In an increasingly digital world, where capital mobility is facilitated and tax engineering increasingly sophisticated, tax fraud is estimated in France at 100 billion euros[1]. In this context, the legislator had to react by strengthening the existing regulatory system.
Thus, the forthcoming entry into force of Directive EU 2018/822, known as DAC6 (Directive on Administrative Cooperation 6), amends Directive 2011/16 / EU to better protect the Treasury against a potential outbreak of so-called “aggressive tax practices. ".
What is the purpose of this directive?
DAC6 defines the framework for administrative cooperation between member states, in particular by imposing a declaration of so-called “aggressive” cross-border agreements; as well as the automatic exchange of information between member countries.
The objective of this Directive is to strengthen tax transparency and reduce “tax evasion” in order to better protect the tax base of the Member States.
When to submit a declaration?
As mentioned, only transactions deemed to be “aggressive” will be subject to a reporting obligation; the aggressive character being assessed using the following 14 markers:
Which actors are concerned?
CAR 6 mainly applies to:
- intermediaries if they have a link with the EU,
- Possibly to taxpayers leveraging the device (if it is an internal device) [2] and not having a membership link in an EU member state.
Within the meaning of CAR 6, an intermediary is either a:
- Designer : actor orchestrating the establishment and management of the cross-border system,
- Service provider : provider of financial and / or tax services, typically law firms, accountants, financial institutions in the investment services and asset management business lines.
Below is a table illustrating the responsibility for the declaration in the different cases:
Footnotes : si the intermediary is subject professional secrecy, the declaration authorization must imperatively be requested from the taxpayer.
Which services will potentially be impacted?
The predominance of financial institutions in intermediation activities, puts them at the forefront of the DAC6 requirements, particularly in the business lines below:
When and what to declare
Importantly, the DAC6 directive is retroactive, so any cross-border device whose first stage has been implemented from the date of entry into force (June 25, 2018) is affected by the reporting obligation.
The initial date for the start of reporting was set for August 31, 2020 for the transitional period (devices from June 25, 2018 to June 30, 2020), however due to the instability caused by COVID-19, the European Commission has granted the possibility an offset from this declaration start date. This delay can be up to six months, i.e. until February 28, 2021, leaving latitude to each country in defining the precise date of implementation.
Note: As of 01/01/2020, any initiated device must be declared within 30 days.
For exemple a six-month extension has been adopted in France and Belgium, while Finland chose not to postpone the initial date.
Regarding the information to be declared, the timing is crucial, since in the recovery of the information the declaration must be made within 30 days and include the following elements:
- The list of all taxpayers and intermediaries involved (tax residence, name, tax identification number, associated persons of the taxpayer concerned and date and place of birth if it is a natural person),
- The markers detected in the device,
- Summary of the provisions to be declared,
- The date of implementation of the first stage of the device,
- The applicable national tax provisions,
- Tax benefit or value of the transaction (if available),
- Other jurisdictions involved or affected.
What consequences for the actors concerned?
Given the scope of the initiatives of DAC 6 and their complexity, the actors concerned find themselves facing new challenges to meet the requirements of the latter, which leads us to highlight the challenges to be taken up in the face of this regulation at through axes below:
The impact measurement by actor along the axes mentioned above is as follows:
Thus, the prerequisite for any initiative to comply with this directive is the analysis of its impact on your organization (activities, product lines, services, etc.) through the prisms mentioned to understand the scope to be addressed and the complexity of implementation. work.
The initiatives induced by this impact analysis will aim to define a target operating model, a technical base (customer and product benchmarks, reporting, etc.) and processes & controls making it possible to respond to the new constraints of this regulation.
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