DAC6 Newsletter
DAC6 local country status
and reporting trends

May 2020

DAC6 local country implementation
Under the terms of the Directive 2018/822 (DAC6 or the Directive), EU Member States wererequired to adopt and publish national laws to comply with the Directive by 31 December 2019.
When transposing the Directive into their domestic law, Member States could align theirdomestic rules with the scope of the Directive or they could adopt a broader scope. To date, only
Poland and Portugal have extended the scope of the Directive in their domestic law by including
domestic arrangements, additional taxes such as value-added tax (Poland, Portugal — only fordomestic arrangements) and excise duty (Poland), additional hallmarks (Poland) and acceleratedtiming (Poland).

Status of DAC6 domestic legislation
As of 30 April 2020, Austria, Belgium, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany,
Gibraltar, Hungary, Ireland, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Romania,
Slovakia, Slovenia and the United Kingdom have adopted final legislation implementing DAC6. A further six
Member States have published draft DAC6 legislation, namely Cyprus, Czech Republic, Italy, Portugal, Spainand Sweden. No information is currently available for Greece.
It is expected that Member States will publish guidance on the technical interpretation of the domestic law
and the practical aspects of compliance and reporting over the next few months.

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DAC6 Newsletter — May 2020

EU Commission notices
On 24 January 2020, the EU Commission announced that it had sent formal notices, under article 258of the Treaty on the Functioning of the EU, to Belgium, Cyprus, Czech Republic, Estonia, France,Greece, Italy, Latvia, Luxembourg, Poland, Portugal, Romania, Spain, Sweden and the United Kingdom
regarding the implementation of DAC6. If these Member States do not address the formal notices
within the next two months, the Commission may issue a reasoned opinion. There is currently nofurther information available as to the concerns of the EU Commission regarding the DAC6
implementation in these countries.

Legal professional privilege
The Directive gives Member States the option to exempt intermediaries from the obligation to report when
the reporting obligation would breach legal professional privilege (LPP). If there are no intermediaries thatcan report, the obligation to report will shift to the taxpayer.
Differing views are already emerging among the Member States on whether LPP can be claimed for DAC6purposes. Italy and Lithuania do not provide any exemption from the reporting obligation due to LPP. In theUK, lawyers are not exempted from making disclosures under the rules; however, the UK regulations do not
require a UK intermediary to disclose any privileged information.
In Cyprus, Finland, Ireland, Gibraltar, Latvia, the Netherlands, Slovenia and Sweden, only law firms can beexempt from the reporting obligation due to LPP.
In Croatia, Czech Republic, Germany, Luxembourg, Romania, Slovakia and Spain (and also likely in Belgium,
where the matter is still being investigated), LPP can also apply to tax advisors and auditors, and in somecases, notaries. In Austria, Bulgaria, Estonia, France, Poland and Portugal, LLP applies even more broadly to
all the professionals subject to professional secrecy as per national legislation.
In any case, Finland, Germany, Poland (for marketable tax arrangements) and Sweden will still require thefiling by intermediaries of anonymous or simplified information when LPP is claimed.
In the majority of Member States, an intermediary that claims LPP must notify any other intermediaries ofthis position, or the relevant taxpayer if no other intermediaries are involved. In some cases, theintermediary must also provide a reporting package to the client with respect to the arrangement.

Reporting mechanism
Croatia, Cyprus, Czech Republic, Germany, Latvia, Lithuania, the Netherlands, Poland, Slovakia and Sweden
will require reporting to be made by intermediaries and taxpayers using an electronic/XML file. This file willneed to be lodged via the web portal of the relevant tax administration. Certain tax authorities may requireintermediaries and taxpayers to register in advance in order to access the web portal (for example, Germany
and the Netherlands).
Austria, France and Spain have requested that reporting be made by completing a web-based form. In
Germany, Lithuania, the Netherlands, Poland and Sweden, it will also be possible to fill out a web-based form
(in addition to being able to use an electronic/XML file). Austria will also allow for paper-based reports incase of missing credentials for the web portal or missing technical requirements. In Estonia, reporting will berequired by way of a digitally signed report submitted by email.
It is expected that the remaining Member States (like Belgium) will specify the format of the reporting anddetails in relation to the lodgment process upon release of further guidance.

Reporting language
Estonia, Germany, Italy, Latvia, Poland, Romania, Slovakia, Slovenia and Spain will require reporting bemade in an official language of the jurisdiction in which the report is made. In Cyprus, Gibraltar, Ireland andthe United Kingdom, reporting will be required exclusively in English. There are a number of countries thatwill allow for a choice between local language and English, and other countries that will require reporting inboth local language and English. To the extent that reporting is required in both local language and English,
it is likely that the translation will have to be made at the cost of the taxpayer or intermediary.
3DAC6 Newsletter — May 2020

Reliance on proof of filing by other intermediaries
The Directive states that an intermediary shall be exempt from filing the requisite information only to theextent that it has proof, in accordance with the relevant domestic law, that the same information has
already been filed by another intermediary. The Member States with final legislation have adopted this in
their local domestic law.
The form of proof differs slightly across the Member States, but the majority require the intermediary toobtain proof of filing from the other intermediary. In Austria, Croatia, Finland, Germany, Latvia, theNetherlands, Poland and the United Kingdom, the tax reference number (also referred to as the registration
number or arrangement reference) issued by the relevant tax authority to the other intermediary is also
required as proof of filing.

Secondary annual reporting obligation
The Directive states that each Member State may take the necessary measures to require that eachrelevant taxpayer file information about their use of a previously reported arrangement in each of the years
for which they use it. Although it is optional, the local country legislation for the majority of Member States
and the UK includes an obligation for the taxpayer to disclose this information by way of a secondary
reporting process.
To date, the Member States that have implemented or intend to implement this secondary reporting
obligation are Bulgaria, Croatia, France, Germany, Ireland, Lithuania, Luxembourg, Poland, Portugal,Romania, Slovenia, Spain and the United Kingdom. In Germany, Ireland, Luxembourg and the United
Kingdom, the annual reporting will be included in the annual tax return. In Poland and Spain, there will be a
separate form for reporting with specific deadlines. The remaining Member States that have implemented orintend to implement the annual reporting obligation will provide information on the form of reporting infuture guidance.
A small minority of Member States — including Austria, Belgium, Cyprus, Denmark, Estonia, Finland,Gibraltar, Italy, Latvia, the Netherlands, Slovakia and Sweden — have not yet implemented or announced
they intend to implement an annual reporting obligation for the taxpayer. As per draft Cypriot MDR
legislation, Cyprus is not expected to implement the secondary annual reporting obligation.

What happens to the reported information?
The tax authority of the Member State where the information was filed shall, by means of an automaticexchange, communicate the relevant information to the tax authorities of all other Member States byelectronic means using the existing Common Communication Network (CCN). The exchange shall take place
within one month beginning at the end of the quarter during which the information has been reported,meaning the first information will be communicated by 31 October 2020.
The Portuguese draft law provides that the tax authority may publish the arrangements on its website, forthe purpose of preventing tax evasion, in abstract and synthetic terms (without identifying the participants),
unless the complexity and innovation of the scheme is inappropriate to prevent tax evasion or to defend thepublic interest.
The Spanish draft law provides that the tax administration will publish on its website, for information
purposes, the most relevant cross-border arrangements as well as information on the applicable regime andthe qualification of these arrangements.
4DAC6 Newsletter — May 2020

Penalties
The Directive allows for Member States to transpose into their domestic law penalties for noncompliancethat are effective, proportionate and dissuasive. Maximum penalties vary from €5,100 in Bulgaria to up to€870,000 in the Netherlands and €4,700,000 in Poland. Some Member States have not specified maximum
penalties.
Up to €15,000
Bulgaria
Estonia
FinlandFranceHungary
Lithuania
Latvia€20,000-€30,000€30,000-€60,000

Croatia
CyprusCzech Republic
Germany
Malta
Slovakia
SwedenRomania

Austria
Belgium
Denmark

Above €60,000
Ireland
Luxembourg
Netherlands
PolandPortugalSlovenia
Spain
United Kingdom

Additional considerations: other sanctions, personal liabilities, waiver or mitigation

Impact of COVID-19 on MDR application date and reporting deadlines
A number of EU public interest groups and large taxpayers are leading the efforts to lobby the EU
Commission and EU Member States to extend the reporting deadlines for DAC6 in response to theCOVID-19 virus pandemic. Whilst the EU Commission has previously advised that it is not in a position topostpone the DAC6 reporting deadlines (given that the legislative process is now the responsibility of theMember States), we understand it may be willing to work with the EU Member States to explore thisfurther in the coming weeks. In Poland, the reporting deadlines that have not already begun aresuspended from 31 March 2020 until the cancellation of the epidemic status, but no longer than until 30
June 2020.

MDR Web is a web-based logging

and reporting tool that provides astandardized and consistent
approach to evaluate arrangements
and to manage communication
between taxpayers andintermediaries and submission ofreportable arrangements.

Click here to register for an MDR
Web demonstration.

Key contacts
US-based DAC6 resources

Global DAC6 teamJose A. (Jano) Bustos
joseantonio.bustos@ey.com

Cornelia Wolff
cornelia.wolff@de.ey.com

Gerrit Groen
gerrit.groen@ey.com

Rienk Kamphuisrienk.kamphuis@nl.ey.com

Serge Huysmans
serge.huysmans@ey.com

Claire Acardclaire.acard@ey-avocats.com

Nadine Redford
nadine.k.redford@ey.com

James Guthrie (FSO)
jguthrie@uk.ey.com

Max Van den Berghmax.vandenbergh@ey.com
Deirdre Fenton
deirdre.fenton1@ey.com

The global DAC6 webpage can be accessed here.
Global tax alerts — current and future — can be accessed at www.ey.com/taxalerts.
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DAC6 Newsletter - May 2020

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