DAC 6 ― reporting of cross-border tax arrangements

Produced by Tolley

The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • DAC 6 ― reporting of cross-border tax arrangements
  • Background to DAC 6 and post-Brexit changes
  • Who must make a DAC 6 report?
  • Intermediaries
  • Intermediaries and legal professional privilege
  • Relevant taxpayers
  • What type of arrangements are reportable?
  • What are the category D hallmarks?
  • DAC 6 reporting deadlines
  • Timing of reports triggered before 1 January 2021
  • More...

DAC 6 ― reporting of cross-border tax arrangements

Background to DAC 6 and post-Brexit changes

DAC 6 is an EU Directive which obliges intermediaries, and in some cases taxpayers, to report information to tax authorities about cross-border arrangements which contain certain characteristics, or ‘hallmarks’. In this context, cross-border involves more than one member state or a member state and a third (non-EU) country. The rules are designed to provide tax authorities with more information about direct tax planning arrangements (rather than those involving indirect taxes and duties), although arrangements that do not have a tax avoidance motive may also be caught.

The UK ceased to be an EU member state on 31 January 2020. The implementation period (IP), during which the UK continued to be treated as a member state for many purposes, ended on 31 December 2020 (IP completion day). The UK was obliged to implement DAC 6 into domestic legislation during this time, and did so in the form of the ‘disclosable arrangements’ rules, which came into force on 1 July 2020. The first reporting deadline is 30 January 2021.

However, with effect from IP completion day, and therefore before any UK reports had to be made, the UK Government significantly restricted the scope of the disclosable arrangements rules. As a result, the only arrangements that now need to be reported in the UK under DAC 6 are those that relate to the avoidance of obligations to report information on financial accounts, or that obscure beneficial ownership (hallmark category D ― see below). The EU-UK Trade and Cooperation Agreement (TCA) requires the UK to abide by the OECD’s rules on exchange of information on cross-border arrangements. Consequently, category D is being retained as it enables the UK to comply with the OECD Mandatory Disclosure Rules (MDR).

Further changes are expected, as HMRC intends to completely repeal the UK DAC 6 regulations and replace them with new rules to implement the OECD’s MDR. The commentary

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