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Multinationals should beware new European tax rules on the horizon

June 20, 2023 Article 5 min read
Bill Henson
In Bloomberg Tax, International Tax Partner Bill Henson explores the implications of new tax rules the EU is likely to implement in early 2024 and how it will affect multinationals with holding companies registered in the bloc’s member states.
Group of business professionals discussing new European tax rules.Small and medium-sized businesses that own holding companies and other legal entities registered in European Union (EU) member states need to prepare for the prospect of paying significantly higher tax rates on dividend income.

However, companies that examine the composition of their European corporate structures may be able to avoid some of these higher tax rates if they begin aligning their operations to reflect the guidelines set forth in a proposed directive.

The pending tax rule — known in EU parlance as the third Anti-Tax Avoidance Directive 3, or ATAD 3 —  passed the European Parliament in January. If unanimously approved by the Council of the European Union, ATAD 3 will add complexity — and potential accounting and compliance costs — to already cumbersome tax reporting requirements for multinational companies, regardless of domicile, industry, and conformity to the pending measure.

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