What does ATAD 3 mean for Dutch shell companies?

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During this roundtable, our panel of 6 tax specialists discussed the possible impact of the ATAD 3 directive on so-called ‘shell companies’, including the current state of play, potential outcomes and views from other EU Member states. The panel also explored the client implementation options based on the current draft directive.

Our panellists:

  • Stephan Damen (Principal, Tax, IQ-EQ)
  • Juan Dagniaux (Chief Commercial Officer, Netherlands, IQ-EQ)
  • Mark Hofstee Holtrop (Client Director, IQ-EQ)

  • Sylvia Dikmans (Partner, Houthoff tax advisers)
  • Onno Backx (Partner, Grant Thornton)
  • Leon Besjes (International Tax Advisor, Grant Thornton)
  • Martin Wörsdörfer (Chairman, Holland Quaestor)
  • Paddy Croft (Head of Tax, Astorg)

The roundtable was hosted and moderated by Hedde Plas, Country Delivery Director, Netherlands, IQ-EQ.

Key Takeaways from ATAD 3 roundtable IQ-EQ Netherlands 7 July

  • The European council currently under French presidency has deprioritized ATAD 3 (focusing on misuse of shell companies by denying tax residency certificates for such shell companies) – result could be extension to 2025 or later and look back period only starting 2023 (or even permanent withdrawal of directive)
  • EU countries likely to vary in implementation – if ATAD 3 will come into place, it is very likely that the current wording of the directive will be amended and countries are expected to push for more business favorable implementation
  • The Dutch government has confirmed that tax treaties legally still apply without a tax residency certificate. So there seems to be the possibility to apply the tax treaty without the need for requesting a tax residency certificate (the latter might be blocked by the ATAD-3 directive)
  • The Dutch industry body for corporate service providers (Holland Quaestor) sees a trend that the Dutch regulator (Dutch Central Bank) requires Dutch corporate service providers to focus on the question whether structures with e.g. a shell company in place, are still acceptable from a social propriety perspective
  • Dutch IQ-EQ office performed an analysis on the Dutch client base, based on current criteria, 31% of the entities would be considered as a shell company, with another 2% that would have a reporting obligation – impact seems to be limited
  • Client implementation options are already available based on current wording directive – insourcing structure, ManCo set-up, AIFM top holding company structure
  • In positioning of IQ-EQ Netherlands to potential clients, we see a gradual shift towards potential structures with tailor made solutions on substance enhancement like payrolling services, HR services and dedicated office space solutions etc.