What is DAC6?

What is DAC6?

DAC6 is an EU directive that introduces reporting obligations for a wide range of cross-border tax arrangements.

What is a reportable cross-border arrangement?

Under the Directive a ‘reportable cross-border arrangement’ refers to any cross-border (involving either two EU member states or one EU member state and a third state) tax planning arrangement which bears one or more of the hallmarks listed in the Directive and concerns at least one EU Member State.

What is cross-border tax?

Companies with employees who visit or reside in the US and multinational groups have tax authorities from both sides of the border playing a tug-of-war to tax the same dollars of corporate profit.

Who does DAC6 apply?

DAC6 applies to any person (including an individual, partnership, company or other legal entity) operating in the EU or with interests in the EU. So it could apply to multinational companies and also applies to intermediaries such as law firms, accountants, banks and financial advisors.

Does DAC6 apply VAT?

25. Some good news is that from a UK perspective DAC6 does not apply to VAT, Customs Duties, Excise Duties or compulsory Social Security Contributions.

Does DAC6 apply to UK?

In January 2020, the UK implemented the EU directive known as DAC6, which came into force on 1 July 2020 and required “intermediaries” (including law firms, accountants and tax advisors) to report to HMRC (from 1 January 2021) cross-border arrangements that met one of a number of “hallmarks” that could be used to avoid …

Why is it called DAC6?

The sixth version of the EU Directive on administrative cooperation (DAC6) aims to provide Member States tax authorities with additional information in order to assist them to more rapidly close perceived loopholes in tax legislation and harmful tax practices.

What is DAC6 regulation?

A new EU Directive (DAC6) requires EU intermediaries (including banks, accounting firms, law firms, corporate service providers and certain other persons) involved in cross-border arrangements to make a disclosure to their tax authority if certain requirements are met.

What is DAC6 HMRC?

Report and update cross-border arrangements (DAC6) between the UK and EU member states.

Can an intermediary rely on reports from other intermediaries?

Relying on reports by others: As mentioned above, there are various instances where an intermediary may seek to rely on reports by other intermediaries to satisfy its obligations.

How many categories of Hallmark exist in the tax intermediaries directive?

Arrangements are reportable if they fall within one of a number of ‘hallmarks’. The 15 hallmarks grouped into five categories, A-E are further described in table 2 below. The hallmarks are broad categories setting out particular characteristics identified as potentially indicative of aggressive tax planning.

Which category of intermediary provides aid assistance or advice in relation to the designing marketing Organising or implementing a cross-border arrangement?

A service provider is an intermediary who undertakes to provide aid, assistance or advice in relation to the designing, marketing, organising or implementing of a reportable cross-border arrangement.

What is a hallmark DAC6?

The DAC 6 Hallmarks are broad categories setting out characteristics identified as potentially indicative of aggressive tax planning. More specifically, if a transaction or an arrangement contains at least one of the five hallmarks, then it must be reported to the appropriate regulatory authority.

Which type of tax arrangements are within the scope of the directive?

Scope: the scope of the Directive encompasses all taxes of any kind with the exception of VAT, customs duties, excise duties and compulsory social contributions because these are already covered by other Union legislation on administrative cooperation. Also recovery of tax debts is regulated via its own legislation.

What is a deductible cross border payment?

1. Cross Border Payments – Deductible cross border payments in certain cases where one of the following occurs: The payment has a full tax exemption in the jurisdiction of the resident. e. The payment benefits from a preferential tax regime where the recipient is resident.

Who is an intermediary under DAC6?

DAC6 requires lawyers, accountants, tax advisers, bankers and other “intermediaries” to report some aggressive cross-border tax arrangements. One of the key aspects of the Directive which HMRC clarify in their guidance is who is considered an intermediary.