves The Proposed EU Council Directive against Tax Avoidance Practices and its Possible Impact By Marco Greggi The famous Galileo’s motto (attributed to) would arguably describe best the current situation in the EU for what concerns the struggle against tax avoidance and evasion. In recent times EU in general and the Commission (together with the ECJ) in particular have been tremendously efficient in enforcing fundamental freedoms and, for what concerns States belonging also to the Eurosystem, the public balance policies. State aid prohibition rule has been massively used in the attempt to ensure a level playing field in the Old continent as well. No remarkable actions have been proposed in the field of Taxation. In this lack of centralized initiatives each State reacted individually to base erosion and profit shifting with different ways and means. The UK, for instance, enacted a Diverted Profit Tax in the attempt to attract to taxation the immense profits generated by non-resident companies (MNEs in particular), while Italy is heavily relying on a very recently introduced GAAR. Even Tax Administrations played their cards in the game against international tax avoidance. Italian and British ones scored remarkable successes with Apple Inc. and Alphabet / Google Inc., considering their business scheme as inconsistent with anti-abuse provisions currently applicable and (at least, in the Italian case) aimed at eroding the taxable base in the source State (in the Italian case the notion of Permanent establishment – hidden – has been used to achieve this goal). After all these events, the EU Commission stepped into the game, proposing a Directive aimed at harmonizing the rules contrasting tax avoidance (COM(2016) 26 Final). The scope should be pursued via the application of specific measures aimed namely at, inter alia: reducing the amount of tax deductible interests (Article 4); regulating exit taxation (Article 5); harmonizing CFC provisions (Articles 8 and 9); enacting a European GAAR (Article 7) and finally dealing with Hybrid mismatches (Article 10). Some of these instruments are already in force in many countries, others appear outdated (in the UK there is an ongoing debate on the possibility to reduce the deductibility of passive interest even below the amount suggested by the Commission: see the Consultation held in October 2015 by HM Treasury). Others are just a snapshot of the current state of the art (GAAR). Some other issues remain unaddressed, in particular those making reference to the necessity to empower much more the State of the source of income, as leading scholars suggested recently and have been suggested in the past (inter alia Avi-Yonah and Freedman). The aim of the paper, if accepted, shall be to assess the possible impact of the forthcoming directive on member States, considering the state of the art in some of them, including Italy and the UK. At the same time, it will try to analyse what would be the actual changes in the audit powers of the