Directive for administrative cooperation—FAQs
Produced in partnership with Ali Kazimi and Rob Smith of Hansuke Consulting
Directive for administrative cooperation—FAQs

The following Tax guidance note Produced in partnership with Ali Kazimi and Rob Smith of Hansuke Consulting provides comprehensive and up to date legal information covering:

  • Directive for administrative cooperation—FAQs
  • What is the directive for administrative cooperation?
  • Does it cover any additional countries beyond those in the EU?
  • How does it impact on CRS?
  • Is there any practical impact on FIs in the UK?
  • Does the DAC differ from CRS?
  • Is there any difference to the due diligence and reporting deadlines in the UK?
  • What will be the impact on the current EU Savings Directive (EUSD) return?

What is the directive for administrative cooperation?

The directive for administrative cooperation (DAC) (Directive 2011/16/EU) provides for wide-ranging exchange of information between tax authorities within the EU Member States. It also provides for assistance between tax authorities.

Previously, the EU Savings Directive (EUSD) facilitated the exchange of financial account information within the EU in relation to financial accounts held by residents of other Member States. However, EUSD was limited in its ability to pierce the corporate veil to provide transparency of tax information and was limited to savings income. In addition, certain jurisdictions (for example, Austria) applied a withholding charge to interest paid to non-residents, as their local banking secrecy laws prevented reporting.

In the context of an Organisation for Economic Cooperation and Development's (OECD)-driven programme to enable global exchange of financial information between states in order to prevent tax evasion, culminating in the Common Reporting Standard (CRS), Council Directive 2014/107/EU (sometimes referred to as DAC2) extends the DAC so that it covers financial account information, including interest, dividends and account balances, and now achieves the same transparency as CRS in relation to the individual beneficial owner of passive investment structures.

Separately, EU Council Directive of 8 December 2015 (Council Directive (EU) 2015/2376/EU) is further enhancing the DAC to cover cross-border tax rulings and transfer pricing arrangements with effect from 1 January 2017.