{"id":16572,"date":"2022-02-17T10:54:48","date_gmt":"2022-02-17T09:54:48","guid":{"rendered":"https:\/\/it.andersen.com\/?p=16572"},"modified":"2024-02-05T16:49:12","modified_gmt":"2024-02-05T15:49:12","slug":"tax-eu-directive-atad3","status":"publish","type":"post","link":"https:\/\/it.andersen.com\/en\/tax-eu-directive-atad3\/","title":{"rendered":"Tax EU Directive: ATAD3"},"content":{"rendered":"<p>On December 22 2021, the European Commission published a proposal for a <strong>Directive<\/strong> also known as <strong>ATAD3<\/strong>, which sets out rules to prevent the misuse of shell entities for tax purposes and amending Directive 2011\/16\/EU. The new Directive is expected to be implemented by member States by June 30, 2023 and to be applicable as from <strong>January 1, 2024<\/strong>.<\/p>\n<p>The proposal targets <strong>EU tax-resident companies<\/strong> involved in cross-border activities and eligible to receive a <strong>tax residency certificate in a Member State<\/strong>. A company is considered a high-risk entity for the application of the Directive and therefore treated as a shell company, if all the following requirements are met:<\/p>\n<ul>\n<li>If more than 75% of the company&#8217;s income in the previous two tax years came from mobile or passive income, as defined in the Directive<\/li>\n<li>if the company conducts cross-border activities<\/li>\n<li>If the company has outsourced the management of day-to-day operations and decision-making for essential functions in the two previous tax years.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h3>REPORTING REQUIREMENT<\/h3>\n<p>High risk entities are required to report additional information in their tax returns, including:<\/p>\n<ul>\n<li>If the company has at least one office space<\/li>\n<li>If the company has at least one active bank account in the EU and<\/li>\n<li>If the company meets either of the following two criteria:\n<ul>\n<li>At least one company director:\n<ul>\n<li>is resident in the jurisdiction of the company<\/li>\n<li>is qualified\/authorized to make relevant decisions; is not an employee or a director of any other unrelated party<\/li>\n<\/ul>\n<\/li>\n<li>Most of the company&#8217;s employees live near the company&#8217;s jurisdiction and are engaged in income- generating activities.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>Entities that, due to the nature of their activity (e.g., listed companies) or that are considered to have a low risk of low economic substance are not subject to the reporting obligation.<\/p>\n<p>&nbsp;<\/p>\n<h3>CONSEQUENCES OF NOT MEETING SUBSTANCE REQUIREMENTS<\/h3>\n<p>If a company established in the EU does not fulfil the minimum substance condition, this has the following consequences:<\/p>\n<ul>\n<li>Non-recognition by the EU Member States when applying the tax treaties and other instruments that eliminate double taxation. However, the Member State concerned may make use of the &#8220;look- through&#8221; treatment<\/li>\n<li>the EU shareholder is taxed as if the income had accrued under domestic rules<\/li>\n<li>the reporting company no longer receives a tax residence certificate.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h3>EXCHANGE OF INFORMATION, PENALTIES AND TAX AUDITS<\/h3>\n<ul>\n<li>Creation of a central database with information on EU companies that are considered reporting companies and are required to disclose additional information in their tax returns<\/li>\n<li>penalties of up to 5% of annual revenue for companies that fail to file reports or submit incorrect reports<\/li>\n<li>Member States may request other Member States to undertake a tax audit if they suspect that an EU company is not complying with the Directive<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>For more information on the content of this document, please contact Andersen. Andersen Global has a presence in more than 320 locations worldwide.<\/p>\n<p>Find your International Tax local expert at: global.Andersen.com<\/p>\n","protected":false},"excerpt":{"rendered":"<p>On December 22 2021, the European Commission published a proposal for a Directive also known as ATAD3, which sets out rules to prevent the misuse of shell entities for tax purposes and amending Directive 2011\/16\/EU. The new Directive is expected to be implemented by member States by June 30, 2023 and to be applicable as [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[50],"tags":[],"_links":{"self":[{"href":"https:\/\/it.andersen.com\/en\/wp-json\/wp\/v2\/posts\/16572"}],"collection":[{"href":"https:\/\/it.andersen.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/it.andersen.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/it.andersen.com\/en\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/it.andersen.com\/en\/wp-json\/wp\/v2\/comments?post=16572"}],"version-history":[{"count":6,"href":"https:\/\/it.andersen.com\/en\/wp-json\/wp\/v2\/posts\/16572\/revisions"}],"predecessor-version":[{"id":25094,"href":"https:\/\/it.andersen.com\/en\/wp-json\/wp\/v2\/posts\/16572\/revisions\/25094"}],"wp:attachment":[{"href":"https:\/\/it.andersen.com\/en\/wp-json\/wp\/v2\/media?parent=16572"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/it.andersen.com\/en\/wp-json\/wp\/v2\/categories?post=16572"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/it.andersen.com\/en\/wp-json\/wp\/v2\/tags?post=16572"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}