Companies & entities
ATAD III and the substance of holding companies in Luxembourg
ATAD III is the proposed European directive targeting shell companies that lack substance. A Luxembourg holding company (often a SOPARFI) that crosses certain thresholds of passive income, cross-border activity and outsourcing may lose access to treaty benefits and to the EU directives. The firm assesses your exposure and strengthens your substance.
ATAD III is built on gateways (indicators): a predominance of passive income, a cross-border dimension and the outsourcing of management. The entities concerned must demonstrate minimum substance (premises, a local bank account, a qualified director).
Cerno Law Firm carries out a substance review, identifies the areas of risk and puts a compliance plan in place.
The need
You hold a holding company and want to secure its tax benefits in the face of ATAD III.
Passive holding structures are the most exposed.
The risk
A presumption of being a shell company, and the loss of treaty benefits and of the parent-subsidiary and interest-royalties directives.
Insufficient substance may result in taxation at the level of the shareholders.
How we help
A review of the gateways, a substance scorecard, and an action plan (local governance, resources, documentation).
Assembling a defensible substance file.
Practice areas
When to call on the firm
- Audit an existing SOPARFI.
- Prepare a new, compliant holding company.
- Document substance ahead of an inspection.
- Secure a cross-border ownership chain.
Method
Our engagement process
- 1
Information intake
You describe your need via a structured form or an initial call. Our digital tools serve only to organise this information and save time.
- 2
Lawyer qualification
Maître Maglo reviews your situation, identifies the legal issues and confirms the feasibility and exact scope of the engagement.
- 3
Transparent quote
You receive a clear fee proposal, a fixed fee or a range, before any engagement. Nothing is billed without your approval.
- 4
Legal work
The firm drafts, negotiates or litigates as required. Every deliverable is designed and approved by a lawyer admitted to the Luxembourg Bar.
- 5
Tracking and delivery
You follow your matter transparently and receive your finalised documents with the explanations you need.
Documents required
- • Structure and income flows
- • Current substance elements (premises, governance, resources)
- • Treaties and participations concerned
Deliverables
- • ATAD III exposure review
- • Substance scorecard
- • Compliance plan
Indicative timing
The review is carried out within a few days; bringing substance up to standard is planned over the longer term.
On a quote basis
Depending on the number of entities and the complexity of the structure.
FAQ
Frequently asked questions
What is ATAD III?
A proposed EU directive targeting entities without genuine substance used for tax purposes (shell companies), by making tax benefits conditional on substance criteria.
Is my SOPARFI concerned?
It depends on the gateways: predominantly passive income, cross-border activity and the outsourcing of management. A review allows this to be determined.
How can substance be strengthened?
Dedicated premises, an active local bank account, a qualified resident director, decisions taken in Luxembourg and rigorous documentation.
Let’s talk about your matter
Describe your situation: you receive an initial analysis and a transparent quote, with no obligation. One dedicated lawyer, from start to finish.