DAC6 refers to the EU Directive 2018/822 of 25 May 2018 which introduced mandatory disclosure rules (DAC6) for intermediaries and relevant taxpayers. These new rules require the disclosure of information on reportable cross-border arrangements to local tax authorities. The information reported is exchanged between EU Member States.
The mandatory disclosure rules (MDR) were transposed into Belgian legislation in December 2019 and took effect on 1 July 2020. However, a transitional retroactive period applied to qualifying cross-border arrangements between 25 June 2018 and 30 June 2020.
Additionally, a 6-month deferral of the reporting obligations applied for the period between 1 July 2020 and 31 December 2020. In principle, reportable cross-border arrangements must be reported within 30 days.
While the legislation primarily targets potentially aggressive tax planning structures, its scope is quite broad. Accordingly, cross-border tax arrangements that contain one of the defined hallmarks must be reported to the tax authorities. Non-compliance with the reporting obligations can lead to fines of up to EUR 50.000 or EUR 100.000 in case of fraudulent intent.
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An arrangement must concern more than one EU Member State or an EU Member State and a third country. Furthermore, certain criteria regarding the participants must be met to qualify the arrangement as a cross-border arrangement. The term ‘arrangement’ is not defined and has a broad meaning. It may include a transaction, agreement, action, scheme, operation, event or undertaking.
A cross-border arrangement is reportable if it contains at least one of the hallmarks. The hallmarks cover a wide range of arrangements and are classified in five categories:
The main benefit test applies to category A, B and some of category C transactions. It is a "benefit" test and not a "purpose" test. Accordingly, it can have an impact on commercially driven transactions as well as tax motivated ones.
This test is met if it can be established that the main benefit or one of the main benefits which, having regard to all relevant facts and circumstances, a person may reasonably expect to derive from an arrangement is the obtaining of a tax advantage.
The primary reporting obligation rests with EU-based intermediaries (based on EU nexus criteria).
An “intermediary” is defined as any person who designs, markets, organizes, makes available for implementation or manages a reportable cross-border arrangement (i.e. primary intermediary). In addition, an intermediary also means any person that knows or could be reasonably expected to know that they have provided, directly or by means of other persons, ‘aid, assistance or advice’ in relation to a reportable cross-border arrangement (i.e. secondary intermediary).
Where an intermediary is unable to report, for reasons of legal professional privilege, it must notify the other intermediaries and/or relevant taxpayer(s) in writing that it is shifting its reporting obligation to the other intermediaries or to the relevant taxpayer(s).
The reporting obligation rests with the relevant taxpayer when:
Where there is more than one intermediary, all intermediaries must report unless there is written proof that the reporting was done by another intermediary.
Where there is more than one relevant taxpayer and the reporting obligation rests with the relevant taxpayer, the reporting must be done by the relevant taxpayer that:
An exemption applies if there is written proof that the reporting was done by another relevant taxpayer.
The reporting by primary intermediaries and relevant taxpayers must be done within 30 days, from:
The reporting by secondary intermediaries must be done within 30 days beginning on the day after they provided aid, assistance or advice.
Administrative deferral: January and February 2021
An administrative deferral until 28 February 2021 is granted for the arrangements which have to be reported in the months January and February 2021. The sanctions for late reporting will not apply during this period.
Cross-border arrangements where the first step in the implementation was made between 25 June 2018 and 30 June 2020, must be reported no later than 28 February 2021.
Cross-border arrangements with a trigger date in the period between 1 July 2020 and 31 December 2020, should have been reported no later than 30 January 2021, but an administrative deferral was granted until 28 February 2021. The first periodic report for marketable arrangements must be submitted by 30 April 2021.
We offer different service levels to help you comply with the DAC6 reporting obligations and can tailor these services to your organizational and business needs. Our services include: