DAC6 Directive

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.

What’s DAC6 all about?

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.

Become DAC6 compliant with our tool

How will this work?

Needing to stay informed

The recent decision by the European Commission to amend the Directive on administrative cooperation (DAC6) to allow for an optional six month deferral of reporting deadlines has had a major impact on the DAC6 projects of multinational groups. The revised reporting deadlines for those countries where the deferral applies are as follows:

The reporting on ‘historical’ cross-border tax arrangements must take place by 28 February 2021;
The period of 30 days for filing information begins on 1 January 2021 if the triggering event took place between 1 July 2020 and 31 December 2020;
The date for the first exchange of information between Member States on reportable cross-border tax arrangements is 30 April 2021;
There is an option to apply for an additional three month extension, subject to unanimous agreement by the Member States and depending on the COVID-19 situation.

Although the adoption of the deferral has been official announced or is expected to be announced by the vast majority of the Member States, there have been three countries where no deferral has been provided for.

Austria, Finland, and Germany have announced that the deadlines for reporting would still apply as per the original DAC6 deadlines. Please note that reporting in Austria is not possible for IT reasons and a 'de facto' deferral is applied. A three-month deferral effectively applies for new arrangements and a two-month deferral for legacy arrangements (and thus no penalties would apply for late filing up to that time).

On 31 December 2020, the UK Government announced that the scope of reporting under DAC6 would be limited to cross-border arrangements under the category D hallmarks (which relate to CRS avoidance and opaque ownership structures). Intermediaries and relevant taxpayers in the UK will not need to report arrangements under hallmark categories A, B, C and E (unless category D was also met).

How we can help you respond correctly and in time

Individual Member States are issuing local guidance and reporting information on a regular basis. As DAC6 is officially live, there is no time to lose in preparing for this regulation. We can help you cover all the bases:

DAC6 tax technical advice regarding hallmark analysis
Tailored DAC6 training sessions for your specific needs
Advice on DAC6 processes and governance (how does DAC6 integrate into your wider tax strategy?)
Fully web-based DAC6 compliance solution (DAC6 Smart reporting Tool) enabling you to collect and analyse potentially reportable arrangements and generate the reporting files in each country

Get in touch with us. We’ll help you rapidly work out where you stand and make the necessary preparations, expertly and efficiently.

DAC6 in 90 seconds

How to prepare for DAC6

Are non-EU companies affected?

If I comply with BEPS, am I prepared for DAC6 too?

DAC6 in national laws: what does it mean for you?

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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.

Swiss HQ group with EU subsidiaries or foreign HQ group with Swiss subsidiaries and transactions with EU subsidiaries
Swiss tax advisors providing services with a cross-border element where at least one party is located in the EU
Swiss law firms providing services with a cross-border element where at least one party is located in the EU
Swiss advisors managing the implementation of certain arrangements
EU resident individuals or families

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.

June 2018: Directive comes into force and transitional period starts
December 2019: directive implemented in local legislation
July 2020: legislation/regulations implementing DAC6 in member states is effective
31 January 2021: first possible reporting deadline (original deadline 31 July 2020)
28 February 2021: reporting deadline for legacy arrangements (original deadline 31 August 2020)
30 April 2021: first quarterly governmental exchange

Note: Austria, Finland and Germany have announced that the original deadlines are applicable. Austria provides a 'de facto' deferral (see above in section 'Needing to stay informed').

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.

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.

From July 2020, certain cross-border transactions need to be reported to the tax authorities under the European Union’s DAC6 regulation. Do you have the governance and technology framework in place to comply?

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