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EU Mandatory Disclosure of Cross-border Arrangements Rules (DAC6)


What is DAC6?

The EU directive on mandatory disclosure of cross-border arrangements (Council Directive (EU) 2018/22) ("DAC6") obliges EU Member States to implement legislation requiring intermediaries (and in some cases taxpayers) to report tax arrangements that meet certain "hallmarks" to the relevant tax authority. Information about these reportable tax arrangements that have been collected by a Member State may be exchanged between Member States. Member States are required to implement national legislation to take effect by 1 July 2020.

A Herbert Smith Freehills entity may be an intermediary in a matter on which you have instructed us or propose to instruct us and may have obligations to report those matters to the relevant tax authority in one or more Member State.

Cross border arrangements, the first step of which was made on or after 25 June 2018, will need analysed and, if reportable, details filed. After this initial reporting phase, information in respect of reportable arrangements must be filed within 30 days of particular trigger events relating to an intermediary's involvement. The date from which this obligation arises may be different in different countries.

What types of tax arrangements are covered?

Tax arrangements involving a wide range of taxes are covered. Cross border arrangements that involve two or more countries where at least one of these countries is a Member State are covered by the rules.

Cross-border tax arrangements must also meet at least one of the "hallmarks" identified in the DAC6 to be reportable.

What information may have to be reported?

Reportable information may include: the identity of the taxpayer(s) and intermediaries, the jurisdictions concerned in the arrangement, commercial and business reasons for entering into a the arrangement, a summary of the arrangement, the date and value of the arrangement and the identification of any other person in a Member State likely to be affected by the reportable cross-border arrangement.

If you would like to know if a matter on which you have instructed us or propose to instruct us may be affected by these new rules please ask a member of the matter team working for you.