EU Mandatory Disclosure regime for cross-border transactions ‘DAC6’

The EU has introduced measures to increase tax transparency to better understand potentially aggressive tax structures. We help you understand the impact of the disclosure rules.

With these measures the EU takes transparency with respect to potentially aggressive tax arrangements to a higher level. 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) has far-reaching consequences for tax advisors, service providers and taxpayers.

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DAC6 in 90 seconds- The new EU directive on cross-border tax

DAC6, the EU directive on cross-border tax arrangements, came into force on 25 June 2018. This directive increases transparency requirements cross-border arrangements and prevents against aggressive tax planning. Businesses headquartered in or trading within the EU will need to ensure compliance with DAC6 from 25 June


DAC6 imposes mandatory disclosure requirements for certain arrangements with an EU cross-border element. Where such an arrangement falls within certain "hallmarks" mentioned in the directive and in certain instances where the main or expected benefit of the arrangement is a tax advantage, the arrangement should be reported. 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.

On 1 July 2020, the Directive entered into force and the obligation to notify took effect on 1 January 2021. The DAC6 Directive has retroactive effect and therefore also applies to cross-border constructions subject to notification that have taken place since 25 June 2018.

PwC’s viewpoint

In general PwC is supportive of full transparency to the tax authorities. DAC6 however creates an inherent risk of over-reporting as well as under-reporting, because of the potentially broad scope of the hallmarks, the multiple reporting by intermediaries involved and a potential lack of consistent interpretation in the EU member states. PwC called upon the European Commission and the EU Member States to come up with clear and consistent interpretative guidance agreed between the different EU Member States to help limit unnecessarily excessive administrative costs and limit confusion for taxpayers and service providers about their responsibilities.

What does it mean for you?

As our client

Our clients should be able to answer the following questions in relation to all cross-border arrangements:

How to assess what arrangements to report?

  • Is a certain tax arrangement a reportable tax arrangement? PwC has developed a tool to support you with recognising those arrangements.
  • What controls and processes do you have in place to capture and analyse whether a transaction needs to be reported?
  • How will this be monitored where Tax and Finance are not (directly) involved?
  • What if an intermediary reports your tax arrangement?

It is important to note that DAC6 does not only capture cross-border tax arrangements that can be perceived as being aggressive, but any cross-border arrangement that meet certain characteristics.

If taxpayers are conducting DAC6 reportable arrangements, they should determine how this fits with their tax policy/strategy.

Who should make the disclosure?

  • Are you as a taxpayer required to make the disclosure yourself or are there advisers or other parties involved in the transaction which may already have the obligation to report? In that case, how do you determine if anything is reported on you by the intermediary?
  • Please note that if EU based advisers or other service providers are involved, they are likely to have the obligation to report. In that case, you will generally not be required to report yourself. However, if more than one adviser or another third party is involved, they could coordinate between them on who should file a single report for all of them and for that purpose agree on the contents of the report.
  • Should you be required to report yourself, PwC can assist you with a reporting solution should you prefer outsourcing over building in-house solutions for DAC6.

What should be disclosed?

  • Can you capture the right information from your systems and is this consistent with other filings (e.g. Country-by-Country Reporting)?
  • What are third parties disclosing about you and does it coincide with your understanding / disclosure? Please note that PwC (Netherlands) will generally be considered an ‘intermediary’ under DAC6. DAC6 does not require us to inform our clients when PwC is reporting under DAC6. However, we will always engage in a dialogue with our client on the DAC6 impact for each advice or transaction. In those cases where we are required to report, we will inform the client thereof and can provide the details of the report.
  • There will be penalties in place for non-compliance. This is both a risk and a reputational issue for taxpayers (as well as for their tax advisers and other service providers).

Remember, information will be shared automatically with all EU Member States.

Reportable tax arrangements

Reportable tax arrangements are 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.

Cross-border arrangements

Cross-border arrangements are arrangements involving at least two EU jurisdictions, or at least one EU jurisdiction and one or more non-EU jurisdictions. If a tax arrangement only involves one tax jurisdiction or only non-EU tax jurisdictions, the arrangement is not considered to be of a relevant cross-border nature and will then not be reportable.

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Marc Diepstraten

Marc Diepstraten

Chief Digital Officer, PwC Netherlands

Tel: +31 (0)65 317 73 03

Edwin Visser

Edwin Visser

Partner, PwC Netherlands

Tel: +31 (0)62 294 38 76