TThe Unshell directive and its impact on Dutch holding structures

Article
NL Law
EU Law
Expertise
Tax

Charlotte Tolman and Michael Molenaars examine the European Commission's proposed Unshell directive, which targets the misuse of shell companies, and its potential impact on Dutch holding structures.

The European Commission presented a legislative proposal for a new EU directive to prevent the  misuse of EU shell companies (the Unshell directive) on December 22, 2021, in the context of its ongoing fight against aggressive tax planning.1 The directive seeks to discourage the use of shell companies within the EU by introducing reporting obligations and possibly denying tax advantages (inter alia, the denial of tax benefits under tax treaties and EU directives) to EU companies that are deemed to have no or minimal substance. To determine whether a company falls under this directive, specific “gateways” and “substance indicators” need to be assessed. If adopted, the Unshell directive must be transposed into national law by June 30, 2023, and take effect January 1, 2024.

If adopted, the directive could have an enormous impact on European (holding) structures. Unlike pillar 2, the draft of the Unshell directive is not limited to multinational groups with global revenues exceeding €750 million. It is therefore expected to affect many small and medium-size enterprises with an EU presence.

This article examines the most important features of the Unshell directive draft, how it could affect Dutch (holding) structures, and what actions can be taken now by businesses that are likely to face consequences of the directive.

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Authors: Charlotte Tolman and Michael Molenaars

Source: Tax Notes International, Volume 106, number 1

Publication date: 4 April 2022