Executive Summary

In June 2025, the EU Council approved an ECOFIN report confirming that work on the Unshell Directive—aimed at curbing misuse of shell entities—has been discontinued. Its objectives will instead be addressed through targeted amendments to DAC6. This streamlines tax rules and avoids duplicative reporting burden while maintaining transparency and competitiveness.

By reading this article, CFOs and Tax Directors will understand the EU's shift from new legislation to refining DAC6; assess implications for cross-border reporting; anticipate targeted DAC6 updates; and align their compliance strategies accordingly.


Why the Unshell Directive Was Dropped

In June 2025, the EU Council formally approved an ECOFIN report noting the suspension of work on the Unshell Directive proposal, initially introduced in December 2021 to prevent misuse of shell entities for tax purposes by imposing substance-based tests.
During Working Party discussions in May 2025, Member States raised concerns about overlaps with DAC6—the EU framework for reporting cross-border tax arrangements—which risked duplicative data collection and administrative burden.
The outcome: a broad consensus to discontinue Unshell and instead pursue targeted updates to DAC6. This aligns with the EU’s policy of tax “decluttering and simplification,” prioritizing clarity and efficiency over layering new rules.

What This Means for Businesses

• No new reporting category: The Unshell proposal’s separate substance-based gateway reporting is off the table.
  
• Focus shifts to DAC6: CFOs should track forthcoming changes to DAC6 hallmarks and thresholds to address shell-entity concerns without added burden.
• Strategic compliance: Firms can rebalance resources toward DAC6 readiness, rather than anticipating a new directive.
• Monitoring essential: Updates to DAC6 may arrive in 2026 following the Commission’s ongoing review of Administrative Cooperation Directives.

Next Steps for CFOs & Tax Teams

1. Review existing DAC6 compliance frameworks—update processes and reporting triggers.
2. Reassure stakeholders: no new Unshell-related reporting, but ensure substance documentation remains robust.
3. Lean into EU’s simplification trend—position your tax function as agile and forward-looking.
   
   

Conclusion

CFOs should now:

• Recognize that the Unshell Directive is officially shelved;
• Refocus on DAC6 compliance and upcoming amendments;
• Simplify internal tax reporting processes;
• Track Commission’s analysis for DAC updates expected in early 2026.
  

*Disclaimer: This article provides general information only and does not constitute professional advice. Seek tailored guidance before acting.