What is DAC6?
DAC6 is a European regulation aimed at reducing international tax evasion and promoting transparency. DAC6 requires lawyers, accountants tax advisors, bankers and other “intermediaries” to report some aggressive cross-border tax arrangements. These “mandatory disclosure requirements” (MDR) are for tax transactions that cross EU borders and where it seems that the primary purpose of the transaction is a tax advantage.
DAC6 specifies a list of “hallmarks” or criteria that must occur in order for the tax arrangement to be reportable.
Training is recommended in order to understand the intricacies of these hallmarks and to determine which transactions must be reported. In addition, all cross-border tax transactions should be logged, even those that do not meet the criteria, in order to monitor and justify reporting procedures in the event of an audit.
When does DAC6 come into force?
The DAC6 mandatory reporting requirement is officially in force on 1 July 2020. However it will cover transactions retroactively from 25 June 2018. In addition, some EU Member States, such as Poland have already introduced a reporting requirement into local legislation.
Who is affected by DAC6?
Any of the following groups could be considered an intermediary:
- Lawyers
- Accountants
- Tax Advisers
- Financial Advisers
- Banks
- Private Equity Funds
- Institutional Investors
- Fund Managers
- Consultants