INTERNATIONAL TAX PLAZA - The proposal for an unshell Directive is again missing on the provisional agenda of the next ECOFIN Council

The next Economic and Financial Affairs (ECOFIN) Council is taking place on November 9, 2023. Agenda highlights and a provisional agenda for this meeting have been published on the website of the European Council/the Council of the EU.

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 (the unshell Directive) is not mentioned in the Agenda highlights or in the provisional agenda for the meeting.

The last time we read something about the proposed directive was in the semi-annual report on tax matters from the ECOFIN Council to the European Council, which was released on June 16, 2023. In this report the progress that was made under the Swedish presidency was described as follows: “Under the Swedish Presidency, the file was discussed in the WPTQ on 22 January, 21 February and 22 March 2023, and in the HLWP on 25 April 2023. The objective of the Presidency was to make as much progress on this file as possible, focusing inter alia on finding accurate substance criteria and tax consequences. The Presidency prepared partial compromise texts and background notes on several aspects of the draft Directive, including a timeline on reporting deadlines, as well as a compromise text covering the whole Directive. Progress was made on a number of controversial issues, such as the scope, criteria of minimum substance, tax consequences and tax residency certificate. The HLWP11 provided guidance for further work on these and also other outstanding issues. Further discussions will be needed in order to find compromise solutions on outstanding issues, also with the common objective to limit administrative burdens for both taxpayers and tax administrations. Delegations stressed the interlinkages between different parts of this complex Directive, meaning that an orientation chosen in one part of the Directive might influence the solution in other parts.”

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