De Brauw, Blackstone & Westbroek: European Court of Justice Tax Law Rulings Limit the Use of Conduit Companies (for Non-EU Investors)

De Brauw Blackstone Westbroek (attorneys, civil law notaries, tax advisers) published an interesting comment on the European Court of Justice judgement dated February 26, 2019 which contains tax law rulings that limit the use of conduit companies. I am happy to assist in improving the substance of those conduit companies. Please use the following link to download the comments: https://app.box.com/s/g4jz31993whzcjwsfsif4vuko1duficy or visit: https://www.debrauw.com/newsletter/ecj-tax-law-rulings-limit-use-of-conduit-companies/

"The European Court of Justice recently issued a judgment in six cases concerning the application of the Interest and Royalty Directive (Joined Cases C-115/16, C-118/16, C-119/16 and C-299/16) and the Parent-Subsidiary Directive (Joined Cases C-116/16 and C-117/16). The ECJ ruled that member states must deny the benefits granted under these two directives if there is an abuse of rights. An abuse of rights would occur if a ‘conduit company’ claimed the benefits of these directives. The ECJ provided guidance on when a conduit company may exist. These six judgments significantly limit the ability of non-EU investors to obtain benefits under the two directives through the use of EU companies established – in the Netherlands or Luxembourg, for example – if the only function of those companies is to pass on interest and dividends to non-EU persons. Investors should review whether any EU company they use is at risk of being deemed a ‘conduit company’. In the Netherlands, these judgments raise the question of whether the minimum substance requirements that apply as a safe harbour against a claim of abuse of rights are in line with EU law and can therefore be maintained in the future."