ATAD 3 Unshell smernice co muzeme ocekavat

ATAD 3 (Unshell Directive) - what can we expect?

Although the first draft of the Directive was issued already at the end of 2021, we didn’t see a significant development in the approval process during 2022.

It is worth noting that in November 2022, the European Parliament approved the final version of its  proposed amendments to the text of the draft Directive (the proposal was issued in January 2023). The Parliament's proposal is legally non-binding and can be found HERE.

Ever since its publication, the Directive has generated a lot of discussions over a large number of unclear aspects that are either not addressed at all in the proposal or are often only outlined in the explanatory memorandum.

Thus, it is still unclear what the final text of the Directive will look like and to what extent it will lead to greater certainty for taxpayers about its specific practical implications for them.

It is now generally expected that we will not see any major shift in the approval process before the second half of 2023. This also suggests that the effective date will probably have to be pushed back to 2025.

All the above is relevant under the assumption that the Directive is actually going to be adopted at the end.

2025 may seem a long way away. Nevertheless, the current proposal foresees that a test to determine the company’s reporting obligation applies for the preceding two years. The situation today may thus affect the future reporting obligation for 2025.

Thus, we recommend that you stay aware of the main aspects of the proposal. You can find our brief summary HERE.

At the same time,  it is worth reviewing the existing holding structures with respect to the most critical aspects for assessing the reporting obligation and the minimum required substance. Recommendations / identified actions  resulting from such review often apply regardless of the (non-)adoption of the Unshell Directive.

Examples include (i) proper documentation of regular board meetings held physically in the company's country of residence; (ii) availability of premises in the country of residence - the directive mentions own premises or premises for own exclusive use; (iii) composition of the board / executives (in terms of residence, qualifications, employment / function as executive with third parties, etc.).

If you have any questions, please contact the authors of this article or the EY tax team with whom you regularly work.

Authors:

Karel Hronek

Jana Svobodová