DAC 6: Obligation to report cross-border transactions

24 July 2020

The EU DAC6 Directive imposes a new obligation on intermediaries and taxpayers to notify cross-border arrangements. As the reporting obligation varies from one EU Member State to another and non-compliance can result in severe sanctions, it is essential that you carefully review your reporting obligation.

The amendments to DAC6 are valid from 25 June 2018. The notification obligation applies to all transactions that have been executed, are ready to be executed or for which a first step has been taken, after the date mentioned above. Arrangements that were in place before 25 June do not need to be notified.

Information obligation DAC 6 

Under the DAC6 Directive, there is a reporting obligation if:

  • it involves an arrangement: the term “arrangement” is not precisely defined and could cover everything from a regular transaction to a sophisticated tax planning structure. It is therefore very unlikely that the transaction would not be reported because it was not an "arrangement".
  • it is a cross-border activity: the arrangement must be cross-border. This means that at least two EU Member States or one Member State and a third country must be involved. This involvement could be done through a subsidiary, through a permanent establishment or even activity in another state.
  • it contains at least one of the characteristic features: these are listed in Annex IV of the DAC6. Characteristic features are those features of cross-border arrangements that provide an indication of the potential risk of tax avoidance. However, the obligation to report is also demonstrated by other characteristics and arrangements that are not established for the purpose of tax avoidance. One example is the transfer of intangible assets.

Prepare for DAC6

BDO offers a wide range of services, both locally and within a global network. We offer you:

  • Compilation of a project plan to identify possible notified measures retrospectively
    • by 28 February 2021 for arrangements which met the characteristics between 25 June 2018 and 30 June 2020
    • by 31 January 2021 for arrangements which met the characteristics between 1 July 2020 and 31 December 2020
  • Formulation of DAC6 internal company compliance policy
  • DAC6 training
  • Tax support for transactions

DAC6 obligation in the Czech Republic

Due to the COVID-19 pandemic, the obligation to notify cross-border transactions has been adjusted:

  • Arrangements that have met the requirements between 25. 6. 2018 and 30. 6. 2020 are due to notify before 28. 2. 2021
  • Arrangements that have met the requirements between 1. 7. 2020 and 31. 12. 2020 are due to notify before 31. 1. 2021