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Tuesday, 31 January 2023

ATAD 3 and more: a brief update

Jacob Huyzentruyt

Jacob Huyzentruyt

Rik Smet

Rik Smet

Senior Associate

In December last year, the European Parliament published a resolution on the proposal for a Directive laying down the rules to prevent misuse of shell entities for tax purposes (so-called “ATAD 3-Directive” – as discussed in a previous newsflash: Tiberghien - Proposal for new European directive: the end of entities with little substance?). The resolution forms the European Parliament’s input on the European Commission’s ATAD 3-proposal and contains some proposed amendments to the draft Directive. It is, amongst others, proposed to make some changes to the gateways, under which an entity would be considered to be a ‘shell’. But also to include a 9 month period for the national tax administrations to reply to a request for an exemption from the reporting obligations. The exemption that is foreseen for entities with 5 qualifying FTE’s would – if the European Parliament’s amendments were upheld in a final Directive – also be stricken. These and the other proposed amendments can be found in this document.

Some important take-aways are:

  • The resolution is not binding for the EU Council, which may adopt the amendments or chose to ignore them;
  • The EU Council must take the final vote on the proposed Directive. To this end, the European Parliament for example calls on the European Commission to lay an amended proposal before the EU Council;
  • Even though they are not binding, the Council could be expected to consider (at least some) of the proposed amendments, as they do meet some critiques to the initial proposal;
  • Nonetheless, substantial and fundamental critiques can still be uttered, which the proposed amendments do not address or solve;
  • The text as proposed by the European Parliament, can therefore not be considered as ‘final’ as (i) the EU Council is not bound by it and (ii) the Council may itself still amend the proposed Directive or even chose to ultimately not issue a Directive at all;

The resolution by the parliament is nonetheless a next step in the ATAD 3- saga and may give some further clarifications on the conditions and consequences. However, the final text of the Directive remains unclear, further complicating the assessment for potentially impacted entities that want to anticipate and prepare for this – still merely proposed but in no way final – Directive.

Next to the ATAD 3-Directive, the European Commission is also working on a new taxation package, including the so-called SAFE-proposal, (as a supplement to the ATAD 3 proposal by targeting enablers setting up structures using non-EU shell  entities). The package also includes the FASTER-proposal, aiming to introduce a new EU-wide system for withholding tax in order to prevent tax abuse in the field of withholding taxes. These proposals are intended to further restrain the use of shell entities and aggressive tax planning. Further news is expected in the beginning of June when the proposals would be published (for the tentative agenda: Register of Commission Documents - SEC(2023)2442 (

 Tiberghien’s international tax team will continue to monitor these and other tax developments relevant for Belgium / Luxembourg based multinational enterprises. Our editorial board consists of: 

Koen Morbée (International and EU corporate tax)

Michiel Boeren (International and EU corporate tax)

Ahmed El Jilali (International and EU corporate tax)

Ben Plessers (Transfer Pricing and Valuations)

Gert Vranckx (VAT, customs, excises and other indirect taxes)

Rik Smet (International and EU corporate tax) 

In case you have further questions on this publication or want to discuss a tax query, please do not hesitate to contact the author(s) or one of the members of the editorial board. 

This newsflash is for information purposes only and cannot be relied upon as legal advice.

Jacob Huyzentruyt

Jacob Huyzentruyt

Rik Smet

Rik Smet

Senior Associate
Tiberghien Brussels

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