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DAC6: The EU Directive on cross-border tax arrangements

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.

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.

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.

On 24 June 2020, ECOFIN agreed to give EU Member States the option to defer reporting deadlines due to COVID-19. If Member States decide to exercise this option to defer, the revised deadlines are:

  • For transitional arrangements (where implementation started between 25 June 2018 and 30 June 2020) reporting will be deferred until 28 February 2021 (originally 31 August 2020).
  • For arrangements where the reporting trigger occurs between 1 July 2020 and 31 December 2020, the 30 day reporting window will not start until 1 January 2021 (i.e. 30 January 2021 filing deadline).
  • For arrangements where the reporting trigger occurs after 31 December 2020, reports will continue to be due within 30 days of the triggering event.
  • For marketable arrangements, intermediaries must make their first periodic reports by 30 April 2021.
  • The first automatic exchange of information between Member States will take place by 30 April 2021.

 

Which countries opted for the deferral?

All EU Member States except for Germany, Finland and Austria decided to defer the original deadlines. Even though Austria did not opt for a deferral, reporting did not start until October due to technical reasons.

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.

Analyse your current and planned activities

How to develop a comprehensively documented governance framework?

Support you with your reportable data

Using technology will help you with preparing necessary paperwork

Support might be helpful if limited internal resources exist to cover specific DAC6

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Quiz: The DAC6 championship has started

Are you ready to join the race?

DAC6 compliance is a continuous marathon for taxpayers and it's part of the "new normal" of the tax ecosystem.

Where do you stand in this marathon?

Take the mini-quiz and find out!

dac 6 marathon

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Contact us

Dr. Arne Schnitger

Dr. Arne Schnitger

Partner, PwC Germany

Tel: +49 30 2636 5466

Dr. Astrid Bauer

Dr. Astrid Bauer

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

Tel: +49 69 9585 1292

Marc Diepstraten

Marc Diepstraten

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

Tel: +31 887926358

Adrian Rudd

Adrian Rudd

Director, Tax Regulation and Policy, PwC United Kingdom

Tel: +44 (0)7753 928353

Richard Jerabek

Richard Jerabek

Partner, International Business Taxation & Tax Policy, PwC Austria

Tel: +43 1 501 88-3431

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Contact us

Dr. Astrid Bauer

Dr. Astrid Bauer

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

Tel: +49 69 9585 1292

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