DAC6 imposes mandatory reporting of cross-border arrangements affecting at least one EU Member State that fall within one of a number of “hallmarks”.
All MNEs with business operations in the EU must comply with DAC6. This applies irrespective of where the MNE is Headquartered (US HQ MNE which have entities in any of the EU countries will need to comply). Also, there are no minimum thresholds before DAC6 reporting applies and no safe harbor exceptions.
Similarly, any intermediary (tax advisory firm) that is registered to do business in the EU will need to comply with DAC6 reporting requirements.
DAC6 is not just about aggressive tax planning. The Directive has been drafted as such that it also applies to standard transactions with no particular tax motive. This means that ordinary transactions such as cross-border leasing, intercompany royalty payments, securitization structures, certain types of reinsurance and many standard group corporate funding structures may be reportable.
Severe penalties could apply to failure to comply with DAC6. The Netherlands for example has proposed penalties as much as EUR 830,000.
The DAC6 directive is set to come into force on July 1st, 2020. However, there is a retroactive reporting obligation for cross-border arrangements that were made available between June 25th, 2018 and July 1st, 2020. The first DAC6 report is due on August 31, 2020 (however Poland has made the rules effective from 2019).
A comprehensive library written in an FAQ format that lists all the DAC 6 requirements for each country, from identifying reportable arrangements to rules on who needs to report and when. The library will also include the specific DAC6 implementation rules for each country, with English translations, and will highlight the differences in each country's implementation as compared to the DAC6 Directive, Council Directive (EU) 2018/822 of 25 May 2018.
Several tools to capture both reportable arrangements and associated cross-border transactions. The tools will enable users to directly upload transactions (that could be previously downloaded from an ERP system) and will apply logic to automatically flag transactions that may need to be reported under DAC6. A data survey tool can then be used to collect additional information, which includes surveying both in-house stakeholders and outside advisors to list reportable arrangements and confirm that all the transactions that are connected to reportable arrangements have been captured. A final piece of logic will then be applied to combine arrangements and transactions and separate them between those that will be reported by an intermediary and those that need to be reported by the taxpayer.
A due date tracker that lists out all the upcoming due dates for filing country specific DAC6 reporting forms. The tracker can also automatically create notifications and reminders for the parties responsible.
TA forms tool that auto-populates editable versions of the DAC6 reporting forms with prefilled data and enables collaboration among stakeholders (including tax advisors) via data survey or chat to complete missing fields. Completed forms will then be converted into the required filing format based on local country specifications (XML, etc.). Users can then file these forms with the local country tax authorities (usually by uploading the file via a government website). All data from a filed form is reused where relevant to easily complete subsequent filings.
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