The New EU Initiative on Fighting Shell Entities: Will this be a game changer for Luxembourg?
On 20 May 2021, the EU Commission launched a new initiative on fighting the use of shell entities and arrangements for tax purposes. The initiative was triggered by the impression on the part of the Commission that legal entities with no or only minimal substance, performing no or very little economic activity, continue to pose a risk of being used for aggressive tax planning structures. The EU Commission organized a public consultation and invited interested parties to share their views by 27 August 2021 in a questionnaire.
However, the tax authorities of EU Member States have already a comprehensive arsenal of anti-abuse rules that allow them to tackle any kind of abusive situation as well as reporting that should allow them to be aware of any residual abuse.
As such, the questions arise whether the new initiative of the EU Commission could elevate existing substance requirements to a higher level and if this might be a game changer for Luxembourg.
2. Substance in international taxation
3. The new EU initiative against shell entities
4. Existing anti-abuse legislation
5. Limits of anti-abuse legislation in an EU context
6. Excursus: Managing substance in extraordinary times
7. Concluding remarks
Oliver R. Hoor, Tax Partner, ATOZ Tax Advisers
Oliver is a Partner in the International and Corporate Tax department of ATOZ. A tax professional since 2003, Oliver has experience in Luxembourg and international taxation with a focus on alternative Investments (private equity, real estate, sovereign wealth funds, hedge funds), mergers & acquisitions and multinational groups. Oliver advises clients on all direct tax aspects regarding deal structuring, maintenance, reorganisations and exit planning.
He is Head of Transfer Pricing and the German Desk. Oliver is further a member of the tax working groups of the Association of the Luxembourg Fund Industry (ALFI) and the Luxembourg Private Equity Association (LPEA).
Oliver is the author of more than 250 articles and books on Luxembourg and international taxation including Transfer Pricing and related documentation requirements, the OECD Base Erosion and Profit Shifting (“BEPS”) Project and the EU Anti-Tax Avoidance Directives (ATAD 1 & 2), reporting obligations of tax intermediaries (DAC 6), the OECD Model Tax Convention and Tax Treaties, EU Law and the State Aid investigations of the EU Commission. He is also a regular speaker at conferences as well as a lecturer with Legitech and ILA.
Oliver is qualified as a Chartered Accountant in Luxembourg (“Expert-Comptable”) as well as a certified German tax adviser (“Steuerberater”). He holds a post-graduate degree in Luxembourg Tax and a degree in Business Administration with a major in Tax from the University of Applied Sciences of Trier (Germany).
The company Legitech has obtained the approval of the Luxembourg Bar.
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