Companies or professionals designing or promoting tax planning arrangements with cross-border elements now need to adhere to Europe's latest rules around reporting.
The sixth amendment to the Directive on Administrative Cooperation in the field of taxation (Directive 2011/16/EU, otherwise known as 'DAC 6') entered into force on 25 June 2018. The legislation is part of the European Commission's (EC) aim to enhance tax transparency in the European Union, and combat aggressive tax planning.
If you're a company or professional – aka an 'intermediary' – that designs or promotes tax-planning arrangements with cross-border elements involving an EU member state, DAC 6 especially applies to you.
What's new in DAC6?
The obligation to report to the tax authorities, any cross-border arrangements that are seen as potentially tax aggressive. This information will be automatically exchanged with all EU member state tax authorities.
What needs to be reported exactly?
'Aggressive tax planning' is not actually defined, however the EC has provided an annex that lists a number of indicators of tax avoidance or abuse. The cross-border arrangement becomes reportable if it meets one or more of these indicators.
Who needs to report and to whom?
Professionals or companies that design, market, organise, make available or manage the implementation of any reportable cross-border arrangement. But that's not all; professionals or companies that have helped, assisted or advised around a reportable cross-border arrangement are also obligated. If you have an EU taxable presence, or work with an EU professional services body such as TMF Group, this counts too. If there is no intermediary involved, or the intermediary relies on a legal privilege exemption, the taxpayer is required to report.
The Reportable Cross-Border Arrangements information needs to be disclosed to your applicable local tax authority.
So, when do I need to report?
By 31 August 2020, and the law applies to transactions from 25 June 2018.
EU member states have until 31 December 2019 to transpose DAC 6 into their national laws and regulations.
Talk to us
Whether you are an existing TMF Group client or not, we have a solution for you.
New clients: we can act as the central point of contact (co-ordinator) for you and your various intermediaries, collating and managing the required information necessary for reporting purposes.
Existing clients: we can agree with you and your advisor on who will take on ultimate reporting responsibility. Where we are the directors of your company, we will document this accordingly in a board meeting. And where we are a director for a cross-border arrangement, we will track the entity (going back to 25 June) and discuss/agree on what should be reported.
Need more information? Make an enquiry with us today.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.