business taxation

DAC 6: Fiscally aggressive cross-border arrangements


The "DAC 6" Act (1) requires taxpayers and certain intermediaries to declare to the tax authorities any cross-border arrangements which are considered to be fiscally aggressive.

It should be made clear from the outset that the three criteria listed must be met cumulatively in order for the whole to generate a reporting obligation:

It must be an arrangement, i.e. a setup or agreement which may or may not be enforceable and which involves at least one party.

This arrangement (setup) must be cross-border, i.e. involve at least 2 countries, one of which must be a member state, and another state which is a member or non-member of the European Union.

In addition, the arrangement (setup) must be able to be qualified as potentially aggressive, i.e. lead to a reduction (or absence) of tax or to a tax deferral. The law sets a number of objective markers of fiscal aggressiveness in order to determine whether an arrangement is objectively fiscally aggressive.

When the criteria thus stated are cumulatively met, it is then up to the taxpayer concerned, on the one hand, and the intermediaries, on the other to spontaneously declare the arrangement to the Direct Tax Administration. The intermediaries covered by the law are all professionals who design, market or organise the cross-border setup (this can be credit institutions, merchant banks, asset managers, etc.), with the exception of lawyers, auditors and accountants ("fiduciaries") who act in the normal course of their business.

The "DAC 6" Act of 25 March 2020 came into force on 1 July 2020.

The "DAC 6" declaration to the Direct Tax Administration must normally be made within 30 days of the "availability" of the cross-border setup to be declared (or from the day on which the setup is ready to be implemented).

However, this 30-day period shall start to run from 1 January 2021 for cross-border reporting setups which were made available or for which the first stage of implementation was completed between 1 July 2020 and 31 December 2020.

In addition, the intermediaries and taxpayers concerned are also required to provide the Direct Tax Administration by 28 February 2021 at the latest with information on the cross-border arrangements to be declared, the first stage of which was implemented between 25 June 2018 and 30 June 2020.

Taxpayers or intermediaries who fail to transmit (or who transmit either late or incompletely) the fiscally aggressive cross-border setups are liable to a fine of up to €250,000.

1tAct of 25 March 2020 relating to cross-border arrangements which must be declared, published in Mémorial A no. 192 of 26 March 2020, which transposes Directive 2018/822 known as "DAC 6".