What is DAC6 reporting of cross border arrangements?
In 2018, EU issued the Directive 2018/822/EU, known as DAC6, which is introducing new reporting obligations of cross border arrangements that have certain characteristics (i.e. broadly, reporting of those transactions whose expected benefit is a tax advantage).
The final purpose of these new obligations and of the directive itself is increasing the transparency and fairness in taxation.
Therefore, any transaction involving two countries where one is in the EU will need to be assessed in order to determine whether it is reportable or not regardless it is intra-group or with third parties. Subsequently, those transactions that have the characteristics emphasized within the Directive 2018/822/EU will have to be reported to the tax authorities.
What businesses should do about DAC6?
Companies carrying cross border transactions already need to have in place a systematic approach to capture, identify and monitor their reportable cross border arrangements designed, marketed or implemented from 25 June 2018 even though they will literally have to report these as of July 2020.
Failure to comply with DAC6 could mean facing significant sanctions under local regulations in European Union countries and reputational risks for individuals, businesses and intermediaries.
Therefore businesses need to understand the importance and implications of the directive and the need to act now to ensure compliance by the deadline in July 2020 especially taking into account that there will be a mandatory automatic exchange of information on such reportable cross-border schemes via the Common Communication Network (CCN) which will be set-up by the EU.
How we can help?
On the one hand, we can work together to manually assess the cross border arrangements, identify those reportable arrangements and for submitting the reports to the tax authorities.
On the other hand, we can assist you in creating your very own procedures and governance framework of assessing internally the cross border arrangements, identifying the reportable arrangements and submitting by your own the reports to the tax authorities.
Lastly, we can provide you with our own software system that will identify and monitor reportable advice, transactions or structures and if ultimately you are the reporting entity, support you with your reporting obligation.
In this regard, our solution « ATIPIC DAC6 Reporting» makes use of state-of-the-art technology to ensure DAC6 compliance. Our tool will allow you to:
(i) monitor, identify and capture reportable cross border arrangements;
(ii) assess cross border arrangements;
(iii) identify responsible party for reporting;
(iv) submit the reports to local tax authorities.
When we can help?
- DAC 6 – New EU tax mandatory disclosure rules with regard to cross – border transactions May 13, 2019
- Countries in the European Union that accept the transfer pricing documentation in English language April 12, 2019
- Country by Country Reporting in European Union November 22, 2018
- The role of the financial manager in preparation of the transfer pricing documentation October 12, 2018
- 10 rules for choosing the right transfer pricing consultant April 17, 2017