New mandatory disclosure requirements

Reporting measurements in
effect as per 25 June, 2018

In March 2018, new mandatory disclosure requirements for intermediaries and relevant taxpayers have been adopted by the EU.

These far-reaching amendments to the Directive on Administrative Cooperation in the field of Taxation, known as DAC6, will impose mandatory disclosure requirements on EU-based intermediaries and their clients. These measurements will enter into force on 25 June, 2018.

Mandatory disclosure in a nutshell
Under the new rules, an obligation (in principle) on intermediaries to disclose potentially aggressive tax planning arrangements and the subsequent exchange of this information between tax authorities is introduced.

It is required to report any cross-border tax planning arrangement if it meets one or more of the “hallmarks” (characterized as indicators of tax avoidance or abuseas) as listed in the Directive.

Intermediaries
The scope of intermediaries is broad and is defined as any person that carries the responsibility that designs, markets, organizes or makes available for implementation or manages the implementation of a reportable cross-border arrangement or persons that are/ should be aware that they provide aid, assistance or advice in this respect.

Besides tax advisors, intermediaries may also include accountants/CPA’s, lawyers, public notaries, (financial) consultants, trust companies and banks that have a link with the European Union.

If no intermediary with a link to the EU can be identified, or if no intermediary is involved – .e.g. the tax planning arrangement is designed by inhouse staff –  the reporting obligation falls on the taxpayer.

Timeframe
The Member States have until 31 December, 2019 to implement the amendments. Starting on 1 July , 2020 the disclosure requirements will apply. Please note that with retroactive effect for all reportable arrangements the first step in regard to which was implemented between 25 June, 2018 and 1 July 2020 will have to be reported by 31 August, 2020.

Fines
The Directive leaves it up to each Member State to decide what fines are to be imposed at a national level for not meeting the reporting requirements. The only requirement being that any penalties are effective, proportionate and dissuasive.