Mandatory
Disclosure Regime(MDR)
Support for intermediaries inmanaging reportable cross-borderarrangements

Support for intermediaries in managing
reportable cross-border transactions
The EU has issued a directive that requires
intermediaries (including EU-based tax
consultants, banks and lawyers) and, insome situations, taxpayers to report certain
cross-border arrangements (reportablearrangements) to the relevant tax authority
in the EU. This disclosure regime applies toall taxes except value-added tax, customs
duties, excise duties and compulsory
social security contributions. Cross-borderarrangements will be reportable if they
contain certain features (hallmarks). The
hallmarks cover a broad range of structures
and transactions — for example, a relianceon transfer pricing safe harbors will require
reporting regardless of the absence of tax
planning. Some of the hallmarks will only
trigger reporting requirements when theyalso fulfill the main benefit test.

The primary reporting obligation lies with
the intermediary. Where the intermediaryis outside the EU or exempt from disclosing
because of legal professional privilege,
the obligation to disclose falls on anotherintermediary or, if none, the relevanttaxpayers. The disclosure includes detailsof relevant taxpayers and other affected
persons and the cross-border arrangement
in question. For arrangements of which thefirst step of implementation istaken between 25 June 2018 and
1 July 2020, disclosures must be filed by
31 August 2020. From 1 July 2020, thereporting deadline is just 30 days afteran arrangement is made available to thetaxpayer.

New arrangement?
Yes
Covered taxes?
Yes
Cross-border arrangement?
Yes
Reportable?
Yes
Reporting intermediary?
No
Reporting taxpayer?

Yes

Yes
What information? Where to? By when?

What does an intermediary need to consider?
Considerations

ImpactConsequences

Develop a strategy, policy and guidance for
MDR reporting:Missed or late disclosures where no otherintermediary as reported• Set up an in-house process for recognizing
arrangements that need to be reported• Establish clear MDR responsibilities and reporting lines• Ensure that tax and other key personnel are trained torecognize arrangements that are likely to be reportable
Establish a process for arrangements that may involve
additional intermediaries:

Inconsistent disclosures made by multiple
intermediaries:• Monitor arrangements where additional intermediaries
may be involved in the same arrangement to establish
who is making the disclosure• Intermediaries who only see their part in
the arrangement• Where possible, reduce the number of disclosures byagreeing on who will file and by ensuring that otherintermediaries have the required proof they need for
non-reporting• Intermediaries who have to file unlessthey can rely on proof that disclosure has
already been madeEnsure that you understand where national legislation (foreach EU Member State in the arrangement) departs fromthe EU directive in terms of additional disclosure criteria(e.g., application to domestic arrangements, and broad or
narrow interpretation of terms)

Under- or over-reporting in certain
countries

Ensure that you have robust and complete documentation
on transactions or arrangements to meet audit challenges

MDR gives tax authorities a “menu” ofactivities to audit; increased activity seems
likelyPenalties, increased
controversy andreputational damage

Identify resources and technology to meet your obligations.

Critical dates
25 June 2018
Transition period starts
Log arrangements

31 December 2019
Transposed into national law
Assess arrangements

Track and log “arrangements” in real time to reduce
problems in August 2020

2| Mandatory Disclosure Regime

1 July 2020
Transition period ends

31 August 2020
Arrangements arising intransition period reported

1 July 2020 onward
Arrangements reportable within 30 days

31 October 2020
First informationexchanged

Information exchanged
one month from end ofreporting quarterWe have an MDR tool and the people to help you
MDR tool features
Intermediaries can use the EY MDR tool, available by accessing the EY server or acquiring a license, to recognize
and document cross-border reportable arrangements.
Data input• Access for named users (intermediaries and/or EY) to logarrangements• Functionality to capture proposed disclosures• Data input guidance (technical explanations of MDR terms)• Disclosure workflow management process• Ability to attach and upload essential documents• Capturing of details of client and other intermediaries requests inrelation to whom will take the lead on making disclosures*Analysis• Evaluates whether an arrangement is reportable• Involves filtering system to maintain consistency of reporting forsimilar arrangements• Highlights differences in individual Member State interpretations per
hallmark to aid review pre-submission• Includes notification system to update your clients with regard totheir arrangements

Documentation and reporting**• An online repository of reportable arrangements during the transition phase (until July 2020) and beyond• Dashboard for monitoring• Report generation per arrangement and hallmark

Process
Tool
configured to
mimic yourreporting
structure

Arrangement
entered by ateam member

Arrangement
subject toreview

Arrangement
logged forfollow-up inspring 2020

Spring 2020
Arrangements
re-evaluated inlight of national
legislation

Agreement over
who will submit
disclosure;
Disclosure made*Until national legislation is available, this section is provisional.
**At this time, the EY MDR tool does not include functionality to make submissions to tax authorities. Tax authorities have yet to release details of how
disclosures should be submitted.

Mandatory Disclosure Regime |3How EY can help
We may assist you in a collaborative manner to help you identify and manage yourobligations under the MDR. This includes:• Conducting strategy sessions to discuss and identify the impact of the MDR on you

Leverage knowledge and experience of theextensive EY tax services network• Conducting MDR workshops for your executive-layer teams (e.g., tax, M&A, internal
compliance, transfer pricing, HR and law)
• Providing MDR e-learning programs for your operational teams• Assisting you in identifying and logging your reportable cross-borderarrangements by:

Use EY MDR tool to document and submit
your reportable cross-border transactions• Using the EY MDR tool
• Creating a repository as part of your systems• Outsourcing the creation and documentation of your reportable arrangements

Get tailored advice specific to yourindustry or sector

Or• Simply helping you understand how these rules apply to your company

Contacts

EY  |  Assurance | Tax | Transactions | Advisory

Ernst & Young LLP (United Kingdom), London
James Guthriejguthrie@uk.ey.com
Katie Woodhousekwoodhouse@uk.ey.com

Ernst & Young LLP,EY Global Tax Desk Network, New YorkJose A. (Jano) Bustos
joseantonio.bustos@ey.com

Ernst & Young Belastingadviseurs LLP, Amsterdam
Marlies de Ruitermarlies.de.ruiter@nl.ey.com

Eric van der Madeeric.van.der.made@nl.ey.com

Rienk Kamphuisrienk.kamphuis@nl.ey.com

Ernst & Young Société d’Avocats, Paris
Claire Acardclaire.acard@ey-avocats.com

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ED NoneThis material has been prepared for general informational purposes only and is
not intended to be relied upon as accounting, tax or other professional advice.
Please refer to your advisors for specific advice.

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