Will ATAD 3 be the end of shell companies in Europe?


On 22 December 2021, the European Commission published a legislative proposal for a new Directive known as ATAD 3, which proposes “rules to prevent the misuse of shell entities for tax purposes.” The new Directive matches the 2016 Multilateral Instrument (MLI) in spirit; for several years, the European Union has been looking closely at benefits enjoyed by so-called “shell entities,” intending to close any doors open to these entities for tax avoidance.

Taken together, these movements have left many financial services firms wondering whether the end has now come for shell entities in the EU.

IQ-EQ’s virtual roundtable in March 2022 centred around the future of tax benefits in the EU, given the context of ATAD 3 and other regulatory movements by the European Commission. As moderator of the session, I was joined by 12 experts from across the private equity investing sphere, including attendees from Invest Europe, InfraRed Capital Partners and Capstone among others.

During our roundtable discussion, three key concepts were discussed in depth:

  • The potential impact and consequences of ATAD 3
  • The view from Luxembourg
  • Industry stance and ongoing initiatives

In our new white paper, we analyse each theme, providing insight into the interpretations voiced during the session. We end with some closing forecasts about what’s next for ATAD 3—and what it means for companies with entities in EU jurisdictions.

Download here