A new EU draft directive (ATAD 3) could subject EU entities to additional reporting and, if ultimately ‘unshelled’, adverse tax consequences from as early as 1 January 2024. The rules are structured as a five-step process, with the first four steps filtering out entities that meet minimum substance requirements or do not result in a tax advantage, and step 5 imposing tax consequences on those that have not managed to escape under steps 1 to 4. If the directive is implemented, many businesses will need to take steps to bolster the substance of their EU holding companies to prevent additional reporting or adverse tax consequences.
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A new EU draft directive (ATAD 3) could subject EU entities to additional reporting and, if ultimately ‘unshelled’, adverse tax consequences from as early as 1 January 2024. The rules are structured as a five-step process, with the first four steps filtering out entities that meet minimum substance requirements or do not result in a tax advantage, and step 5 imposing tax consequences on those that have not managed to escape under steps 1 to 4. If the directive is implemented, many businesses will need to take steps to bolster the substance of their EU holding companies to prevent additional reporting or adverse tax consequences.
If you are not a subscriber, subscribe now to read this content.
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