Mandatory
Disclosure Regime(MDR)
Support for managing reportablecross-border arrangements

Support for managing reportablecross-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 safe harbors will require reporting
regardless of the absence of tax planning.
Some of the hallmarks will only trigger
reporting requirements when they also fulfil
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
the first step of implementation is taken
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 the taxpayer need to consider?
Considerations

ImpactDevelop a strategy, policy and guidance for
MDR reporting.

Missed or late disclosures on arrangements
undertaken in-house or where no intermediaryrequired to report• Set up an in-house process for recognizing
arrangements that need to be reported

Consequences• Establish clear MDR responsibilities andreporting lines• Ensure that tax and other key personnel aretrained to recognize arrangements that are likely
to be reportable
Engage with your advisors to agree on an approach.
• Monitor what your advisors are planning todisclose for consistency and accuracy• Where possible, reduce the number of
disclosures by agreeing on who will file and by
ensuring that other intermediaries have therequired proof they need for non-reporting

Inconsistent disclosures made by multiple
intermediaries:• Intermediaries only see their part in thearrangement

Penalties, increased
controversy andreputational damage• Intermediaries have to file unless they can rely
on proof that disclosure has already been madeEnsure that you understand where nationallegislation (for each EU Member State in thearrangement) departs from the EU directive
in terms of additional disclosure criteria (e.g.,
application to domestic arrangements, and broador narrow interpretation of terms).

Under- or over-reporting in certain countries

Ensure that you have robust and complete
documentation on transactions or arrangements tomeet audit challenges.

MDR gives tax authorities a “menu” of activities toaudit; increased activity seems likely

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 arrangementsTrack 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
Clients can use the EY MDR tool, available by accessing the EY server or acquiring a license, to recognize anddocument cross-border reportable arrangements.
Data input• Access for named users (client and/or EY) to log arrangements• Functionality to capture proposed disclosures by your intermediaries• Data input guidance (technical explanations of MDR terms) provided• Disclosure workflow management process• Essential documents can be attached and uploadedAnalysis• Evaluates whether an arrangement is reportable• Compares input on same arrangement from different intermediaries
to drive reporting consistency• Highlights differences in individual Member State interpretations per
hallmark to aid review pre-submission

Documentation and reporting*• Functions as 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
Lead assigned
to log andanalyze thearrangement

Intermediaries
contacted toobtain theiranalysis of thearrangement(PDF or form)

Intermediaries’
responses
reviewed anddiscrepancies
resolved

Arrangement
andintermediaries’
responses
logged forfollow up in
spring 2020

Spring 2020
Arrangements
re-evaluated inlight of national
legislation

Agreementover whowill submit
disclosure*At this time, EY’s 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 will assist you in a collaborative and holistic manner to help you identify andmanage your obligations under the MDR. This includes:• Conducting strategy sessions to discuss and identify the impact of the MDR on yourEuropean and global tax strategy

Leverage the knowledge and experience ofour extensive tax services network• Conducting MDR workshops for your executive-layer teams (e.g., tax, M&A, internal
compliance, transfer pricing, HR and law)
Use our MDR tool to document and submit
your reportable cross-border transactions• Providing MDR e-learning programs for your operational teams• Assisting you in identifying and logging your reportable cross-borderarrangements by:• Using our MDR tool

Get tailored advice specific to yourindustry or sector• Creating a repository as part of your systems• Outsourcing the creation and documentation of your reportable arrangementsOr• Simply helping you understand how these rules apply to your company

Contacts
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
Rienk Kamphuisrienk.kamphuis@nl.ey.com
Eric van der Madeeric.van.der.made@nl.ey.com

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

EY  |  Assurance | Tax | Transactions | Advisory
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to be relied upon as accounting, tax or other professional advice. Please refer to your advisors
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