- In 2021, the EC proposed a directive targeting the use of 'shell' entities for tax purposes in the EU. This may be relevant for some UK groups with presence in the EU.
- Although the Council engaged in extensive technical discussions on the Unshell proposal since 2022, including new drafting suggestions in late 2024, many Member States expressed concerns about overlaps with existing frameworks (particularly DAC6) and the potential for increased administrative burden.
- According to the ECOFIN Report on Tax Issues adopted on 20 June 2025, and in line with the Council's tax decluttering and simplification agenda, a broad consensus emerged in May 2025 that work on the Unshell proposal should not be continued, with member states instead supporting a reassessment of the relevant issues within the framework of future revisions to the Directive on Administrative Cooperation.
- Timing: as mentioned above, there is no intention to progress the Unshell proposal.
Resources (click to open)
- Biannual ECOFIN report on tax issues (June 2025)
- Texts adopted - Rules to prevent the misuse of shell entities for tax purposes (europa.eu) (January 2023)
- Draft report of the Committee on Economic and Monetary Affairs on the Unshell proposal (May 2022)
- EU Commission proposes directive to prevent misuse of shell entities in the EU (Deloitte tax@hand, December 2021)
