DAC6, directive, European Union, mandatory disclosure regime, tax disclosure, coordination, hallmarks, main benefit test, Member State, OECD Organization for Economic Cooperation and Development, Union legislation, regulations, cross-border arrangements, tax, safe harbor interest rate, disclosure, member nations, deadline, transaction, legal professional privilege, DAC Directive on Administrative Cooperation, taxable periods, assets, tax transparency, sales, taxable value
Under the European Union's DAC6 tax disclosure coordination, the reporting requirements have become enforced across the member states after an almost seven-month postponement of reporting deadlines by many member states, as a result of the recent coronavirus pandemic. Complying with information-sharing requirements and the new disclosure directions may pose some difficulties associated with the differences in legal structures of member nations and the challenges in the interpretation of different provisions of the requirement, including the "hallmarks" and "main benefit test" that result in the arrangement as subject to disclosure.
[...] For hallmark (C. to get considered as met, multiple tax exemptions should get obtained for the relatively same income, which should consequently remain untaxed. Multiple tax exemptions, for instance, from assignment or qualification conflicts within a three-state double taxation case, may result in tax-exempt income between entities A and and a subsequent exemption between A and C. Hallmark (C.4) covers asset transfers whose taxable values within the state of sales differ from the state of purchase's taxable value (Bianco, 2021). [...]
[...] Only arrangements that fall under hallmarks of the DAC6 may fall within the Organization for Economic Cooperation and Development's disclosure requirements. The category involves the obscuring of arrangements and beneficial ownership which undermine the reporting prerequisites under the regulations that implement Union legislation, or any equal agreements on automatic exchange of information. Although the stated objectives of the directives focus on aggressive tax planning which may further improve visibility for authorities on such activities, deliberate drafting of the directives implies that they may apply to specific standard transactions which necessarily may not have particular tax motives. [...]
[...] (2018). DAC 6 reporting requirements pose numerous compliance problems. International Tax Review. KPMG, U., Martin, M., & Bettge, T. (2020). EU mandatory disclosure impending for certain transfer pricing arrangements. International Tax Review. [...]
[...] The hallmark (A. involves all standardized structures and documentation available to more taxpayers without any considerable individual adjustment requirements for implementation. The standardization may involve, for instance, financial centralized services or products provided by group members; such tax structures may also get perceived as "marketable structures" (Cardoso, 2021). Tax arrangements meet the hallmark (B. when loss-making organizations get acquired; in such a case, the acquired organization's primary activity gets terminated, and obtained reduction in an acquirer's tax burden as a result of loss usage received by a consideration of inappropriate steps. [...]
[...] References Bianco, A. (2021). DAC6 and the Challenges Arising from Its Disclosure Obligation. EC Tax Review Ballancin, A., & Cannas, F. (2020). The `DAC 6 and Its Compatibility with Some of the Founding Principles of the European Legal System EC Tax Review Cardoso, G. C. (2021). Balancing Tax Transparency and Tax Certainty: Reporting Obligations for Unilateral Safe Harbours Under DAC 6. Interfax Haines, A. [...]
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