EU DAC6 - Tax structures Disclosure & Reporting comes into effect 1 July 2020

[Martin Everson]

DAC6 Directive

DAC6 provides for mandatory disclosure requirements for certain tax planning models with EU cross-border elements. PwC helps with advice.

www.pwc.ch

What’s DAC6 all about?

The EU is introducing an additional level of transparency in order to detect potentially aggressive tax arrangements.

The amendment to Directive 2011/16/EU on mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements (DAC6 for short) will have far-reaching consequences for tax advisors, service providers and taxpayers – including organisations and individuals in Switzerland and Lichtenstein.

DAC6 imposes mandatory disclosure requirements for certain arrangements with an EU cross-border element where the arrangements fall within certain "hallmarks" mentioned in the directive and in certain instances where the main or expected benefit of the arrangement is a tax advantage. There will be a mandatory automatic exchange of information on such reportable cross-border schemes via the Common Communication Network (CCN) which will be set-up by the EU.

Although the directive is not effective until 1 July 2020, taxpayers and intermediaries need to monitor their cross-border arrangements already as of 25 June 2018. Therefore the time to act is now.

 

[Martin Everson]

DAC6 - EU Mandatory Disclosure Regime

The sixth version of the EU Directive on administrative cooperation (DAC6) aims to provide Member States tax authorities with additional information in order to assist them to more rapidly close perceived loopholes in tax legislation and harmful tax practices.

www2.deloitte.com

The sixth version of the EU Directive on administrative cooperation (DAC6) aims to provide Member States tax authorities with additional information in order to assist them to more rapidly close perceived loopholes in tax legislation and harmful tax practices. Taxpayers and intermediaries entering into or advising on cross border arrangements involving EU jurisdictions will need to monitor where reporting will be required and disclose as necessary.

Who does it affect?
DAC6 requires EU intermediaries to file information on RCBAs to their home tax authorities. Where no EU intermediary is involved or the intermediary asserts legal professional privilege, the reporting obligation will fall instead to the EU taxpayer. Failure to comply will result in penalties.

The definition of an intermediary is broad, capturing lawyers and advisers, and is expected to apply to banks, trustees, insurance companies, asset managers and other service providers.

Such intermediaries will be required to report on RCBAs that involve at least one EU Member State, where certain ‘hallmarks’ are met.

 

[DavidS]

This does not affect lawyers right? The lawyer is still bound by clients secrecy, right?

 

[JohnLocke]

This does not affect lawyers right? The lawyer is still bound by clients secrecy, right?

Depends very much on the particular situation and client case. In some cases they can be forced to report you to the authorities, it's going to be very tough from now on.