DAC6

Background 

DAC6 requires EU-based intermediaries or, under certain circumstances, taxpayers to report to their tax authorities about cross-border  arrangements that fulfil specific criteria (geographic scope and the so-called hallmarks related to potential tax risk). Information on these arrangements is then submitted by tax authorities in a dedicated DAC6 Central Directory which is accessible to other tax authorities in the EU. 

In the past, certain  intermediaries and other providers of tax advice appear to have actively assisted their clients in concealing money offshore. The reporting of potentially abusive cross-border tax-planning arrangements can contribute effectively to the efforts for combatting tax abuse and also creating an environment of fair taxation in the internal market. 

One of the advantages of DAC6 is its ‘early alert’ mechanism.  Intermediaries are required to report the arrangement to their Member State tax authority within 30 days of the arrangement being implemented or being ready for implementation. This early reporting mechanism provides the tax authority with the means for assessing and communicating any possible tax risk of the arrangement to the intermediary or the taxpayer.   

By November 2024 60,734 arrangements had been submitted to the DAC6 Central Directory. 

Scope

In order for a cross-border arrangements to be reportable an intermediary should assess whether the arrangement meets a set of Hallmarks (Categories A-E), consisting of a set of criteria that indicate possible tax risk. 

A recent amendment to the DAC (DAC8), requires intermediaries to provide a summary which describes the arrangement as well as any other information that could help tax authorities assess a potential tax risk. 

In line with the Court’s Decision in Case C-694/20 of December 8 2022,  DAC8 clarifies that when an intermediary is exempted from reporting obligations under DAC6 due to legal professional privilege then the intermediary only needs to inform their client about their reporting obligations, and is not obliged to inform other intermediaries that may be party to the arrangement.

The geographic scope of tax arrangements to be reported by intermediaries is broad and includes both EU and non-EU jurisdictions. Tax abuse takes place using arrangements that often have an international dimension therefore DAC6 has a wide geographic scope, involving either more than one Member State, or a Member State and a third country, depending on the residence and business operations of the parties involved. The importance of capturing the non-EU dimension is reflected in the DAC6 statistics provided by Member States as around half of all tax arrangements registered only concern non-EU countries, i.e., arrangements concerning only the reporting Member States and countries outside the EU, but no other Member State.

Reporting of  DAC6 AEOI information

DAC6 requires intermediaries to submit the relevant information to their tax authorities within 30 days counting from: 

1. the day after the cross-border arrangement is made available for implementation; or
2. the day after the reportable cross-border arrangement is ready for implementation; or
3. when the first step in the implementation of the reportable cross-border arrangement has been made.

DAC6 and the related Implementing Regulation established a Central Directory database for storing information on cross-border tax arrangements, which all Member States can access, ensuring better coordination between Member State to combat cross-border tax abuse and reducing the administrative burden on tax authorities. 

Tax authorities are required to submit the arrangements in the DAC6 Central Directory notified to them within one month of the end of the quarter in which the information was filed by the intermediary. For example, a cross-border tax arrangement notified by an intermediary in January 2024 should be registered by the relevant tax authority by 30 April 2024 at the latest in the DAC6 Central Directory. 

There is no public disclosure with information in the DAC6 Central Directory and is only accessible to the relevant tax authorities of the Member States. The European Commission has only limited access to the database  for monitoring purposes.

International 

At international level, the OECD BEPS Action 12 Mandatory Disclosure Rules (MDR), provides a framework with a set of recommendations for jurisdictions to require intermediaries or taxpayers to report information on aggressive or abusive tax planning schemes and their users. 

The OECD has also issued Mandatory Disclosure Rules for the  reporting of arrangements and opaque offshore structures with a potential risk of circumventing the OECD Common Reporting Standard for Automatic Exchange of Financial Account Information. 

Legal texts

• Council Directive (EU) 2018/822 of 25 May 2018 amending Directive 2011/16/EU as regards mandatory automatic exchange of information (‘AEOI’) in the field of taxation in relation to reportable cross-border arrangements.
• 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.
• Statistics to be provided under DAC6 by Member States: Commission Implementing Regulation (EU) 2022/1467 of 5 September 2022 amending Implementing Regulation (EU) 2015/2378.

Publications

• Information sheet on the functioning of DAC6
• OECD BEPS Action 12 Framework for Mandatory Disclosure Rules
• OECD Mandatory Disclosure with respect to OECD Common Reporting Standard for Automatic Exchange of Financial Account Information