Analysis of the DAC 6 in light of EU Primary Law
Authors:   , Castro Bosque Marina 
Published: November 2022

The present thesis is divided into six substantial chapters excluding the introduction, the conclusions and the bibliography. Chapter I, primarily descriptive, seeks to answer the following questions: i) why are mandatory disclosure rules necessary?; ii) how should mandatory disclosure rules be drafted to work effectively?; iii) how does the EU mandatory disclosure regime work? For this, the historical context in which mandatory disclosure rules originated is described. Subsequently, a detailed analysis of the OECD’s approach in relation to mandatory disclosure and, especially, of BEPS Action 12 as an international standard will be carried out. Finally, the Chapter makes a descriptive analysis of DAC 6 as the unified mandatory disclosure regime in the EU with the aim of highlighting its characteristic elements and major points of concern. Chapter II intends to demonstrate whether the DAC 6 actually contributes to improve the internal market and henceforth it might be adopted based on articles 113 and 115 TFEU. To this aim, as an introductory remark, the Chapter briefly addresses the relationships of the sources of EU law relevant for direct taxation. Right after that, the concept of the “internal market” as the basis for the adoption of EU directives in the field of direct taxes is analyzed. The question of what is the real objective or purpose of the DAC 6 is addressed as well in this section. Once this is clarified the Chapter analyzes whether this objective justifies the adoption of a mandatory disclosure regime at the EU level and whether it contributes in practice to the improvement of the internal market. Chapter III analyzes the objective element of the Directive in light of the principle of legal certainty. In particular, the issues to be addressed in this Chapter are: i) what is legal certainty and when it is understood to be violated in the EU; ii) whether DAC 6, as regards its objective element, contravenes the postulates of this principle of legal certainty. Either in its clarity aspect (objective demand) or in its foreseeability aspect (subjective demand). This is observed from the analysis of the wording directive (e.g. lacks clarity) and is demonstrated through the analysis of the implementing measures (i.e. the lack of clarity has led to differing implementations). Chapter IV analyzes whether the EU mandatory disclosure regime really violates the rights of the affected intermediaries and taxpayers. To this end, as a preliminary question, the Chapter deals with the system of protection of fundamental rights in the European Union. Then, the right/duty of professional secrecy in the EU and the protection granted to it by the Directive is analyzed. In this way I will conclude whether or not the right is affected by DAC 6. In addition, the Chapter discusses the rights of defense and, in particular, the right against self-incrimination from a European perspective. Again, the idea is to what extent accounting disclosure under DAC 6 obligations may lead to compelled self-incrimination. Finally, the respect of the privacy rights as a consequence of the disclosure mechanism is questioned. Chapter V deals with the consequences of complying or breaching the disclosure obligation. In this regard, the EU mandatory disclosure rule can give rise to sanctions at two different levels. On the one hand, the sanction for not declaring the required information (i.e. for failing to comply with the reporting obligation). On the other hand, the potential sanction for the information declared. That is, the sanction that the subject may face in the event of reporting a mechanism that falls within the scope of illegal behavior. This Chapter will deal with both levels of sanctions. In this way, an analysis will be made of the different consequences or responses to reporting or non-reporting under the DAC 6 regime. In the first case, the limits faced by Member States when regulating and applying penalties for possible breaches of the obligation to declare will be addressed. These limits arise mainly from the principle of proportionality, the principle of legality or the principle of culpability. In this sense, not all sanctions are subject to the same guarantees and limits. Thus, “criminal” sanctions are subject to a higher standard of protection. Secondly, in some cases, information may be declared that gives rise to the imposition of a sanction. In this case the fundamental rights of the taxpayer and the intermediary may be affected. Therefore, in this Chapter it will also be addressed who imposes these sanctions and under what circumstances. Chapter VI discusses whether retrospective legislation may be employed to combat aggressive tax planning arrangements disclosed under mandatory disclosure rules. In other words, how do EU mandatory disclosure rules affect the taxpayers’ right to legal certainty and legitimate expectations in its temporal demand? This Chapter attends in particular to the above-mentioned question. To this aim, the Chapter analyzes in the first place the requirements of the prohibition of retroactivity as stemming from the principle of legal certainty and legitimate expectations. At this point it shall be noted that it is generally accepted that under certain circumstances the legislator is allowed to deviate from this prohibition. The concept of legitimate expectations has a key role in this respect. Finally, the Chapter concludes with a section dedicated to the application of the key concepts developed around the prohibition of non-retroactivity in the field of DAC6. Against this background it shall be noted that although independent, all the Chapters work as a “whole”. In this regard, as an example, it is not possible to conclude whether fundamental rights are violated without discussing the objective of the Directive (Chapter II), the arrangements that fall within its scope (Chapter III) and the punitive response that might arise from the disclosure obligation (Chapter V). To frame it negatively, without discussing the penalties that might be imposed in case of that certain arrangements are disclosed, it is not possible to assess whether professional secrecy and the right not to incriminate oneself are undermined. The answer to this question will also enable the author to conclude whether the DAC 6 follows the line of mandatory disclosure rules and international tax policy in the last few years or if, on the contrary, it involves a new step in the tax transparency agenda. To this aim the background of the Directive is especially relevant (Chapter I). Finally, the thesis concludes with some general remarks by way of summary. In this section the main ideas, critics and suggestions are highlighted.