Unshell - Laying down rules to prevent the misuse of shell entities for tax purposes - a BusinessEurope position paper

Key messages

• We welcome and support the European Commission’s continued fight against tax fraud, tax evasion and aggressive tax planning both at the corporate and at the personal income tax level. A targeted and coordinated approach to fight the misuse of shell entities for tax purposes could be an effective step forward on the condition that both the current Unshell proposal and upcoming measures to address non-EU shell entities are enacted at the same time and valid commercial entities are not faced with significant additional administrative burdens.
• The European Commission has rightly observed that while “shell entities as such are not the problem”, some shell entities are indeed used for tax abusive practices. We believe it is important that the focus of Unshell is on identifying and sanctioning these type of entities.
• We are however very concerned that valid commercial business entities may still be faced with cumbersome (administrative) procedures due to the proposed functioning of the rules in Unshell. A more targeted approach, including through further clarifications on the gateway test, would lower the administrative burden for businesses, without undermining the goals of the directive. Similarly, we regret that the impact of previous anti-tax abuse measures (such as ATAD) has not been fully evaluated.