The so-called “Unshell Directive” (proposal for a Council Directive laying down rules to prevent the misuse of shell entities for tax purposes), which aims to prevent the misuse of shell entities for tax purposes, is still under consideration, with the schedule for adoption unclear due to ongoing disagreements among member states.

The Unshell Directive was on the agenda of the meeting of the Working Party on Tax Questions (Direct Taxation) which was held on 27 May 2025.  As reported by Tax Notes and Bloomberg Tax, this was the result of an initiative by the EU Council’s Polish Presidency to gauge whether member states would support an amendment to DAC6 (Council Directive 2018/822 amending the Directive on Administrative Cooperation) to incorporate some of the features of the Unshell Directive proposal instead of adopting the Unshell Directive as a standalone legislative instrument.

While the Unshell Directive proposal and DAC6 remain substantially different in scope, the Polish Presidency believes that the objectives of the Unshell Directive proposal can be achieved through amendments to DAC6. This would fit into the EU’s ongoing tax simplification and decluttering efforts whilst also reducing implementation costs, compliance and administrative burdens on taxpayers and authorities alike.

Since it was initially published in 2021, substantial changes to the Unshell Directive proposal have been proposed, essentially to limit its scope; none of these initiatives, however, have resulted in the proposal being adopted.

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