The EU is increasing the level of transparency another notch in order to detect potentially aggressive tax arrangements. We help you meet DAC6’s massively tightened disclosure rules.
The EU is introducing an additional level of transparency in order to detect potentially aggressive tax arrangements.
The amendment to Directive 2011/16/EU on mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements (DAC6 for short) will have far-reaching consequences for tax advisors, service providers and taxpayers – including organisations and individuals in Switzerland and Lichtenstein.
DAC6 imposes mandatory disclosure requirements for certain arrangements with an EU cross-border element where the arrangements fall within certain "hallmarks" mentioned in the directive and in certain instances where the main or expected benefit of the arrangement is a tax advantage. There will be a mandatory automatic exchange of information on such reportable cross-border schemes via the Common Communication Network (CCN) which will be set-up by the EU.
Although the directive is not effective until 1 July 2020, taxpayers and intermediaries need to monitor their cross-border arrangements already as of 25 June 2018. Therefore the time to act is now.
These new EU rules can potentially impact any individual or entity involved in designing, marketing, organising, making available for implementation or managing the implementation of potentially aggressive tax-planning arrangements with an EU cross-border element as well as those who provide assistance or advice. On the other hand also taxpayers, both businesses and individuals can potentially be affected, even if they are based in Switzerland or Liechtenstein, e.g.
The main purpose of DAC6 is to strengthen tax transparency and fight against aggressive tax planning. It broadly reflects the elements of action 12 of the BEPS project on the mandatory disclosure of potentially aggressive tax-planning arrangements as well as the OECD model regarding mandatory reporting of CRS avoidance schemes and opaque offshore arrangements.
Mandatory reporting by intermediaries (or taxpayers) and the automatic exchange of information by the tax authorities of EU member states via the Common Communication Network (CCN) for a wide range of cross-border arrangements in relation to individuals and entities
Which arrangements need to be reported?
DAC6 imposes mandatory disclosure requirements for arrangements with an EU cross-border element where the arrangements fall within certain "hallmarks" mentioned in the directive and in certain instances where the main or expected benefit of the arrangement is a tax advantage. There will be a mandatory automatic exchange of information on such reportable cross-border schemes via the Common Communication Network (CCN) which will be set up by the EU.
The potentially aggressive tax planning arrangements with a cross-border element need to be reported by the intermediaries to the tax authorities in the country in which they are resident. The EU member states then will share the information with all other member states via the Common Communication Network (CCN) on a quarterly basis.
If the taxpayer develops the arrangement in-house, or is advised by a non-EU adviser, or if legal professional applies, the taxpayer must notify the tax authorities directly.
Penalties will be imposed on intermediaries (or taxpayers) that do not comply with the transparency measures. EU member states to implement effective, proportionate and dissuasive penalties.
It is crucial to stay on the right side of the new rules. We are reviewing the practical impact of the directive including working closely with our client and our PwC network colleagues in EU member states.
We are running specific workshops with our clients to assess the initial impact. For more detailed information, please call or email one of the following contacts or your usual PwC contact.
Partner Tax & Legal Services, PwC Switzerland
Tel: +41 58 792 43 72
International Tax Services, EMEA ITS Leader, PwC Switzerland
Tel: +41 58 792 97 18
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