The Dutch who hold the EU presidency for the first half of this year and like Ireland have a tax system much favoured by multinationals, say they hope to have agreement by July.

The proposed directive would ensure that companies cannot shift high-interest inter-company loans to subsidiaries in high-tax countries, allowing them to offset it against their tax liability.

This has long been a complaint of Germany against Ireland and the new rule would limit the amount of interest that can be deducted, and would only be deductible up to a fixed ratio based on the taxpayer’s gross operating market.

Exit taxation, which would see companies having to pay tax before they can move tax residence or assets to a low- tax jurisdiction would affect Ireland, as it is often the receiving country.

Another area where Ireland’s tax regime would be affected is a proposed controlled foreign company rule to combat shifting profits within group, including the ownership of intangible assets such as intellectual property.

This is followed as a second step by shifting large amounts of income in the form of royalty payments into a low-tax country outside the EU.

The new rules proposes reattributing the income of a low taxed controlled foreign subsidiary to its parent company, usually in a high-tax state.

On hybrid mis-matches that can lead to double deductions in two countries, and which has been covered by OECD voluntary base erosion and profit shifting proposals, the EU rule would be that both countries involved in the mis-match would change their rules to block its further use.

Other elements of the proposed directive are a switcher-over clause to prevent foreign income being exempted from tax and would instead see it taxed with credit for the amount of tax paid abroad.