After being stalled at the draft stage for over three years, it
results from the ECOFIN report 9960/25 of 18 June 2025 (the
"Report") that the proposal for a
Council Directive laying down rules to prevent the misuse of shell
entities for tax purposes and amending Directive 2011/16/EU
(so-called "Unshell" or "ATAD 3" proposal) has
been officially dropped.
As a reminder, the Unshell proposal's objective was to fight
against shell entities by establishing a series of
"gateway" tests to identify companies lacking sufficient
substance. Once identified as a shell, an undertaking was denied
treaty benefits and EU directive access.
However, since then, Member States have not been able to reach
consensus on key aspects of the Unshell proposal.
