DAC6: The EU Directive on cross-border tax arrangements

What is DAC6?

The Council Directive (EU) 2018/822 of 25 May 2018 (DAC6) amended Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements.

DAC6 applies to cross-border tax arrangements which are entered into by an EU taxpayer with other entities in EU or non-EU countries. Such arrangements will have to be reported to national tax authorities starting from 1 st July 2020 if certain criteria (hallmarks) are met.

The aim of DAC6 is to ensure transparency and fairness in taxation, as well as to counter tax avoidance. Failure to comply with DAC6 could mean facing 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 July 2020.

When will reporting commence?

Once the rules become fully applicable (i.e. on 1 July 2020), it 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 consists of tax and legal experts with considerable experience. We can help clients to understand DAC6, to analyze and identify if there are any reportable cross-border arrangements, assist with reporting the arrangements designed in-house and implement effective controls and processes to ensure all reportable cross-border arrangements are proactively identified and managed in the future.

Where PwC work on a particular assignment might qualify as intermediary, we would contact our clients offering the most thorough solution for the reporting obligation.

 

Vita Sakne

Senior Manager, Riga, PwC Latvia

+371 67094400

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