Irish Revenue has issued eBrief No. 175/22 concerning an update to Tax and Duty Manual Part 35-01-01a, Guide to Exchange of Information. The main update is the addition of the new Section 3.7, which provides an overview of the DAC6 requirements for reportable cross-border arrangements.
3.7 Council Directive (EU) 2018/822 Amending Directive 2011/16/EU As Regards Mandatory Automatic Exchange Of Information In The Field Of Taxation (DAC6 - EU Mandatory Disclosure Regime)
DAC6 introduced a mandatory disclosure regime for reportable cross-border arrangements that could potentially be used for aggressive tax planning. It is intended that the information obtained will enable Member States to act promptly against harmful tax practices by closing loopholes in legislation, undertaking risk assessments, and carrying out tax audits.
What is a reportable cross-border arrangement?
For an arrangement to be "cross-border", it must concern parties in either (a) more than one Member State or (b) a Member State and a third country. For the arrangement to be "reportable" it must meet the characteristics of at least one of the five hallmarks listed in DAC6.
Who is obliged to report under DAC6?
Reporting obligations usually fall on the intermediary in the arrangement. An "intermediary" includes persons (individuals or entities) who design, market or manage the implementation of a reportable cross-border arrangement or can be reasonably expected to know about the arrangement. Tax advisors, lawyers and companies who design schemes which meet the criteria of an arrangement are common examples of intermediaries.
In certain circumstances, specifically where legal privilege applies, the intermediary cannot report the arrangement to Revenue. In this case, the obligation to file is on the taxpayer. The intermediary must inform the taxpayer of their reporting obligations and timelines involved.
Intermediaries must file the return with Revenue, providing information on the reportable cross-border arrangement, within 30 days beginning:
(a) the day after the reportable cross-border arrangement is made available for implementation; or
(b) the day after the reportable cross-border arrangement is ready for implementation; or
(c) when the first step in the implementation of the reportable cross-border arrangement has been made,
whichever occurs first.
Revenue exchanges this information with relevant Member States within one month of the end of the quarter in which the information was filed. The first such exchange was made in April 2021.
The following legislation transposes DAC6 into Irish law:
- Chapter 3A of Part 33 of the Taxes Consolidation Act 1997; and
- the European Union (Administrative Cooperation in the Field of Taxation) Regulations 2012, as amended by S.I. No. 626/2019 - European Union (Administrative Cooperation in the Field of Taxation) (Amendment) Regulations 2019.
The use of data under DAC6 is subject to the same restrictions as set out in 3.2.3 regarding DAC2.
More detailed information on DAC6 is available in Tax & Duty Manual Part 33-03-03 - EU Mandatory Disclosure of Reportable Cross-Border Arrangements.