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.
Legal content reviewed by Maître Cora Maglo, Avocate à la Cour, Liste I du Barreau de Luxembourg depuis 2009.
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.
Member of
Affiliations & réseaux professionnels
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Choosing Cerno means choosing over 17 years of experience
- 2013
- independent firm
- 2009
- at the Bar since 2009
- 7
- working languages
- 100+
- companies & SOPARFI structured
- 200+
- visas & residence permits obtained
- 170
- client nationalities served
- 300+
- due diligence reviews conducted
Around twenty M&A transactions supported · one of the best visa approval rates in Luxembourg.
Since 2009, we devote our expertise to your satisfaction: more than 85% of our clients renew their trust in us.
Our work
Representative matters, anonymised
Typical examples of engagements handled by the firm, presented in an anonymised and illustrative manner. Each matter is handled and validated by a lawyer registered with the Luxembourg Bar.
A holding company and a residence permit, in a single process
Incorporation of a SOPARFI for a non-resident investor, combined with obtaining their residence permit. A single point of contact across both fronts.
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Structuring a shareholders’ agreement and governance for a young company with several founders, ahead of a funding round.
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Cross-border recovery of unpaid debts for an SME, through an order for payment and coordination with a foreign colleague.
Receivable recovered in full (100%)A similar matter? Employment lawAn executive defended before the Labour Tribunal
Supporting an executive in a contested dismissal, from strategy to representation at the hearing.
Case argued at the hearingA similar matter? ContractsA secured international distribution
Negotiating and securing an international framework distribution agreement, from liabilities through to the competent jurisdiction.
Competent jurisdiction securedA similar matter?Typical, anonymised examples, for illustration only. They do not prejudge the outcome of a matter, which depends on each situation.
Entrust my matter to the firmExpertise & authority
Ongoing review and analysis of Luxembourg and European case law
Avocate à la Cour, List I of the Luxembourg Bar since 2009
Trained at the London School of Economics, formerly at Clifford Chance and Bonn Steichen & Partners
Member of international networks: EILN, AEA, Cross Border Advisory Solutions
Every matter handled and approved by a lawyer admitted to the Bar
Support in 7 languages, clients of 170 nationalities
Testimonials
What our clients say
Had a consultation with Me Cora Maglo about my Luxembourg Blue Card application. She explained everything clearly: the process, timeline and documents I need, and helped me with my wife’s family reunification too. Honest and practical advice. I felt confident after talking to her.Farshid Pourlatifi
J’ai beaucoup apprécié le service de Maître Maglo : son sérieux, sa sympathie, son professionnalisme et sa disponibilité. Toujours répondu rapidement et clairement, avec des conseils pragmatiques, sans pousser à des procédures longues et coûteuses lorsqu’elles ne sont pas justifiées.Nathan Wirtzfeld
Super assistance and great support! Highly recommend. All my questions were answered, Cora and her team kept me updated all the time. I will definitely reach out to them next time for my residency.Tatiana
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