DAC6: The EU Directive on cross-border tax arrangements

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The EU Council Directive 2011/16 in relation to cross-border tax arrangements, known as DAC6, has been in force since 25 June 2018. DAC6 aims at transparency and fairness in taxation.

DAC6 applies to cross-border tax arrangements, which meet one or more specified characteristics (hallmarks), and which concern either more than one EU country or an EU country and a non-EU country. It mandates a reporting obligation for these tax arrangements if in scope no matter whether the arrangement is justified according to national law.

Failure to comply with DAC6 could mean facing significant sanctions under local law in EU countries and reputational risks for businesses, individuals and intermediaries.

Therefore businesses need to understand the importance and implications of the directive and the need to act now to ensure compliance by the deadline in 2020.

What are the consequences of reporting?

  • The automatic exchange of information between the EU Member States’ tax authorities does not appear to be limited to those tax authorities who are directly interested in the cross-border arrangements. Member States may also share the information with tax authorities in third countries, with which they have information-sharing agreements, where the information is relevant to those third countries.
  • Taxpayers will want to ensure that what is disclosed to tax authorities under these rules is consistent with their other filings, such as Country-by-Country Reporting. Close and timely liaison between taxpayers and their tax and other advisers will therefore be important.

When will reporting commence?

Once the rules become fully applicable (i.e. on 1 July 2020), intermediaries and taxpayers will be required to file information with their national tax authority within thirty days of the first of the following dates:

  • on the day after the reportable cross-border arrangement is made available for implementation; or
  • on the day after the reportable cross-border arrangement is ready for implementation; or
  • when the first step in the implementation of the reportable cross-border arrangement has been made; or
  • (only when an intermediary is involved) when the intermediary provided aid, assistance or advice.

As a transitional measure, where the first step in a reportable cross-border arrangement is implemented between 25 June 2018 and 30 June 2020, the arrangement should be reported between 1 July 2020 and 31 August 2020.

How can PwC help?

Our team combines experts in tax, people, processes, data and technology. By bringing together these different skill sets, we can help clients to understand DAC6, and the broader tax policy context, and implement effective controls and processes to ensure all reportable cross-border arrangements are proactively identified and managed.

  1. Impact assessment: We can analyze your current and planned activities so that you understand the impact the directive has on your reporting obligations.
  2. Governance framework: We can help you to develop a comprehensively documented governance framework to define roles and responsibilities with respect to the reporting obligations and to identify and manage risks.
  3. Data management: We can support you in the effective and efficient collation, analysis and storage of reportable data.
  4. Reporting: Using technology, we can assist you to fulfill multiple reporting requirements using the same data set and reporting mechanism in the required format, and with preparing the necessary paperwork.

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Contact us

Edwin Visser

EMEA Tax Policy Leader, PwC Netherlands

Tel: +31 88 792 3611

Dr. Arne Schnitger

Partner, Corporate Tax, PwC Germany

Tel: +49 30 2636 5466

Dr. Astrid Bauer

EMEA and Global Tax and Legal Regulatory Leader, Partner, PwC Germany

Tel: +49 69 9585 1292

Marc Diepstraten

Chairman of the Tax & Legal Board and Member of the Board of Management, PwC Netherlands

Tel: +31 887926358

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