The situation
A holding chain and its board minutes and service agreements
An investment group holds its German and Polish operating companies through a Luxembourg Sàrl and a Dutch intermediate company in Amsterdam. The Dutch company has two part-time directors and a serviced office. The German company is about to pay its first large dividend, and group tax wants a memo on whether the chain will hold up if the source country’s tax authority asks.
There is no single substance test to tick. The question is whether the holding companies are the beneficial owners of the income and whether the structure is genuine, judged against the Court of Justice’s case law and each source country’s anti-abuse rules. The hours go on the case law and on an honest list of the gaps.
What the research has to settle
The rules behind the answer
- The Danish cases set the frame
- In its February 2019 judgments in the Danish beneficial ownership cases (C-115/16 and others, and C-116/16 and C-117/16), the Court of Justice held that member states must refuse the benefits of the Parent-Subsidiary and Interest-Royalties Directives for abusive arrangements, even without a specific national anti-abuse rule.
- What a conduit looks like
- The Court pointed to indicators of an artificial arrangement: income passed on soon after receipt, a small taxable margin and a company whose only activity is receiving and passing on income. A holding with no staff, premises or decisions of its own fits that pattern.
- Treaties have their own test
- Many treaties now include a principal purpose test, often added through the multilateral instrument. Whether a given treaty has one, and from when, is something the research confirms treaty by treaty.
- Substance is evidence, not a box
- Board meetings held where the company is resident, directors with relevant expertise, own staff and premises, and real decisions on the holdings all support a genuine arrangement. None of them is a safe harbour on its own.
How it runs in azta
From the question to the document
The question, as you would type it
Luxembourg Sàrl owns a Dutch BV that owns German and Polish operating companies. The BV has two part-time directors, a serviced office and no employees. Against the Court of Justice’s Danish beneficial ownership judgments, what are the risks for withholding relief on dividends, and what substance would reduce them?
You start with
A holding chain and its board minutes and service agreements
- 01
Upload the minutes and agreements
Add the board minutes, director agreements and the office lease. azta reads them and refers back to the passage it relied on.
File upload· Pro - 02
Research the tests
Ask what the Directives, the Dutch rules and the relevant treaties require. azta cites each source.
Cited research· Free - 03
Find the case law
Ask for the Court of Justice’s decisions on beneficial ownership and abuse, and the Dutch decisions applying them. azta links each decision to its full text.
Case-law search - 04
Write the memo
Ask for a memo setting each fact against the indicators in the case law, with a list of gaps and how to close them. Edit it in Canvas.
Canvas · Ask azta· Pro You send
A substance memo with the case law and the gaps to close
What you get
A substance memo with the case law and the gaps to close
Substance memo · draft
Substance of the Dutch and Luxembourg holding companies
Summary. The holding chain has commercial reasons, but the Dutch company’s current substance is thin. Measured against the indicators the Court of Justice described, the main risk is that the dividend from Germany is passed on to Luxembourg shortly after receipt with no decisions taken in Amsterdam.
What supports the structure. Board meetings are held in Amsterdam and minuted. One director has investment experience relevant to the holdings. The company holds its own bank account and files its own returns.
Gaps to close. The company has no employees, its office is shared, and the minutes show no discussion of the holdings beyond approving dividends. We recommend the steps in Section 5 before the German dividend is paid.
Outcomes on your numbers
What azta is worth on this task
Pro pays for itself after
12 minutes a month
At €140 an hour, that is all the time Pro (€27 a month) has to take off your desk to cover its price.
Example figures. Replace them with your own.
- Hours back a year
- 32
- Capacity at your rate
- €4,536
- More substance memos a quarter
- 0.8
- Return on Pro
- 14×
- Research
- Drafting
- Your review
A scenario you set, not a promise. The hours that come back go to another client, or deeper into this one.
Want these numbers on your team’s real workload?
Book a demoSources azta searches here
- EUR-Lex · Curia
- Rechtspraak.nl
- wetten.overheid.nl
- Belastingdienst
What stays with you
- The facts about how the holding companies actually operate.
- Decisions on staff, premises and governance.
- The position you take with each source country.
Frequently asked questions
- Does azta search Court of Justice case law?
- Yes. The Court of Justice’s decisions are among the sources azta searches, with links to the full text.
- Does it cover Luxembourg?
- Ask about Luxembourg and check the source register for what is covered there. EU law and the Court of Justice apply throughout.
- Will it tell me the structure is safe?
- No. It sets the facts against the case law and lists the gaps. The judgement on risk is yours.
