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The Directive on Administrative Cooperation (DAC) establishes a harmonised framework addressing the needs of EU countries for mutual assistance in the field of taxation and secure administrative cooperation between their national tax authorities.
It is the legal instrument of reference regarding the rules and procedures for exchanging information and governing cooperation for tax purposes within the EU. Its objectives are to combat tax evasion and tax avoidance in order to ensure tax fairness.
Latest news
Judgement of the Court of Justice of the European Union on DAC6 in Case C-623/22
Commission Implementing Regulation (EU) 2024/432 of 2 February 2024 determining that the information to be automatically exchanged pursuant to the agreement signed by the competent authorities of Canada and certain Member States is equivalent to the information specified in certain provisions of Council Directive 2011/16/EU.
Background
Fair taxation is one of the main foundations of the European social market economy. It is also among the key pillars of the Commission’s commitment to ‘an economy that works for people’. A fair tax system should be based on tax rules that ensure everybody pays their fair share while making it easy for taxpayers, businesses or individuals to comply with the rules.
Globalisation and digitalisation have brought benefits to EU citizens, such as the possibility to work and invest in other EU countries. At the same time, this brings challenges for tax administrations. Taxpayers in the EU may be required to declare their global income in their country of residence.
Tax administrations normally have measures in their own country to ensure compliance of their taxpayers with declaring national income, for example through withholding taxes or national reporting. However, in the case of income derived from abroad, it is more challenging for tax administrations to ensure income has been declared by their taxpayers.
Through the Directive on Administrative Cooperation (DAC), EU countries can make use of mechanisms like the automatic exchange of information and exchange of information on request to ensure that foreign income is subject to tax.
DAC also ensures that businesses pay their fair share of taxes through transparency measures. The automatic exchange of tax rulings/advance pricing arrangements (‘DAC3’) between EU countries ensure that all tax administrations have information on cross-border rulings.
Similarly, the automatic exchange of country-by-country reports (‘DAC4’) ensures that tax administrations receive information on the taxes and profits made by their MNE group resident entities throughout the world. This helps ensure that transfer pricing rules are correctly applied. It also helps enforce anti-avoidance rules at the EU level through the Anti-Tax Avoidance Directive and globally through the OECD Base Erosion and Profit Shifting (BEPS) project.
DAC6 introduces mandatory disclosure rules with regards to potentially aggressive tax arrangements by placing reporting obligations on the intermediaries designing or supporting them - or in certain cases, the taxpayers concerned.
The information exchanged is used by EU countries' tax authorities to enrich their risk analysis and carry out tax investigations and audits, thus generating additional resources. This can deliver substantial revenue for EU countries. The forthcoming report on the evaluation of DAC indicates that the annual net benefits of DAC are between EUR 500 million and EUR 6.1 billion.
DAC is compliant with the provisions of the GDPR.
Scope
DAC covers all taxpayers that are natural persons and legal entities. Although the focus is on direct taxation, DAC can also be used for other purposes such as VAT, customs duties, excise duties and the recovery of tax debts. As of 1 January 2026, DAC can also be used to combat money laundering and to enforce sanctions in the EU.
DAC has been amended seven times (the most recent being DAC8).
The exchange of information comes in three forms: automatic, on-request and spontaneous, that are specific for the type of information to be exchanged. Information is exchanged from one competent authority to another through a secured network, ensuring confidentiality and privacy.
- Automatic exchange of information (AEOI) (Articles 8 to 8b) means the systematic communication of pre-defined information from the tax administration of an EU country to the tax administration of another EU country. DAC, and its amendments, includes the following information in relation to AEOI:
- DAC1 – five categories of income and assets: employment income, pension income, director fees, income and ownership of immovable property and life insurance products. Royalties and non-custodial dividends are added to these categories following DAC7 and DAC8 respectively.
- DAC2 – financial assets and accounts information
- DAC3 – cross-border tax rulings and advance pricing arrangements
- DAC4 – MNE country-by-country reporting
- DAC6 – potentially tax-harmful cross-border arrangements
- DAC7 – income generated by online platform sellers
- DAC8 – information on crypto-assets
- Exchange of information on request (EOIR) (Articles 5 and 5a) is used when an EU country needs additional information from another Member State for tax purposes and that the requested information will be relevant to the tax affairs of one or several taxpayers. According to Article 3 of DAC, – ‘exchange of information on request’ means the exchange of information based on a request made by the requesting EU country to the requested Member State in a specific case.
- Spontaneous exchange of information (SEOI) (Article 9) takes place if an EU country discovers any information relevant or useful to another Member State on taxation matters. According to Article 3 of DAC, ‘spontaneous exchange’ means the non-systematic communication, at any moment and without prior request, of information from one EU country to another.
DAC5 ensures tax authorities have access to beneficial ownership information collected pursuant to the anti-money laundering legislation.
DAC allows for other forms of administrative cooperation such as the presence of officials of an EU country in the offices of the tax authorities of another EU country, or during administrative enquiries carried out therein.
It also covers simultaneous controls allowing two or more EU countries to conduct controls of persons of common or complementary interest, requests for notifying tax instruments and decisions issued by the authority of another Member State. The latest update to this list was included in DAC7 and encompasses provisions for joint audits applicable as of 1 January 2024.
Evaluation of DAC
Article 27 of DAC requires a report on its application every five years from 1 January 2013. The second evaluation of the Directive is ongoing and due to be finalised in the first quarter of 2025.
The report on the first evaluation of the Directive was published in December 2017, accompanied by a staff working document. A second report under Article 8b of the Directive, which covers only the automatic exchange of information mechanisms, was published in December 2018.
The second report provides an overview and assessment of the statistics and information received under paragraph 1 of Article 8b. It is based on statistical data and yearly assessments received from EU countries’ Competent Authorities on the automatic exchanges under Articles 8 and 8a, regarding issues such as administrative and other relevant costs and benefits of the automatic exchange of information, as well as practical aspects linked thereto.
A staff working document, which includes outcomes of the study accompanying the first evaluation of the Directive, was published in September 2019. It presents the views of the Commission on administrative cooperation in direct taxation as regards its effectiveness, efficiency, coherence, relevance and added value to the EU.
The executive summary is available in English, French and German. The evaluation received a positive opinion from the Regulatory Scrutiny Board. The study supporting the evaluation and its executive summary was also published in September 2019.
Legal texts
Directives
- Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC
- Council Directive 2014/107/EU of 9 December 2014 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation (DAC2)
- Council Directive (EU) 2015/2376 of 8 December 2015 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation (DAC3)
- Council Directive (EU) 2016/881 of 25 May 2016 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation (DAC4)
- Council Directive (EU) 2016/2258 of 6 December 2016 amending Directive 2011/16/EU as regards access to anti-money-laundering information by tax authorities (DAC5)
- Council Directive (EU) 2018/822 of 25 May 2018 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements (DAC6)
- Council Directive (EU) 2021/514 of 22 March 2021 amending Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC7)
- Council Directive (EU) 2023/2226 of 17 October 2023 amending Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC8)
Implementing regulations
- Commission Implementing Regulation (EU) 2015/2378 of 15 December 2015 laying down detailed rules for implementing certain provisions of Council Directive 2011/16/EU on administrative cooperation in the field of taxation and repealing Implementing Regulation (EU) No 1156/2012
- Commission Implementing Regulation (EU) 2018/99 of 22 January 2018 amending Implementing Regulation (EU) 2015/2378 as regards the form and conditions of communication for the yearly assessment of the effectiveness of the automatic exchange of information and the list of statistical data to be provided by Member States for the purposes of evaluating of Council Directive 2011/16/EU
- Commission Implementing Regulation (EU) 2019/532 of 28 March 2019 amending Implementing Regulation (EU) 2015/2378 as regards the standard forms, including linguistic arrangements, for the mandatory automatic exchange of information on reportable cross-border arrangements
- Commission Implementing Regulation (EU) 2022/1467 of 5 September 2022 amending Implementing Regulation (EU) 2015/2378 as regards the standard forms and computerised formats to be used in relation to Council Directive 2011/16/EU and the list of statistical data to be provided by Member States for the purposes of evaluating that Directive