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An overview by Atoz Tax Advisors, Taxand Luxembourg
Last week the EU Council formally approved an ECOFIN report confirming that work on the proposed Unshell Directive will be discontinued. Originally introduced to combat the misuse of shell entities for tax avoidance, the directive is now being dropped due to concerns over redundancy with existing EU rules.
Specifically, Member States raised concerns about overlaps with DAC6, the directive requiring the disclosure of cross-border tax arrangements. These overlaps could have led to duplicative reporting and increased administrative burdens for businesses and tax authorities alike.
In keeping with the EU’s broader tax simplification agenda, it was agreed that the objectives of the Unshell Directive could instead be achieved more efficiently through targeted amendments to DAC6. This approach supports regulatory clarity and reduces unnecessary complexity. The decision has been welcomed as a positive step towards enhancing the EU’s regulatory efficiency and competitiveness, marking a clear shift in focus towards refining current frameworks rather than introducing new ones.
Hugues Henaff and Marie Bentley from our Luxembourg member firm Atoz Tax Advisors have published an article exploring the background to this decision and its implications for businesses and tax professionals across the EU. You can read the full article here.
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