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Join us as we provide more insights about this new reporting obligation and what it means for your business.
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.
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:
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.
DAC6 is relevant for Singapore headquartered groups who have subsidiaries, branches or investment structures in member states of the European Union. Cross-border arrangements where at least one EU member state is affected could be subject to reporting. For a Singapore headquartered group, in particular (but not limited to) the following transactions could be subject to reporting:
In the case of a reportable arrangement, either the intermediary involved into this arrangement (e.g. tax advisor, bank etc.), or the taxpayer itself would be obliged to report the arrangement under DAC6. Consequently, the EU subsidiaries/branches of a Singapore headquartered multinational group could be obliged to report certain cross-border arrangements.
The subsidiaries/branches of Singapore headquartered companies that fulfil the definition of an “intermediary” for a specific arrangement (e.g. banks typically qualify as intermediary), will also need to report the transactions where they are involved as an intermediary.
In case of non-compliance, there will be significant penalties. According to the directive, each member state shall lay down the rules on penalties applicable to infringements of national provisions adopted. Penalties vary significantly between Member States, and go up to EUR 5 Mio. (in Poland).
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.
Impact Assessment |
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Governance Framework |
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Data Management |
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Reporting |
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