On December 22^nd, 2021, the European Commission presented the proposal for a council directive to fight against the misuse of shell entities for improper tax purposes. The new directive will establish transparency standards and uses several objective indicators related to income, premises, and staff of such entities to help tax authorities in the European Union to detect and “unshell” entities existing on paper only. The directive will introduce a filtering system for entities in scope that have to comply with three indicators that constitute a type of a “gateway”. If an entity crosses all three gateways, additional information must be added to its annual tax return that is related to the premises of the entity, its bank accounts, and the residency of its directors and employees. If the entity fails at least one of the “substance indicators”, it is presumed to be a “shell”. If the entity cannot rebut this presumption any access to tax relief under a tax treaty, the EU Parent Subsidiary Directive and the EU Interest and Royalties Directive will be denied. In addition, the member states’ authorities will automatically exchange information on all entities in the scope of the directive...