The Indicators or Gateways
Posted: Wed Feb 19, 2025 6:39 am
This Directive sets out transparency standards, so that entities that merely exist ‘on paper’ can be more easily detected by the respective tax authorities.
The EU Commission proposes to introduce a filtering system to determine whether a company is deemed to be a shell company or not.
Companies that meet three gateway ‘cumulative’ requirements, will need to disclose information in their tax return to validate the company’s substance. This information will include providing supporting evidence regarding the company’s premises and bank accounts as well as the tax residency of its directors and employees.
The key indicators or gateways are highlighted below:
Consequences of Gateways Being Met
If all three gateway specifications, as detailed above, are met, and there pakistan mobile database is a subsequent failure to meet the substance validation requirements, from the information provided in the relevant tax return, the company will be deemed a shell company and will not be able to access tax relief and any related benefits.
In addition, companies will not be able to obtain a tax residency certificate or will receive a certificate to say that it is a “shell”. The “shell” entity will be regarded as a “flow entity” and thus any payments to third countries, for example, will not be treated as flowing through the “shell” entity. Withholding tax will be applicable in the state of the “shell’s” shareholder/s.
The EU Commission proposes to introduce a filtering system to determine whether a company is deemed to be a shell company or not.
Companies that meet three gateway ‘cumulative’ requirements, will need to disclose information in their tax return to validate the company’s substance. This information will include providing supporting evidence regarding the company’s premises and bank accounts as well as the tax residency of its directors and employees.
The key indicators or gateways are highlighted below:
Consequences of Gateways Being Met
If all three gateway specifications, as detailed above, are met, and there pakistan mobile database is a subsequent failure to meet the substance validation requirements, from the information provided in the relevant tax return, the company will be deemed a shell company and will not be able to access tax relief and any related benefits.
In addition, companies will not be able to obtain a tax residency certificate or will receive a certificate to say that it is a “shell”. The “shell” entity will be regarded as a “flow entity” and thus any payments to third countries, for example, will not be treated as flowing through the “shell” entity. Withholding tax will be applicable in the state of the “shell’s” shareholder/s.