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DAC6 information exchange between EU Member States may begin on April 30

March 2021

In brief

Most of the EU Member States that deferred the DAC6 reporting deadlines due to the pandemic postponed them to February 28, 2021. Thus, the extended deadline for reporting cross-border arrangements satisfying at least one of the DAC6 hallmarks and whose first step was implemented on or after June 25, 2018 has passed. 

However, EU Member States still are navigating the DAC6 landscape, with States frequently deviating in implementing and interpreting the rules. While some EU countries have published guidelines, the interpretation of key requirements for certain hallmarks and concepts remains unclear.  

Despite the challenges, the EU is committed to begin the exchange of information on reportable cross-border arrangements between European tax authorities on April 30, 2021. 

Action item: MNEs should consider implementing internal control mechanisms to timely identify potential DAC6 exposures and coordinate filing of reportable arrangements.


EU Council Directive 2018/822 of May 25, 2018, amending Directive 2011/16/EU concerning “mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements (broadly known as ‘DAC6’ or the ‘DAC6 Directive’),” introduced a new mandatory disclosure regime for EU advisors and taxpayers. 

The DAC6 Directive’s main objective is to provide tax authorities with an early warning mechanism for potentially ‘tax aggressive’ schemes with tax avoidance purposes. 

Cross-border arrangements that meet at least one of the hallmarks - characteristics identified in the DAC6 Directive as being potentially tax aggressive - can fall within the scope of the DAC6 Directive. Arrangements that occurred between June 25, 2018 and June 30, 2020 (the ‘interim period’) initially were required to be disclosed by August 31, 2020.  However, most EU countries agreed to defer the deadline until February 28, 2021 in light of the COVID-19 pandemic. 

Implementation status

With the exception of Cyprus, all EU Member States have transposed the DAC6 Directive into their domestic legislation. DAC6 requires disclosing reportable arrangements to the relevant tax authorities within 30 days of the arrangement:  

(i) being made available for implementation,

(ii) becoming ready for implementation, or 

(iii) implementing its first step,

whichever occurs first.

The novelty of the regulations and the post-DAC6 implementation environment create significant  challenges for the Mandatory Disclosure Regime (MDR).  One main concern facing relevant parties is the divergence of criteria with respect to interpretation guidelines, which currently are available only in some EU countries.

The different implementation and interpretations by EU Member States increase the level of scrutiny that advisors and taxpayers need to perform in order to comply with the DAC6 regulations. For example, the interpretation of Hallmark E3 (‘Intragroup cross-border transfer of functions and/or risks and/or assets') the context of holding entities is not yet consistent among Member States. Thus, an EU-wide approach often is necessary to assess DAC6 implications, especially if an arrangement impacts more than one Member State. 

Initially, the United Kingdom implemented the DAC6 Directive as put forward by the European Union.  However, the UK removed the disclosure obligation in light of Brexit, unless the cross-border arrangement relates to ‘D Hallmarks.’ Category D includes situations where reporting obligations are circumvented or when a non-transparent legal or beneficial ownership chain is impacted. 

Exchange of information

The first exchange of DAC6 information between European tax authorities is expected to occur on April 30, 2021. Local authorities and revenue services intend to meet this milestone and ensure timely compliance with the requirements of the European Union.  

How tax authorities will respond when they have access to this information is uncertain. However, failure to comply with the DAC6 requirements could result in imposition of penalties on taxpayers or their advisors (‘intermediaries’). 

Multinational groups should consider implementing internal controls and mechanisms allowing them to identify and comply with DAC6 obligations. Companies must be able to coordinate a quick and unified response toward DAC6 exposures and compliance requirements in seeking to avoid non-filing or late-filing penalties (see the 30-day disclosure requirement above). Operations in departments other than tax (such as finance, treasury, legal, and human resources) also could trigger DAC6 reporting obligations. 

The takeaway

The first DAC6 information exchange between EU member states is expected to begin on April 30. MNEs with interests in Europe should intend to satisfy compliance with the DAC6 disclosure requirements on a timely basis. If they have not already done so, MNEs should develop internal control mechanisms to timely identify potential DAC6 exposures and coordinate filing of reportable arrangements within the 30-day window.

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Bernard Moens

US International Tax Inbound Leader, PwC US

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