Pearse Doherty (Donegal, Sinn Fein)
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277. To ask the Minister for Finance the Government’s position in relation to the draft EU Directive for preventing the misuse of shell entities ATAD III; and if he will make a statement on the matter. [3049/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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In December 2021, the European Commission published the Unshell Directive, an anti-avoidance proposal that aims to prevent the misuse of shell entities for tax purposes and since then discussions have progressed slowly.

In June 2024, a new proposed approach for the Unshell proposal was presented to Member States in order to try and progress discussions and focus the directive more towards exchange of information. An update on negotiations was provided in the December 2024 EcoFin (Council) report to the European Council on tax issues. The report outlined that some of the most discussed issues have included the following: tax consequences, links with domestic anti-abuse legislation, the scope of excluded entities, minimum substance requirements, rebuttal mechanisms, reduction of administrative burden, tax residency certificates and exchange of information.

The Irish position adopted to date on this file is to support the policy aims of Unshell in tackling the use of shell entities for tax avoidance purposes, and to ensure legitimate business arrangements are not unduly impacted in terms of compliance burden or reputational harm associated with the proposal. In our negotiations, we have aimed to ensure that the compliance burden is not disproportionate to the risk, and/or does not place an undue administrative burden on national tax authorities, which have finite resources.

As the proposal applies only to entities within the EU and impacts intra-EU business structures, it is also important that it does not result in a loss of competitiveness compared to third countries outside the EU. Irish officials will continue to engage constructively on the proposal and will keep me informed on developments during the Polish and future EU Presidencies.