The DAC6 reporting requirement will come into effect on July 1, 2020.
The Dutch tax authority has published detailed guidance on the country’s DAC6 law concerning reportable cross-border arrangements.
The DAC6 reporting requirement will come into effect on July 1, 2020.
The guidance covers topics such as when to report a cross-border arrangement, which tax arrangements must be reported, which taxes does the DAC6 law apply to, how to report potential tax arrangements, among other things.
The guidance notes that intermediaries virtually always have to report a potential tax avoidance arrangement. “If you are an intermediary and you are involved in a potentially aggressive international tax arrangement, you have to report it,” it notes.
According to the guidance, there are two exceptions to the above rule. These are: another intermediary has already reported the tax arrangement and he has given you a reference number to prove it; and a legal professional privilege exists.
The guidance notes that the DAC6 law applies to all intermediaries, including tax consultants, lawyers, accountants, civil-law notaries, financial advisers, banks, and trust offices.
The guidance notes that taxpayers have to report a potential tax avoidance arrangement if an intermediary from outside the European Union is involved in the artificial tax arrangement. Taxpayers would also have to report where an intermediary who is involved in the artificial tax arrangement has a legal professional privilege, or where no intermediary is involved in the tax arrangement.
“When in doubt, report it yourself,” the guidance notes.
The DAC6 law has retrospective effect and tax arrangements in which a reporting entity is involved in between June 25, 2018, and July 1, 2020, must be reported between July 1, 2020, and August 31, 2020. Every arrangement must be reported within 30 days.
The guidance notes that a tax arrangement is reportable if it has one or more of hallmarks specified in the law. The tax authority said it would provide additional guidance on the hallmarks shortly.
The guidance notes: “The hallmarks have been set at a European level and may, therefore, be interpreted differently at times. If you are not sure if a tax arrangement is potentially aggressive, be on the safe side and report it anyway.”
Tax arrangements may be reported by means of the Cross-Border Arrangements Reporting form, in English. The form may be completed via the data portal of the Tax and Customs Administration from July 1, 2020. A reference number would be provided the reporting entity after the report is submitted.
Last, the guidance notes that failure to report would attract a high fine.
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable at editor@transferpricingnews.com