The Organisation for Economic Co-operation and Development (OECD) has pushed for additional levels of transparency in the context of the base erosion and profit shifting (BEPS) project.
As a result, effective 25 June 2018, the European Union (EU) Council put into force a new directive commonly referred to as DAC6, which requires additional reporting of cross-border arrangements – with in-scope arrangements having to be reported by the end of August 2020.
Who has to report?
DAC6 will largely affect intermediaries – deemed to be any person that designs, markets, organises or makes available for or manages the implementation of a cross-border arrangement, as well as anyone assisting them. Typically, intermediaries include tax consultants, lawyers, banks and corporate service providers. When no intermediary exists, the taxpayer needs to report.
What needs to be reported?
Any cross-border arrangements that are seen as 'potentially tax aggressive' need to be reported to the tax authorities. This information will then be automatically exchanged between EU member states' tax authorities. Businesses, individuals and intermediaries who fail to comply with DAC6 could face significant sanctions under local law in EU countries and suffer reputational risks.
How can Vistra help?
At Vistra, we are experts in governance, tax compliance and regulation, and are constantly mindful of statutory and regulatory obligations that might affect you and are fully committed to helping you stay compliant.