The proposals follow on from the public consultation on this topic which found the definition of shell entities across the EU lacked coherence and national tax authorities did not have enough information for them to be able to use the tools already at their disposal effectively. ![]() The proposals are broadly drafted and may lead to additional reporting and compliance obligations as well as the denial of tax treaty benefits and additional tax burdens in the alleged shell’s shareholder jurisdictions to the extent covered by the Unshell Directive. Whilst there are other ongoing tax initiatives aimed at combating tax avoidance such as changes to the directive on administrative cooperation ( DAC) and the anti-tax avoidance directive ( ATAD), the Commission feels that specific measures are needed to tackle the perceived misuse of shell entities for tax evasion and tax avoidance purposes (which have been lumped together for these purposes). Recent investigations, such as OpenLux and, more recently, the Pandora papers have increased the political pressure on the EU to take action in this area and members of the European Parliament were particularly pivotal in pushing the Commission to act. ![]() On 22 December 2021, the European Commission published a draft proposal for a directive to prevent the misuse of shell entities for tax purposes (the Unshell Directive). Technology, media and telecommunications.
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