COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT REPORT Accompanying the document Proposal for a COUNCIL DIRECTIVE on administrative cooperation in the field of taxation (recast)
Date: 2026-06-24
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: European tax cooperation, administrative cooperation, approximation of laws, exchange of information, tax avoidance, tax harmonisation, tax law, tax offence

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 24.6.2026  SWD(2026) 165 final  COMMISSION STAFF WORKING DOCUMENT  IMPACT ASSESSMENT REPORT  Accompanying the document Proposal for a COUNCIL DIRECTIVE on administrative cooperation in the field of taxation (recast) {COM(2026) 308 final} - {SEC(2026) 186 final} - {SWD(2026) 164 final} - {SWD(2026) 166 final}  
 
 
Table of contents 

1. 

INTRODUCTION: POLITICAL AND LEGAL CONTEXT ............................................................... 5 

1.1.  Political context ................................................................................................. 5 
1.2.  Legal context ..................................................................................................... 6 
PROBLEM DEFINITION .................................................................................................................. 10 

2. 

2.1.  What are the problems? ................................................................................... 11 
2.2.  What are the problem drivers? ........................................................................ 18 
2.3.  How likely is the problem to persist? .............................................................. 20 
3.  WHY SHOULD THE EU ACT? ........................................................................................................ 21 

3.1.  Legal basis ....................................................................................................... 21 
3.2.  Subsidiarity: Necessity of EU action ............................................................... 21 
3.3.  Proportionality: Added value of EU action ..................................................... 22 
4.  OBJECTIVES: WHAT IS TO BE ACHIEVED? ............................................................................... 22 

4.1 General objectives ............................................................................................... 23 
4.2  Specific objectives ........................................................................................... 23 
5. WHAT ARE THE AVAILABLE POLICY OPTIONS? .......................................................................... 24 

5.1 What is the baseline from which options are assessed? ...................................... 24 
5.2 Description of the policy options ........................................................................ 25 
5.3   Discarded Options ............................................................................................. 29 
6. WHAT ARE THE IMPACTS OF THE POLICY OPTIONS? ................................................................. 29 

6.1 Impact on simplification while preserving the policy objectives of the DAC 

framework (compliance costs and risks assessment) ...................................... 30 
6.2 
Impact on competitiveness and SME’s ........................................................... 46 
6.3  Other impacts ................................................................................................... 47 
7. HOW DO THE OPTIONS COMPARE? ................................................................................................. 49 

Measure 1 – Ensuring that DAC6 reporting obligations remain proportionate 
and  effective  while  promoting  a  more  harmonised  application  of  the 
MBT ................................................................................................................ 50 

Measure 2 – Amending the reporting threshold for activities involving the sale 

of goods under DAC7 ...................................................................................... 51 

Measure 3 – Streamlining notification obligations for MNE group under DAC4 

and DAC9 ........................................................................................................ 53 
Measure 4 - Improving the verification of TINs ....................................................... 55 
Measure 5 - Improving the completeness of information reported under DAC1 ..... 56 
PREFERRED OPTION ...................................................................................................................... 59 

8. 

8.1  Preferred policy options and option package .................................................. 59 
8.2  Summary of the preferred policy package ....................................................... 62 
8.3  REFIT (simplification and improved efficiency) ............................................ 64 
8.4  Application of the ‘one in, one out’ approach ................................................. 64 
9.  HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED? .................................. 64 

1 

 
9.1.  Monitoring arrangements ................................................................................ 65 
ANNEX 1: PROCEDURAL INFORMATION ............................................................................................ 69 
1. LEAD DG, DECIDE PLANNING/CWP REFERENCES ....................................................................... 69 
2. ORGANISATION AND TIMING ........................................................................................................... 69 
3. CONSULTATION OF THE RSB ............................................................................................................ 69 
EVIDENCE, SOURCES AND QUALITY ......................................................................................... 76 
4. 
5. 
EXTERNAL EXPERTISE .................................................................................................................. 76 
ANNEX 2: STAKEHOLDER CONSULTATION (SYNOPSIS REPORT) ................................................ 77 
1. INTRODUCTION .................................................................................................................................... 77 
2. 
RESULTS OF CONSULTATION ACTIVITIES ............................................................................... 77 
ANNEX 3: WHO IS AFFECTED AND HOW? .......................................................................................... 84 
PRACTICAL IMPLICATIONS OF THE INITIATIVE..................................................................... 84 
1. 
SUMMARY OF COSTS AND BENEFITS ....................................................................................... 85 
2. 
3. 
RELEVANT SUSTAINABLE DEVELOPMENT GOALS ............................................................... 88 
ANNEX 4: ANALYTICAL METHODS ..................................................................................................... 89 
ANNEX 5: COMPETITIVENESS CHECK .............................................................................................. 101 
ANNEX 6: SME CHECK .......................................................................................................................... 103 

ANNEX  7:  OVERVIEW  OF  SELECTED  REPORTING  AND  EXCHANGE  MECHANISMS  IN 

THE DIRECTIVE ON ADMINISTRATIVE COOPERATION (DAC) .......................................... 106 

ANNEX 8: PRACTICAL EXAMPLES OF NATIONAL TAXATION RULES FOR THE SALE OF 

GOODS (DAC7) ............................................................................................................................... 116 
ANNEX 9: RATIONALE FOR DIVERGING AUTOMATIC MATCHING RATES .............................. 117 

2 

 
 
 
Glossary 

AEOI 

ATAD 

Acronym 

Meaning or definition 

Automatic Exchange of Information 

Anti-Tax Avoidance Directive 

AUTOMATIC 
MATCHING 

Automatic  matching  is  the  automated  process  of 
linking information reported under DAC to the relevant 
taxpayer in the national tax database using identifying 
information (e.g. TIN). 

BEPS 

BO 

BRIS 

CbCR 

CfE 

DAC 

DF 

ECA 

GDPR 

GIR 

IE 

IIR 

IP 

LIP 

LPP 

MBT 

MCAA 

MDR 

Base Erosion and Profits Shifting 

Beneficial ownership 

Business Registers Interconnection System 

Country-by-Country Reporting 

Call for Evidence 

Directive on Administrative Cooperation in the field of 
direct taxation 

Directors’ Fees 

European Court of Auditors 

General Data Protection Regulation 

GloBE Information Return 

Income from Employment 

Income Inclusion Rule  

Income from immovable property  

Life Insurance Products  

Legal professional privilege 

Main Benefit Test 

Multilateral Competent Authority Agreement 

Mandatory Disclosure Rules 

3 

 
 
 
MNE 

OECD 

Multinational Enterprise 

Organisation for Economic Co-Operation and 
Development 

OECD MRDP 

OECD Model Rules for Reporting by Digital Platform 
Operators 

PC 

PEN 

PO 

Public Consultation 

Pension Income 

Policy Option 

QDMTT 

Qualified Domestic Minimum Top-up Tax 

SDG 

SME 

TIN 

TFEU 

UPE 

UTPR 

VIES 

Sustainable Development Goal 

Small and medium sized enterprise 

Taxpayer Identification Number 

Treaty on the Functioning of the European Union 

Ultimate Parent Entity  

Undertaxed Profits Rule  

VAT Information Exchange System 

4 

 
 
 
1. 

INTRODUCTION: POLITICAL AND LEGAL CONTEXT 

1.1. 

Political context 

The  Political  Guidelines  of  the  European  Commission1  have  set  the  objective  of  making 
business  easier  and  faster  in  Europe  by  reducing  administrative  burdens  and  simplifying 
implementation,  while  upholding  high  standards,  with  a  view  to  strengthening  European 
competitiveness. 

in 

its  Communication  on 

The Competitiveness Compass2 highlighted the need to simplify the regulatory environment 
and reduce administrative burdens in order to strengthen competitiveness across all sectors. 
Subsequently, 
the 
Commission  reiterated the need for a bold approach to  enhance EU competitiveness and 
introduced  new  targets  to  reduce  administrative  burdens.  Under  the  new  approach,  the 
burden-reduction targets of at least 25% for all companies and at least 35% for small and 
medium-sized enterprises (SMEs) will be applied to a baseline covering the full range of 
administrative costs rather than focusing solely on reporting obligations.  

implementation  and  simplification3, 

To achieve these objectives, the Commission committed to prioritise proposals that simplify, 
consolidate and codify legislation in order to eliminate overlaps and inconsistencies while 
ensuring  that  the  EU’s  priorities  continue  to  be  met.  The  2025  Commission  Work 
Programme4  therefore  placed  a  stronger  focus  on  simplification  than  ever  before  and 
included a series of omnibus packages and other simplification initiatives addressing priority 
areas identified with stakeholders. 

The  2026  Commission Work  Programme5  builds  on  this momentum  by including  a  new 
cycle of simplification initiatives and omnibus packages aimed at simplifying rules across 
key policy areas, including taxation. In particular, the Omnibus on Taxation will streamline, 
simplify and clarify the EU direct tax acquis including the Interest and Royalties Directive6, 
the  Tax  Merger  Directive7,  the  Parent-Subsidiary  Directive8,  the  Anti-Tax  Avoidance 
Directive9, the Dispute Resolution Mechanisms Directive10, and the Faster and Safer Relief 
of Excess Withholding Taxes Directive11 with a view to reducing administrative burdens for 
businesses and ensuring a level playing field across Member States. 

2025, 

1European Commission, Political Guidelines for the Next European Commission 2024–2029: Europe’s Choice, July 2024, available at: 
https://commission.europa.eu/priorities-2024-2029_en  
2  European  Commission,  Communication  from the  Commission to  the  European  Parliament,  the European  Council, the  Council, the 
European Economic and Social Committee and the Committee of the Regions: A Competitiveness Compass for the EU, COM(2025) 30 
final, 29 January 2025, available at: https://commission.europa.eu/document/download/10017eb1-4722-4333-add2-e0ed18105a34_en 
3 European Commission, Competitiveness Compass, COM(2025) 30 final. 
4 European Commission, Communication from the Commission to the European Parliament, the Council, the European Economic and 
Social Committee and the Committee of the Regions: Commission Work Programme 2025 – Moving forward together: A Bolder, Simpler, 
Faster Union, COM(2025) 45 final, 11 February 2025, available at: EUR-Lex - 52025DC0045 - EN - EUR-Lex 
5 European Commission, Communication from the Commission: Commission Work Programme 2026 – Europe’s Independence Moment, 
https://commission.europa.eu/strategy-and-policy/strategy-documents/commission-work-
21  October 
programme/commission-work-programme-2026_en 
6 Council Directive 2003/49/EC of 3 June 2003 on a common system of taxation applicable to interest and royalty payments made between 
associated companies of different Member States, OJ L 157 
7 Council Directive 2009/133/EC of 19 October 2009 on the common system of taxation applicable to mergers, divisions, partial divisions, 
transfers of assets and exchanges of shares concerning companies of different Member States and to the transfer of the registered office 
of an SE or SCE between Member States, OJ L 310 
8 Council Directive 2011/96/EU of 30 November 2011 on the common system of taxation applicable in the case of parent companies and 
subsidiaries of different Member States (recast), OJ L 345 
9 Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning 
of the internal market, OJ L 193 
10 Council Directive (EU) 2017/1852 of 10 October 2017 on tax dispute resolution mechanisms in the European Union, OJ L 265 
11 Council Directive (EU) 2025/50 of 10 December 2024 on Faster and Safer Relief of Excess Withholding Taxes (FASTER), OJ L, 
2025/50 

available 

at: 

5 

 
 
The  proposal  to  recast  the  Directive  on  administrative  cooperation  in  the  field  of  direct 
taxation (DAC)12 will complement these simplification efforts by clarifying, streamlining 
and improving the functioning of the EU framework for administrative cooperation in direct 
taxation. The objective is to reduce the administrative burden on businesses while increasing 
the efficiency of tax administration without undermining the overarching policy objective 
of combating tax fraud, evasion and avoidance. 

Member States unanimously support simplification in the field of direct taxation and on 20 
March 2025, adopted Council Conclusions13 calling for efforts at EU, national and regional 
levels to ensure a clear, simple and smart regulatory framework that reduces administrative, 
regulatory  and  reporting  burdens  for  businesses  and  public  administrations  without 
undermining the policy goals.  

This  initiative is  consistent  with  the recent  proposal  for a regulation  on the 28th  Regime 
Corporate Legal Framework – EU Inc14, which includes the “once-only” principle for the 
submission  of  information,  as  well  as  with  the  FASTER  Directive,  which  simplifies 
procedures for claiming relief of excess withholding taxes while, at the same time, providing 
for reporting obligations to increase transparency. The DAC, once recast, will continue to 
be  coherent  and  complementary  with  the  EU  Accounting  Directive15  which  intends  to 
promote the public transparency of the MNE group. 

In  addition,  the  DAC  recast  initiative  is  consistent  with  the  Union’s  commitment  to  the 
United Nations 2030 Agenda for Sustainable Development16. It contributes in particular to 
Sustainable  Development  Goal  (SDG)  8  (Decent  Work  and  Economic  Growth),  SDG  9 
(Industry, Innovation and Infrastructure), SDG 10 (Reduced Inequalities), SDG 16 (Peace, 
Justice and Strong Institutions) and SDG 17 (Partnerships for the Goals). A more detailed 
analysis of these aspects is included in Annex 3. 

1.2.  Legal context 

The DAC is the main piece of EU legislation governing administrative cooperation in direct 
taxation.  It  provides  harmonised  tools  such  as  exchange  of  information  (on  request, 
automatic  and  spontaneous)  as  well  as  other  cooperation  instruments  (presence  in 
administrative  offices  or  during  administrative  enquiries,  simultaneous  controls  and  joint 
audits). These mechanisms enable Member States’ tax authorities to cooperate efficiently in 
combating tax fraud, evasion and avoidance. By increasing tax transparency, the DAC helps 
protect the financial interests of Member States and the EU, ensures the proper functioning 
of the internal market and contributes to a fairer taxation system. 

The  most  impactful  cooperation  tool  under  the  DAC  is  the  automatic  exchange  of 
information (AEOI). In most cases, this mechanism operates through a two-step process: i) 
reporting to the tax authorities by the taxpayer or a third-party (e.g. financial institutions) 

12 Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 
77/799/EEC, OJ L 64 
13 European Council, European Council conclusions, 20 March 2025, EUCO 1/25, 20 March 2025, available at: 
https://www.consilium.europa.eu/media/viyhc2m4/20250320-european-council-conclusions-en.pdf 
14 European Commission, Proposal for a Regulation on the 28th Regime Corporate Legal Framework – ‘EU Inc.’, COM(2026) 321 final, 
18 March 2026 
15 Directive (EU) 2021/2101 of the European Parliament and of the Council of 24 November 2021 amending Directive 2013/34/EU as 
regards  disclosure  of  income  tax  information  by  certain  undertakings  and  branches;  OJ  L  429,  1.12.2021,  pp.  1–14,  ELI: 
http://data.europa.eu/eli/dir/2021/2101/oj. 
16 United Nations, Transforming our world: the 2030 Agenda for Sustainable Development, Resolution adopted by the General 
Assembly on 25 September 2015, A/RES/70/1, available at: https://undocs.org/en/A/RES/70/1 

6 

 
 
and ii) automatic exchange between the tax authorities concerned of the information that has 
been reported. The scope of AEOI under the DAC has been expanded several times over 
recent years, in order to respond to emerging challenges and evolving economic realities. 
While the initial framework covered AEOI on five categories of income and capital (DAC1), 
the framework was subsequently expanded to provide for third-party reporting and AEOI 
on  financial  accounts  (DAC2)17,  cross-border  tax  rulings  (DAC3)18,  country-by  country 
reporting  (CbCR)  on  the  activities  of  multinational  enterprise  (MNE)  groups  (DAC4)19, 
reportable cross-border arrangements (DAC6)20, income earned through digital platforms 
(DAC7)21,  crypto-asset  transactions  (DAC8)22  and  information  related  to  the  global 
minimum tax for MNE groups (DAC9)23. In addition, (DAC5)24  provides access for tax 
authorities to beneficial ownership registers. 

Figure 1: Evolution of the DAC 

17 Council Directive (EU) 2014/107 of 9 December 2014 amending Directive 2011/16/EU as regards mandatory automatic exchange of 
information in the field of taxation, OJ L 359 
18 Council Directive (EU) 2015/2376 of 8 December 2015 amending Directive 2011/16/EU as regards mandatory automatic exchange of 
information in the field of taxation, OJ L 332 
19  Council  Directive  (EU)  2016/881  of  25  May  2016  amending  Directive  2011/16/EU  as  regards  mandatory  automatic  exchange  of 
information in the field of taxation, OJ L 146 
20  Council  Directive  (EU)  2018/822  of  25  May  2018  amending  Directive  2011/16/EU  as  regards  mandatory  automatic  exchange  of 
information in the field of taxation in relation to reportable cross-border arrangements, OJ L 139 
21  Council  Directive  (EU) 2021/514  of  22 March  2021  amending  Directive  2011/16/EU on  administrative  cooperation in  the  field of 
taxation, OJ L 104 
22 Council Directive (EU) 2023/2226 of 17 October 2023 amending Directive 2011/16/EU on administrative cooperation in the field of 
taxation, OJ L 2023/2226 
23  Council  Directive  (EU)  2025/872  of  29  April  2024  amending  Directive  2011/16/EU  on  administrative  cooperation  in  the  field  of 
taxation, OJ L 2024/1263 
24 Council Directive (EU) 2016/2258 of 6 December 2016 amending Directive 2011/16/EU as regards access to anti-money-laundering 
information by tax authorities, OJ L 342 

7 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
In 2025 the Commission published an evaluation report on the application of the DAC25.The 
report covers the period from 2018 to 2023 and all amendments up to DAC6. The report is 
supported by an accompanying staff working document (the SWD)26, which is based inter 
alia on the findings of an external study27. The evaluation report and SWD concluded that 
that  the  DAC  provides  a  robust  legal  framework  that  has  facilitated  the  exchange  of 
substantial volumes of information. It also found that there has been a progressive increase 
in both the matching of information and the use of exchanged information by tax authorities, 
which has had a positive effect on Member States’ tax bases and revenues28. However, the 
evaluation  also  identified  several  areas  for  improvement29.  In  particular,  the  evaluation 
concluded  that  frequent  amendments  to  the  DAC  since  2011  and  the  absence  of  a 
consolidated legal text have made the framework more complex and less user-friendly. The 
evaluation also highlighted the need to simplify reporting obligations, in particular under 
DAC6, to eliminate inefficient reporting practices, thereby reducing administrative burdens 
for stakeholders. In addition, the evaluation found that, despite progress made, challenges 
remain  with  respect  to  the  automatic  matching  of  information  and  the  identification  of 
taxpayers, which increases the burden on tax administrations to cross check the information 
received. 

These findings are consistent with the conclusions and recommendations of the European 
Court of Auditors (ECA) in its 2021 Special Report30 on DAC1 – DAC4 and their 2024 
Special  Report31  on  DAC6.  The  targeted  consultations  carried  out  by  the  Commission 
services on the simplification of the EU direct tax acquis and the public consultation and 
call for evidence 32 conducted to inform this impact assessment also confirmed that there are 
a number of issues related to DAC6 while also identifying further areas for simplification 
with respect to the interaction of notification obligations to support reporting under DAC4 
and DAC9 as well as DAC7. No significant issues were identified with respect to DAC2, 
DAC3,  DAC5  and  DAC8  (further  information  is  provided  in  Annex  7).  The  latter  only 
entered into application on 1 January 2026. 

2.  PROBLEM DEFINITION 

This section describes the problems and tries to estimate their magnitude.  

A problem tree (Figure 2) has been included to visually present the problem, its drivers and 
consequences.  

Figure 2: Problem tree 

25 European Commission (2025), Report from the Commission to the European Parliament and the Council on the evaluation of Council 
Directive 2011/16/EU on administrative cooperation in the field of taxation, COM (2025) 695 final, 19 November 2025. Available at: 
https://taxation-customs.ec.europa.eu/document/download/c24ef108-3dce-4169-84e3-
0d024f419efd_en?filename=COM_2025_695_1_EN_ACT_part1_v3.pdf 
26 European Commission (2025), Commission Staff Working Document accompanying the Report on the evaluation of Council Directive 
2011/16/EU  on  administrative  cooperation  in  the  field  of  taxation,  SWD(2025)  [final],  Brussels.  Available  at:  https://taxation-
customs.ec.europa.eu/document/download/c1235b9c-8c70-4c36-8270-fc908d3d28fa_en?filename=Soon.pdf 
27  Ramboll,  London  School  of  Economics  and  Political  Science,  and  Syntesia  (2025),  Study  supporting  the  evaluation  of  Directive 
2011/16/EU 
https://taxation-
customs.ec.europa.eu/document/download/2206de45-1576-4eab-826a-4cb22aa7f80d_en?filename=Soon_0.pdf 
28 See COM(2025) 695 final, pp. 6–8; SWD(2025), pp. 33–40. 
29 European Commission (2025), COM(2025) 695 final, Section 3 
30 European Court of Auditors, Special Report 03/2021: Exchanging tax information in the EU: solid foundation, cracks in the 
implementation, 2021, available at: https://www.eca.europa.eu/en/publications/SR21_03 
31 European Court of Auditors,  Special Report 27/2024: Combatting harmful tax regimes and corporate tax avoidance, 28 November 
2024, available at: https://www.eca.europa.eu/en/publications/SR-2024-27 
32  European  Commission,  EU  rules  on  administrative  cooperation  in  the  field  of  taxation  –  recast  (call  for  evidence  and  public 
consultation), available at: EU rules on administrative cooperation in the field of taxation – recast 

Commission. 

Available 

European 

external 

(DAC), 

study 

the 

for 

at: 

8 

 
 
2.1.  What are the problems? 

2.1.1 Increasing complexity and insufficient legal clarity and certainty  

The DAC is a patchwork of nine different legal instruments comprised of the initial DAC1, 
multiple  amending  directives  (DAC2-DAC9)  and  corresponding  annexes.  This  leads  to 
increased  complexity  and  lack  of  legal  clarity  and  certainty  as  tax  administrations  and 
reporting  entities  are  often  required  to  interpret  and  apply  provisions  that  are  dispersed 
across  several  legal  instruments.  The  DAC  evaluation  concluded  that  the  frequency  of 
amendments  since  2011  has  made  the  legal  text  more  complex  and  less  user-friendly33. 
These  conclusions  were  corroborated  by  both  Member  States  and  business  stakeholders, 
during the consultation activities. Stakeholders unanimously emphasised that the complexity 
of the existing acquis has created practical difficulties in understanding, interpreting, and 
applying the rules consistently across the Union. 

33 See COM(2025) 695 final, pp. 7–9; SWD(2025), pp. 20–24. 

9 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 
 
 
2.1.2 Reporting requirements with limited added value for tax administrations 

The conclusions from the DAC evaluation, recommendations from the 2024 ECA Special 
Report and outcomes from the targeted consultations highlight that certain aspects of the 
framework create legal uncertainty and result in reporting/notification outcomes that provide 
limited  added  value  for  tax  administrations.  These  aspects  primarily  relate  to  the 
DAC4/DAC9,  DAC6  and  DAC7  which  have  led  to  disproportionately  high  volumes  of 
notifications and reporting that are either redundant or do not present a risk of tax fraud, 
evasion or avoidance. These outcomes limit the effectiveness and efficiency of the DAC, as 
they create high compliance burdens for business stakeholders and high administrative costs 
for  tax  administrations  who  must  process  and  analyse  high  volumes  of  information  that 
provide limited added value in tackling tax fraud, evasion and avoidance.    

a.  DAC6 

DAC6 requires intermediaries (e.g. tax advisers, accountants, financial institutions) or, in 
some cases the taxpayer to report to the tax authorities of Member States information on 
certain potentially aggressive cross-border tax arrangements. This information enables tax 
authorities to react promptly against harmful tax practices by enacting legislation to close 
loopholes or by undertaking risk assessments or carrying out tax audits. These arrangements 
must  be  reported  whereupon  they  meet  specific  characteristics  known  as  “hallmarks”. 
These hallmarks serve as indicators of potentially aggressive tax planning arrangements and 
are grouped into five categories: A (Generic hallmarks), B (Specific hallmarks), C (Specific 
hallmarks related to cross-border transactions), D (Specific hallmarks concerning exchange 
of  information  and  beneficial  ownership)  and  E  (Specific  hallmarks  concerning  transfer 
pricing). Reporting requirements under hallmark A, hallmark B and points b(i), (c) and (d) 
of paragraph 1 of hallmark C are linked to the application of a Main Benefit Test (MBT). 
The MBT is intended to operate as a filter that reduces reporting volumes as it requires that 
obtaining a tax advantage must be one of the main benefits that a person can reasonably 
expect to obtain from an arrangement for that arrangement to be reportable.  

While DAC6 is intended to discourage the use of aggressive tax planning arrangements, it 
has generated significant volumes of reporting. Since reporting first  commenced in  2020 
more than 60,000 cross-border arrangements comprised of 79,274 disclosure reports have 
been reported by Member States to the DAC6 Central Directory. While multiple different 
hallmarks may be reported in each disclosure report, the SWD from the DAC evaluation 
identified the proportion of reporting under each hallmark as follows34: hallmark A (35%), 
hallmark B (34%), hallmark C (16%), hallmark D (4%) and hallmark E (12%). These high 
volumes  of  reporting  underline  the  importance  of  ensuring  that  the  information  reported 
remains proportionate and targeted to achieving the objectives of tackling tax fraud, evasion 
and avoidance.  

Limited tax relevance of DAC6 reporting for MNE Groups within the scope of the Pillar 
2 Directive 

Since the adoption of DAC6, the legal environment at both the EU and international level 
has  significantly  evolved  with  the  implementation  of  the  Pillar  2  Directive.  The  Pillar  2 
Directive prevents base erosion and profit shifting by ensuring that MNE groups in scope 
pay a minimum effective tax rate of 15% on profits in each jurisdiction that they operate. 

34 See SWD(2025) [final], p. 96. 

10 

 
 
The  main  mechanism  to  achieve  this  objective  is  an  Income  Inclusion  Rule  (IIR)  which 
requires the ultimate parent entity (UPE) of a group to pay an additional amount of tax ("top-
up tax") on profits from entities in the group that are subject to an effective tax rate below 
15%.  The  rules  also  include  an  Undertaxed  Profits  Rule  (UTPR),  which  is  designed  to 
operate as a backstop to the IIR. Finally, the rules allow jurisdictions to collect any top-up 
tax due from domestic entities before the application of the IIR top-up tax or UTPR top-up 
tax.  

As the Pillar 2 Directive was only recently transposed by Member States the actual effects 
of the interaction between the two sets of rules are not yet possible to assess in a reliable 
manner.  That  said,  the  core  objective  of  DAC6  is  to  target  cross-border  aggressive  tax 
planning arrangements which are developed to take advantage of disparate national tax rules. 
However, the introduction of a global minimum effective tax rate has significantly reduced 
the  risk  of  shifting  profit  to  low  tax  jurisdictions  via  these  types  of  tax  planning 
arrangements.  

In their contributions to the public consultation 14 stakeholders expressly highlighted that 
DAC6 should only focus on high-risk arrangements that are not already covered by other 
EU rules. Several business stakeholders involved in the targeted consultations called for a 
complete carve out from DAC6 reporting for MNE groups within the scope of the Pillar 2 
Directive. Currently there are approximately 4,700 MNE groups with at least one subsidiary 
in the EU that are within the scope of the Pillar 2 Directive. It is estimated that 3,000 of these 
MNE groups have a sufficiently large operational footprint in the EU, in particular in terms 
of  multiple  subsidiaries  and  cross-border  intra-group  transactions,  to  give  rise  to  DAC6 
reportable  arrangements.  Such  MNE  groups  have  complex  organisational  structures  and 
high volumes of cross-border transactions that necessitate dedicated in-house compliance 
functions  for  DAC6  purposes,  which  result  in  high  compliance  costs.  These  groups  are 
estimated to incur compliance costs of around EUR 300 million per year35. 

Limited tax relevance of certain arrangements reported under Hallmark A 

The findings from the DAC evaluation report highlighted that business stakeholders and EU 
tax  administrations  view  certain  DAC6  hallmarks  as  no  longer  fit  for  purpose36.  Tax 
administrations highlighted that reporting associated with A1 is frequently precautionary in 
nature and triggered by standard confidentiality clauses that are not specifically related to 
tax arrangements. The SWD from the evaluation noted that this practice has led to significant 
administrative  workload  without  necessarily  increasing  the  value  of  the  reports37  Tax 
administrations also highlighted that the application of A3 has been problematic due to its 
broad and ambiguous language and that this has led to excessive reporting38. 

During  the  targeted  consultations,  4  Member  States  accounting  for  75%  of  all  reporting 
under DAC6 highlighted that reporting linked to  A1, A2  and A3 provides limited added 
value in identifying tax fraud, avoidance and evasion while creating significant operational 
processing burdens for tax administrations. The ECA also identified that tax administrations 

35 This estimate is based on approximately 3,000 MNE groups within the scope of Pillar 2 and an average annual compliance cost of EUR 
100,000 per group, drawing on evidence from the evaluation of the Anti-Tax Avoidance Directive. This results in an aggregate compliance 
cost of around EUR 300 million per year (see Chapter 6 and Annex 4 for details). 
36 COM(2025) 695 final, p. 6. 
37 SWD(2025) 695 final, p. 109 
38 SWD(2025) 695 final, p. 109 

11 

 
 
face  difficulties  filtering  and  prioritising  large  volumes  of  DAC6  information  including 
arrangements that do not necessarily present a substantive tax risk39. 

In  their  contribution  to  the  public  consultation,  17  business  stakeholders  expressly   
highlighted  the  necessity  to  review  and  refine  the  DAC6  hallmarks  to  better  target 
arrangements  that  pose  a  genuine  risk  of  aggressive  tax  planning.  In  this  respect,  they 
converged on the need to remove hallmark A. In particular they indicated that A1 does not 
provide any added value for tax administrations, A2 concerns transactions that are already 
prohibited by law in many Member States and advised that A3 has led to excessive reporting 
that has negatively impacted on the efficiency and effectiveness of the framework. These 
findings broadly correspond to those of the targeted consultations of business stakeholders. 

Since reporting commenced in July 2020, the volumes of reports linked to these hallmarks 
are as follows, A1 (19,256), A2 (704) and A3 (33,785) representing an annual average of 
8,300  reports  by  companies  outside  of  the  scope  of  the  Pillar  2  Directive.  For  these 
companies, compliance costs are more closely linked to the preparation and submission of 
individual reports, and they often rely upon external advisory services for these purposes40. 
Based  upon  the  average  cost  per  report  of  EUR  5,000,  as  indicated  during  stakeholder 
consultations  with  tax  advisory  firms  (see  Annex  2  for  more  details  on  stakeholder 
consultations),  the  corresponding  total  compliance  burden  is  estimated  at  approximately 
EUR 41 million per year.  

Divergent interpretation of the Main Benefit Test (MBT) 

A  consistent  interpretation  and  application  of  the  MBT  is  of  critical  importance  to  the 
effective and efficient functioning of the framework. Reporting requirements under hallmark 
A, hallmark B and points b(i), (c) and (d) of paragraph 1 of hallmark C are linked to the 
application  of  the  MBT.  The  MBT  is  intended  to  operate  as  a  filter  to  reduce  reporting 
volumes, however reports linked to these hallmarks are listed in 77% of all disclosure reports 
(Annex  7).  The  findings  from  the  DAC  evaluation  SWD41  indicate  that  the  MBT  is 
interpreted and applied differently across the Union. These divergent interpretations, which 
reflect variations in administrative practices and approaches to risk assessment reduce legal 
certainty for intermediaries and taxpayers that operate cross-border. They also negatively 
impact on reporting behaviours resulting in inconsistent reporting outcomes across Member 
States which limits the efficiency and effectiveness of the framework.  

Similar findings were included in the 2024 ECA Report42 where it was identified that there 
is persistent uncertainty in determining whether obtaining a tax advantage constitutes the 
main or one of the main benefits of an arrangement, including whether such assessments 
should rely on a quantitative comparison of expected benefits. Consequentially, the ECA 
concluded that similar cross-border arrangements may be treated differently across Member 
States in terms of reportability. 

39 ECA, Special Report 27/2024, paras 59–63 
40 DAC6 reporting obligations are primarily imposed on intermediaries, which account for approximately two thirds of all disclosures, 
while the remaining one third are filed directly by taxpayers. For the purpose of this analysis, no distinction is made between intermediary 
and  taxpayer  filed  reports,  as  the  associated  compliance  costs  are  assumed  to  be  broadly  comparable.  In  practice,  costs  incurred  by 
intermediaries are typically passed on to the underlying taxpayer, such that the overall economic burden is borne by companies irrespective 
of the reporting channel. 
41 See SWD (2025), pp. 118–128; COM (2025) 695 final, pp. 8–9. 
42 ECA, Special Report 27/2024, paras 59–63 

12 

 
 
b.  DAC7 

Limited tax relevance of certain sellers reported in relation to the sale of goods 

DAC7  introduced  reporting  obligations  for  digital  platform  operators  to  improve  tax 
transparency and tax compliance in the platform economy. Platform operators must collect 
and  report  information  on  sellers  engaging  in  activities  such  as  selling  goods,  providing 
personal services or renting immovable property or means of transport. This information is 
then automatically exchanged with the Member State where the seller is resident and where 
the immovable property is located.  Under the current rules and with respect to activities 
involving the sale of goods, sellers carrying out fewer than 30 transactions not exceeding 
EUR 2,000 in a calendar year are excluded from reporting. Consequentially the reporting 
obligation will apply even where the monetary value of transactions is minimal e.g. a seller 
carrying out 30 transactions with a value of EUR 1 each would still be reportable. 

In their response to the public consultation 6 business stakeholders, mainly online platform 
associations, expressly highlighted issues concerning the current threshold for the sale of 
goods.  These  respondents  considered  this  current  threshold  as  too  low  and  proposed 
amendments including raising the monetary threshold (e.g. to EUR 5,000) and removing the 
transaction threshold. These views are largely consistent with those expressed by business 
stakeholders  during  targeted  consultations  where  platform  operators  indicated  that  the 
current threshold is leading to the reporting of many non-professional sellers that carry out 
many transactions for minimal income and that this is particularly prevalent in the second-
hand  goods  market.  They  also  indicated  that  the  current  thresholds  discourage  private 
individuals from selling their second-hand goods with many of these individuals concerned 
by the requirement to provide their TIN. According to them, this has reduced the number of 
sales of second-hand goods, conflicting with the broader Union objective of promoting the 
circular economy43. 

Sixteen out of 19 Member States that expressed a view highlighted that the current threshold 
is  not  sufficiently  proportionate  and  is  leading  to  the  reporting  of  information  that  is  of 
limited value from a tax perspective, as under national tax rules income from the occasional 
sale of personal goods is generally not taxable. Moreover, the reporting of large volumes of 
low-value  transactions  that  do  not  present  a  tax  risk  creates  operational  challenges  and 
resourcing costs for tax administrations. Seven out of 12 Member States that expressed more 
specific views supported removing the activity threshold while there were diverging views 
on the appropriate level for the monetary threshold, with 2 supporting the retention of EUR 
2,000, 3 favouring a threshold of between EUR 3,000 and EUR 5,000 and 2 supporting a 
threshold above EUR 5,000. Since these views were expressed all relevant jurisdictions and 
26  Member  States  reached  a  provisional  agreement  at  technical  level  at  the  OECD,  to 
remove the activity threshold and increase the monetary threshold to EUR 3,000. in relation 
to the Model Rules for Digital Platform Operators (MRDP), which are implemented in the 
EU  through  DAC7.  This  provisional  technical  agreement  is  reflective  of  the  fact  that 
Member States do not view an increase of the threshold as negatively impacting on their 
ability to effectively apply their national taxation rules. While  the application of national 

43 European Commission, A new Circular Economy Action Plan: For a cleaner and more competitive Europe, COM(2020) 98 final, 11 
March 2020, available at: Circular Economy Action Plan (COM(2020) 98) 

13 

 
 
taxation rules is dependent on specific personal circumstances e.g. entitlement to tax credits 
and allowances based on marital and parental status, general case study examples of national 
taxation rules are included at Annex 8. 

DAC7 reporting  has  reached a significant  scale  across the Union.  According  to  statistics 
made  available  by  the  Member  States  to  the  Commission  services  approximately  52,000 
platform operators were active in the EU in 2024. These operators reported information on 
approximately 13.5 million sellers out of an estimated total seller base of approximately 71 
million individuals engaged in platform-based activities. According to information provided 
by major platform operators in the EU almost 80% of sellers reported for activities involving 
the sale of goods consist of those exceeding  the  activity threshold of 30 transactions but 
remaining  below  the  EUR  2,000  monetary  threshold.  Platforms  operators  incur  the 
compliance costs associated with reporting these low value sellers, which are estimated at 
approximately EUR 640 million per year across all platform operators. At the same time, 
tax administrations are required to process and analyse large volumes of information that 
are of limited relevance for assessing tax liabilities, which reduces the overall effectiveness 
and efficiency of their risk analysis and enforcement activities. 

c.  DAC4/DAC9 

Duplication of notification obligations 

DAC4 requires certain  MNE groups to  file a country-by-country report  (CbCR) with the 
relevant tax authorities of Member States. CbCR applies to MNE Groups with an annual 
consolidated group revenue of EUR 750 million or more in the preceding fiscal years. The 
report includes information on revenue, profits, income tax paid, number of employees, etc. 
Tax  authorities  can  use  this  information  to  perform  high-level  transfer  pricing  risk 
assessments, evaluate other BEPS related risks and for economic and statistical analysis. 

DAC4  requires  entities  of  the  MNE  group  to  notify  the  tax  authorities  of  the  entity 
responsible for reporting for the group. DAC9, which also applies to MNE groups with an 
annual  consolidated  revenue  of  EUR  750  million  or  more,  enables  central  filing  of  the 
GloBE Information Return (GIR). However, each entity of the MNE group is required to 
notify the tax authorities of the entity responsible for reporting for the group 

While the content of these notifications are not directly aligned, they do contain duplicate 
informational requirements. With respect to the filing deadline for these notifications, DAC4 
requires that the filing should take place before the last day of the reporting fiscal year of 
the  MNE  group,  however  there  is  no  such  filing  deadline  prescribed  for  the  notification 
obligations which support the DAC9 reporting requirements. This has led to diverging filing 
deadlines across the Union.  

In their response to the public consultation, 12 stakeholders expressly highlighted the need 
for  a  centralised  Union  wide  system  for  such  notifications.  Ten  of  these  stakeholders 
supported a single DAC4/DAC9 group level notification in tandem  with  a ‘change only’ 
approach,  standardised  template  and  EU  wide  harmonised  filing  deadline.  These 
respondents  highlighted  that  the  absence  of  standardised  notification  procedures  and 
templates has led to divergent approaches across the Union which increases the compliance 
burden for MNE groups.  

14 

 
According  to  Orbis  there  are  approximately  4,700  MNE  groups  comprised  of  around 
109,000  constituent  entities  with  activities  in  the  Union.  These  entities  are  subject  to 
notification obligations under both DAC4 and DAC9. Groups that are subject to the existing 
notification  obligations  under  DAC4  estimate  that  the  associated  administrative  costs  of 
compliance are approximately EUR 135 million per year. In the absence of streamlining, the 
combined compliance costs for DAC4 and DAC9 could reach around EUR 270 million per 
year.  

2.1.2.  Member States limited in their ability to maximise the benefits of the DAC 

Limited automatic identification of reported taxpayers in national tax systems reducing 
the effective use of reported information 

The  TIN  is  a  unique  identifier  issued  by  public  authorities  to  taxpayers  to  facilitate  the 
administration of their national tax affairs. The TIN is a fundamental element of the DAC 
framework  as  it  ensures  that  information  exchanged  between  tax  authorities  can  be 
accurately matched to the correct taxpayers, thereby facilitating the correct assessment of 
tax obligations. Under the DAC, the TIN and other information is collected and reported by 
the  relevant  reporting  entity  to  the  relevant  tax  administration.  The  information  is  then 
automatically  exchanged  with  the  tax  administrations  of  other  Member  States.  The 
evaluation SWD44 identified weaknesses in the completeness and quality of reported TINs 
and highlighted that automatic matching rates remain relatively low for certain categories of 
exchanged information. In some cases, the automatic matching rate is below 30% (Figure 
3 below), a detailed rationale for the diverging automatic matching rates between DAC1 - 
DAC7 is included at Annex 9. 

Figure 3: Average automatic matching rates for TIN for 2025 

DAC1 
IE 

DAC1 
DF 

DAC1 
PEN 

DAC1 
LIP 

DAC1 
IP  

DAC2  DAC3  DAC4  DAC6  DAC7 

39.3%  41.6%  46.9%  24.2%  35% 

67.9%  27.3%  81.5% 

56.8%  69.7% 

Source: European Commission statistics  
Legend: Income from employment (IE), directors’ fees (DF), pension income (PEN), life insurance products 
(LIP), income from immovable property (IP) 

The  inaccurate  reporting  of  TINs  constrains  the  ability  of  tax  administrations  to 
automatically  reconcile  data  received  from  other  Member  States  with  national  taxpayer 
databases.  This  constraint  inhibits  effective  risk  assessment  and  follow-up  compliance 
actions and substantially increases reliance on manual processing and follow up requests, 
which  in  turn  increases  administrative  costs  and  burden  for  tax  administrations.  This 
assessment  is  corroborated  by  the  findings  of  the  2021  ECA  Special  Report45,  which 
identified  that  matching  performance  (automatic  and  manual)  varies  significantly  across 
Member  States  and  that  unmatched  information  cannot  be  readily  used  for  compliance 
purposes.  

44 See SWD(2025), pp. 95–97 
45 ECA, Special Report 03/2021, paras 57–63. 

15 

 
 
 
Where  information  cannot  be  automatically  matched  this  reduces  the  scope  for  tax 
administrations  to  automate  and  digitalise  their  processes  for  using  information. 
Simultaneously  operational  costs  increase  due  to  the  necessity  to  manually  match 
information  and  submit  follow  up  requests  for  information  to  the  tax  administration  that 
exchanged the information. This limits the effective use of all information by tax authorities 
and  negatively  impacts  on  the  efficiency  and  effectiveness  of  the  framework.  In  their 
response to the public consultation 7 stakeholders expressly highlighted the necessity for a 
centralised TIN verification system.  

d. DAC1 

Incomplete reporting across categories and limitations in the information available for 
reporting 

Under DAC1 Member States must exchange information that is “available” in their tax files 
on at least 5 of the 7 DAC1 income categories. The evaluation SWD identified significant 
differences between Member States in the number and type of income categories exchanged 
under  DAC146  (see  figure  4).  Furthermore,  the  ECA  in  their  2021  Special  Report  also 
highlighted the large differences between the number of categories reported and exchanged 
by Member States and that this may contribute to situations where income is not taxed in 
the  Member  State  of  residence  of  the  taxpayer  because  the  relevant  information  is  not 
exchanged47.  These  structural  limitations  reduce  the  effectiveness  of  the  administrative 
cooperation framework, in particular, where the information is already held at national level 
but not made available to tax administrations, thereby further constraining the ability of tax 
administrations to maximise the benefits of the DAC.  

Figure 4: Categories of information exchanged by Member States 

Category of Income and Capital 

Number of Member States 
exchanging information 

Income from employment 
Directors Fees 
Income from life insurance products 
Pensions 
Ownership and income from immovable property  
Royalties 
Non-custodial dividend income 

Source: European Commission statistics  

26 
23 
10 
25 
24 
18 
AEOI will start in 2027 

In particular, income from life insurance products (LIP) is exchanged by only 10 Member 
States and represents less than 1% of both the number of taxpayers and the total value of 
income exchanged under DAC1. This limited use partly reflects the fact that several Member 
States do not hold relevant information in their tax files due to the absence of national tax 
provisions applicable to LIP. Moreover, certain LIP are already covered by exchanges under 

46 See SWD(2025), pp. 45–49 
47 ECA, Special Report 03/2021, para. VIII; see also paras 29–33, 108 

16 

 
 
 
DAC2.  This  overlap  arises  because  certain  LIP  are  treated  as  financial  accounts  and  are 
therefore reported by financial institutions under the DAC2 framework.  

2.2.  What are the problem drivers?  

Fragmentation of the legal framework due to numerous amending legal instruments 

Since  its  first  adoption  in  2011,  the  DAC  has  been  amended  8  times  to  introduce  new 
reporting  requirements  and  administrative  cooperation  mechanisms.  While 
these 
amendments  have  progressively  expanded  the  scope  of  administrative  cooperation, 
particularly AEOI, they have also resulted in a fragmented legal framework that must be 
read and interpreted together. This has increased the complexity of the legal framework and 
has contributed to challenges in ensuring consistent interpretation and implementation of the 
DAC across the Union.  

Evolution of tax compliance risks faced by tax administrations 

The compliance risks faced by tax administrations have evolved significantly since 2011, 
due to increased cross-border economic activity, digitalisation and the growing complexity 
of MNE structures. In response, the administrative cooperation framework has expanded to 
include additional reporting obligations under instruments such as DAC4 for MNE groups, 
DAC6 for cross-border tax arrangements and DAC7 for activities carried out through digital 
platforms. While these instruments were introduced to address specific tax compliance risks, 
the  cumulative  expansion  of  reporting  obligations  has  also  increased  the  complexity  and 
compliance costs associated with the framework.  

Certain  tax  compliance  risks  that  were  once  prevalent  have  now  significantly  reduced 
particularly since the introduction of the Pillar 2 Directive (which was adopted in 2022) and 
which has established a comprehensive framework for ensuring a minimum effective level 
of taxation for MNE groups in each jurisdiction they operate. Simultaneously, the evolution 
of  tax  compliance  risks  in  other  areas  such  as  activities  carried  out  via  digital  platforms 
means that certain reported information may now be of limited value for tax administrations. 
This  affects  the  efficiency  and  proportionality  of  the  reporting  system  and  increases 
administrative burdens for both tax administrations and reporting entities. 

Inaccurate reporting of the TIN and limitations in the legislative reporting framework 

The DAC evaluation identified that weaknesses remain in the accurate reporting of TINs. 
While the DAC requires reporting entities to validate the TIN of the reported taxpayer, it 
does not prescribe the method by which the TIN should be validated. At present there is no 
centralised  system  for  reporting  entities  and  tax administrations  to  validate  that  a  TIN  is 
correct and that it corresponds to the relevant taxpayer. The Commission has developed an 
online tool (i.e. the TIN-on-the Web module48). However, the tool is limited to verifying 
whether the structure of the TIN is valid (types and number of characters i.e. syntax).  

Moreover, and as highlighted by the ECA in their 2021 Special Report, there are structural 
limitations  in  the  design  of  the  legal  framework  governing  the  exchange  of  information 
under DAC149. Member States are required to exchange information on at least five of the 

48 European Commission, TIN on the Web (Taxpayer Identification Number), available at: TIN on the Web 
49 ECA, Special Report 03/2021, para. VIII; see also paras 29–33, 108 

17 

 
 
seven DAC1 income categories. In addition, only information that is “available” in the tax 
files of the competent tax authority must be exchanged, meaning that if relevant information 
exists  within  a  Member  State’s  public  administration  but  is  not  recorded  in  the  tax 
administration’s databases, Member States are not obliged to exchange this information. For 
example, information on ownership of immovable property may be held by a land registry 
or another public authority but not systematically captured in the tax authority’s records. 
Where such information is not available in the tax administration’s files, it is not considered 
“available” for the purposes of DAC1 and is therefore not exchanged. This “availability” 
provision substantially limits the scope of information exchanged between Member States.  

2.3.  How likely is the problem to persist?  

The DAC and its subsequent amendments constitute Union legal acts intended to ensure that 
there is a coherent and comprehensive framework for administrative cooperation within the 
Internal  Market.  To this  end the  DAC establishes harmonised reporting and exchange of 
information requirements across Member States. 

In  the  absence  of  amendments  to  the  existing  Union  acquis,  the  problems  identified  are 
expected to persist and, in several areas, intensify over time. The complexity of the current 
legal framework stems from the cumulative development of the DAC through successive 
amendments. Without EU action, tax administrations and reporting entities would continue 
to interpret and apply provisions dispersed across several legislative instruments. Divergent 
interpretations of certain provisions across Member States would therefore likely remain, 
creating legal uncertainty for businesses operating cross-border and potentially affecting the 
level playing field. 

At  the  same  time,  available  evidence  points  to  a  continued  increase  in  the  volume  of 
information  exchanged  under  the  DAC  framework.  For  example,  under  DAC1,  between 
2018 and mid-2022, Member States exchanged information  covering approximately 36.7 
million taxpayers and EUR 239.5 billion in income. On an annual basis (2018–2021), this 
corresponds to  around 8.6 million taxpayers and EUR 54.8 billion in income exchanged, 
with a clear upward trend compared to earlier periods (50). In the absence of reform, this 
trend  is  expected  to  continue,  further  increasing  the  volume  of  data  handled  by  tax 
administrations. 

At the same time, the evolution  of reporting obligations introduced under different  DAC 
instruments  would  continue  to  generate  situations  where  certain  notification  obligations 
overlap and reporting requirements result in the reporting of large volumes of information 
that may be of limited added value for tax administrations.  This is particularly evident in 
the  case  of  DAC6,  where  stakeholder  consultations  indicate  that  continued  reporting  at 
current  levels  would  generate  substantial  volumes  of  disclosures,  a  significant  share  of 
which are considered to have limited tax relevance (“noise”).  

This assessment is substantiated by the fact that during the targeted consultations, 4 Member 
States accounting for 75% of all reporting under DAC6 highlighted that reporting linked to 
A1, A2 and A3 provides limited added value in identifying tax fraud, avoidance and evasion 
while  creating  significant  operational  processing  burdens  for  tax  administrations.  This 
concern is reinforced by observed trends since the introduction of DAC6, with more than 

(50) Evaluation of the Directive 2011/16 and its amendments, Final Report, 2025, Figure 5. 

18 

 
 
 
60,000 arrangements reported between mid-2020 and 2025. In the absence of reform, these 
volumes are expected to remain high or increase further, thereby exacerbating administrative 
burdens and reducing the capacity of tax administrations to focus on high-risk cases. 

Similarly, for DAC7, while time series data are still limited, broader economic developments 
such  as  the  continued  expansion  of  the  platform  economy  and  increasing  digitalisation 
suggest that the number of platform users and transactions will continue to grow. This is 
expected to translate into a rising number of reportable sellers and corresponding reporting 
obligations over time. 

In  the  absence  of  legislative  amendments,  compliance  costs  would  continue  not  to  be 
proportionate to the contribution of these obligations to the underlying policy objectives. 
More  generally,  the  combination  of  increasing  reporting  volumes  and  overlapping 
obligations  is  expected  to  lead  to  rising  compliance  costs  for  both  businesses  and  tax 
administrations, as also evidenced in the DAC evaluation. 

Limitations affecting the completeness and use of exchanged information would also persist. 
In particular, the optionality associated with certain reporting requirements under DAC1 and 
the  obligation  to  exchange  only  information  available  in  the  tax  files  of  the  competent 
authority  would  continue  to  result  in  differences  in  the  scope  of  information  exchanged 
across  Member  States.  In  addition,  challenges  related  to  the  accurate  identification  of 
taxpayers would remain as weaknesses in the verification of TINs would continue to limit 
the  ability  of  tax  administrations  to  automatically  match  exchanged  information  with 
national  taxpayer  databases  and,  therefore,  to  effectively  and  efficiently  use  exchanged 
information for risk assessment and compliance purposes.  

These  trends  indicate  that,  in  the  absence  of  policy  intervention,  the  current  challenges 
related to complexity, fragmentation, data quality and administrative burden are likely not 
only to persist but to become more pronounced over time, driven by increasing volumes of 
exchanged information and the evolving economic environment. 

3.  WHY SHOULD THE EU ACT? 

3.1.  Legal basis 

The legal basis of DAC relies on Articles 113 and 115 of the Treaty on the Functioning of 
the  European  Union  (TFEU).  Article  113  of  the  TFEU  provides  a  legal  basis  for  the 
harmonisation of indirect tax systems of Member States, as far as is needed to ensure the 
functioning of the Internal Market and to avoid distortion of competition. Article 115 of the 
TFEU provides for the approximation of such laws, regulations or administrative provisions 
of the Member States, which directly affect the establishment or functioning of the Internal 
Market and make the approximation of laws necessary.  The key objective of the DAC is to 
ensure that there is a robust legal instrument based on uniform conditions and harmonised 
practices to facilitate administrative cooperation and exchange of information in the field of 
direct taxation. This is necessary to ensure the proper functioning of the Internal Market and 
reduce the negative effects of tax fraud, evasion and avoidance in the EU. 

3.2. 

Subsidiarity: Necessity of EU action 

The  DAC  and  its  8  amendments  are  legal  acts  of  the  EU.  The  political  objectives  of 
simplification necessitate proposals to codify, simplify and clarify the existing framework 
to eliminate any overlaps and contradictions, cut unnecessary and low-value reporting and 

19 

 
ensure  consistent  implementation,  while  not  undermining  the  policy  objectives  of  the 
legislation.  Given  the  need  to  act  and  the  nature  and  extent  of  the  problem  as  set  out  in 
chapter 2, an EU approach is the only option to ensure that there is a comprehensive and 
uniform solution that conforms with EU law, does not distort competition and maintains the 
level  playing  field.  Individual  actions  taken  by  Member  States  could  not  achieve  these 
objectives. At the same time, the current inefficiencies in the effective functioning of the 
DAC acquis, as identified in the DAC evaluation and the Special Reports of the ECA are 
linked to several existing reporting and exchange obligations contained in the DAC, which 
can only be comprehensively and uniformly addressed by an EU legislative initiative.  

3.3. 

Proportionality: Added value of EU action 

The added value of EU action is that it ensures that there is a coherent, uniform and complete 
solution  at  EU  level,  which  achieves  the  targeted  reductions  in  reporting  burdens  and 
associated  administrative  costs  for  EU  businesses,  and  which  could  not  be  achieved  by 
individual  actions  taken  by  Member  States.  At  the  same  time,  EU  action  will 
comprehensively address the current identified inefficiencies in the functioning of the DAC 
with  targeted  improvements  to  the  existing  acquis  ensuring  that  tax  administrations, 
reporting entities and taxpayers benefit from a more efficient and effective functioning of 
the  DAC.  More  specifically,  these  uniform  and  coherent  enhancements  will  support 
improvements in data completeness, data quality and use of information and therein advance 
the  capabilities  of  the  tax  authorities  of  Member  States  to  effectively  tackle  tax  fraud, 
avoidance and evasion. 

4.  OBJECTIVES: WHAT IS TO BE ACHIEVED? 

Figure 5: Intervention logic 

20 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
 
4.1 General objectives 

In  response  to  the  problems  identified,  the  general  objectives  of  this  initiative  are  to 
contribute to strengthening the competitiveness of EU businesses and to enhance the 
functioning of the Internal Market. These objectives are consistent with the priorities set 
out  in  the  Competitiveness  Compass51  and  the  2025  Single  Market  Strategy52,  which 
emphasise the importance of regulatory efficiency as a means of supporting competitiveness 
and economic resilience. 

At the same time, the initiative aims to continue to effectively support the Union’s efforts 
to fight against tax fraud, evasion and avoidance with a view to safeguarding Member 
States’  tax  bases,  ensuring  fair  taxation,  and  maintaining  a  level  playing field  within  the 
Single  Market.  A  key  objective  of  the  DAC  is  to  ensure  that  Member  States  receive 
information, which enables their tax administrations to effectively enforce their national tax 
rules.  The  information  is  intended  to  support  compliance  and  effectively  address  non-
compliance.  In  certain  instances,  non-compliance  may  take  the  form  of  tax  fraud  or  tax 
evasion both of which are illegal activities. In other instances, non-compliance may take the 
form of tax avoidance, which is not by its nature an illegal activity, but is an activity that is 
usually contrary to the intention of the legislation. Attaining these objectives requires that 
Member States’ tax administrations remain equipped with effective and proportionate tools 
to detect, assess, and address non-compliance with tax obligations. 

4.2 Specific objectives 

Reducing complexity and improving legal clarity and legal certainty for all stakeholders 

This  objective  addresses  the  fragmentation  resulting  from  successive  amendments  to  the 
DAC  and  aims  to  improve  legal  clarity  and  certainty  for  tax  administrations,  reporting 
entities and taxpayers by consolidating the Directive into one legal text. Greater clarity will 
facilitate easier readability and usability thus facilitating more consistent implementation of 
reporting obligations across the Union and supporting a more predictable, streamlined and 
cost-efficient compliance environment for stakeholders. 

Ensuring  reporting  and  notification  obligations  are  proportionate  and  better  targeted 
while preserving the policy objectives 

This  objective  seeks  to  reduce  reporting  requirements  and  notification  obligations  that 
generate  limited  added  value  for  tax  administrations  while  preserving  and  upholding  the 
policy  objectives  of  tackling  tax  fraud,  evasion  and  avoidance.  Aligning  reporting 
requirements  and  notification  obligations  with  the  tax  compliance  risks  that  they  are 
intended to address will improve the relevance of the information collected, reported and 
exchanged under the framework thereby ensuring that the framework remains proportionate, 
efficient and effective. 

51 European Commission, Competitiveness Compass, available at: 
https://commission.europa.eu/topics/competitiveness/competitiveness-compass_en 
52 European Commission, The Single Market: our European home market in an uncertain world – A Strategy for making the Single 
Market simple, seamless and strong, COM(2025) 500 final, 21 May 2025, available at: https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=celex%3A52025DC0500 

21 

 
 
Improving the effectiveness and usability of exchanged information 

This objective focuses on improving the completeness, accuracy, and usability of exchanged 
data, including the automatic identification of taxpayers via their TIN. This will enhance the 
ability  of  tax  administrations  to  automatically  identify  taxpayers  and  effectively  use  all 
exchanged  information  for  risk  assessment  and  compliance  purposes.  The  objective  also 
seeks  to  address  the  current  limitations  in  the  legislative  framework  that  are  leading  to 
incomplete and fragmented reporting under DAC1.  

5. WHAT ARE THE AVAILABLE POLICY OPTIONS? 

5.1 What is the baseline from which options are assessed? 

The policy options are assessed against a baseline scenario in which no Union level action 
is  taken  to  amend  the  existing  acquis  under  the  DAC.  Under  this  baseline,  the  current 
legislative framework, consisting of 9 separate legal instruments, would remain unchanged. 
Tax  administrations  and  reporting  entities  would  therefore  continue  to  operate  under  the 
existing  notification,  reporting  and  automatic  exchange  of  information  obligations 
established under the DAC. 

Under  DAC6,  the  reporting  framework  for  cross-border  arrangements  would  remain 
unchanged, including the existing scope of reportable arrangements and the application of 
the MBT. Since the reporting regime became operational in 2020, more than 60,000 cross-
border  arrangements  and  over  79,000  disclosure  reports  have  been  reported  through  the 
DAC6 Central Directory. Approximately 35% of all reporting is attributable to Hallmark A, 
while around 8% of total disclosure reports are filed by MNE groups within the scope of the 
Pillar 2 Directive. 

Under  DAC7,  platform  operators  would  continue  to  report  information  on  sellers  in 
accordance with the existing thresholds for the sale of goods. In the baseline scenario, it is 
estimated  that  approximately  13.5  million  sellers  in  the  EU  are  currently  reportable 
corresponding to around 20% of all individuals engaged in platform-based selling activities.   

Under DAC4 and DAC9, entities of MNE groups would continue to be subject to multiple 
duplicative  notification  obligations  across  Member  States.  In  the  baseline  scenario, 
approximately  4,700  MNE  Groups  and  109,000  constituent  entities  are  subject  to  these 
notification obligations. 

As regards TINs, the baseline is reflected in the current automatic matching rates achieved 
by  the  receiving  tax  administrations  when  linking  exchanged  information  with  national 
taxpayer databases. These automatic matching rates represent the baseline performance of 
the system across the Union (see figure 3). Available administrative data indicates that a 
share of exchanged records cannot be automatically matched to national taxpayer databases 
due  to  incorrect  or  inconsistent  taxpayer  identification  information  (including  invalid  or 
mismatched TINs). This necessitates manual verification or follow-up requests between tax 
administrations.  

Finally,  under  DAC1,  Member  States  would  continue  to  exchange  information  on  five 
categories of income and capital and only where such information is “available” in the tax 

22 

 
 
files of the competent authority. As a result, differences in the scope and completeness of 
the information exchanged across Member States would remain under the baseline scenario. 

5.2 Description of the policy options 

As regards the legislative approach it is proposed to recast the DAC to simplify and reduce 
the complexity of the acquis, to enhance legal clarity of the provisions and to provide legal 
certainty  for  all  stakeholders.  The  recast  of  the  DAC  will:  (i)  codify  the  initial  legal  act 
(DAC1) and all its subsequent amendments (DAC2-DAC9) by bringing them together, into 
a single, legally binding act; and  (ii) introduce new substantive changes,  in  line with the 
preferred policy options stemming from measures 1 to 5 below. The new text of the DAC 
will repeal and replace all earlier versions. 

Measure  1  -  Ensuring  that  DAC6  reporting  obligations  remain  proportionate  and 
effective while promoting a more harmonised application of the MBT 

The  policy  options  aim  to  ensure  that  reporting  obligations  under  DAC6  remain 
proportionate and effective in supporting the overarching aims of tackling tax fraud, evasion 
and avoidance. At the same time, they are intended to improve legal certainty and achieve a 
more harmonised application of the MBT, which will in turn contribute to strengthening the 
competitiveness of EU businesses and enhancing the functioning of the Internal Market. 

Baseline (Status Quo)  

Policy Option 1a  

Policy Option 1b  

Policy Option 1c 

Measure 1 

Excluding all 
companies within 
the scope of Pillar 2 
from the reporting 
under DAC6. 

Intermediaries and, in 
certain instances, relevant 
taxpayers are required to 
report information on 
cross-border arrangements 
based on hallmarks with 
reportability for certain 
hallmarks conditional on 
the MBT being met.  

Policy Option 1a +  
Removing all reporting 
requirements related to 
hallmark A 
+ 
Issuing guidance on 
application of the MBT 
to remaining hallmarks 
subject to the test. 

Policy Option 1a + 
Removing all reporting 
requirements related to 
hallmark A 
+ 
Removing the MBT + 
revising the remaining 
hallmarks previously 
subject to the test  

Policy Option 1a would exclude all companies within the scope of the Pillar 2 Directive 
from reporting under DAC6. Policy Option 1b would build on Option 1a and would also 
remove  all  reporting  obligations  related  to  hallmark  A  for  all  other  companies  and 
intermediaries within the scope of DAC6. In addition, the Commission services would issue 
guidance  to  support  a  more  harmonised  interpretation  and  application  of  the  MBT  with 
respect to the remaining hallmarks subject to the test (hallmark B and C(1)(b)(i), C(1)(c) 
and C(1)(d)). Policy Option 1c would build on Option 1a and on Option 1b and in addition 
would remove the MBT from the remaining hallmarks currently subject to the test (hallmark 
B and C(1)(b)(i), C(1)(c) and C(1)(d)). These hallmarks would be revised to make them fit 
for purpose without the MBT. 

Measure 2 - Amending the reporting threshold for activities involving the sale of goods 
under DAC7  

The proposed policy options aim to ensure that the information reported and exchanged in 
relation to activities involving the sale of goods remains proportionate and relevant for tax 

23 

 
 
authorities in supporting the policy objectives of tackling tax fraud, evasion and avoidance. 
This  will  in  turn  contribute  to  strengthening  the  competitiveness  of  EU  businesses  and 
enhancing the functioning of the Internal Market. The options also seek to ensure coherence 
with the OECD Model Rules for Reporting by Digital Platform Operators (OECD MRDP) 
and with broader Union policy objectives that promote longer product lifetimes under the 
Commission’s Circular Economy Action Plan53.  

Baseline (Status Quo) 

Policy Option 2a 

Policy Option 2b 

Policy Option 2c 

Measure 2  

Platform operators 
report information on 
sellers who carry out 30 
or more activities or 
receive income of EUR 
2,000 or more during the 
calendar year. 

Removing the activity 
threshold of 30 
transactions and 
retaining the monetary 
threshold of EUR 2,000.  

Removing the activity 
threshold of 30 
transaction and 
increasing the monetary 
threshold to EUR 3,000. 

Removing the activity 
threshold of 30 
transaction and 
increasing the monetary 
threshold to EUR 5,000. 

Policy Option 2a would remove the current activity-based threshold of 30 transactions and 
retain only the existing monetary threshold of EUR 2,000. Under this option, the number of 
activities carried out by a seller would no longer be relevant for reporting purposes. A seller 
would be reportable only where the total consideration received during the calendar year 
reaches  or  exceeds  EUR  2,000.  Policy  Option  2b  would  also  remove  the  activity-based 
threshold and, in addition, increase the monetary threshold to EUR 3,000, in line with the 
approach  agreed  at  technical  level  at  the  OECD  in  relation  to  the  MRDP,  which  are 
implemented in the EU through DAC7. Under this option, the number of activities carried 
out by a seller would no longer be relevant for reporting purposes and a seller would be 
reportable only where the total consideration received during the calendar year reaches or 
exceeds EUR 3,000. Policy Option 2c would also remove the activity-based threshold and 
in addition, increase the monetary threshold to EUR 5,000. This option would implement a 
more ambitious adjustment of the monetary threshold, as suggested by some Member States 
and business stakeholders, to further reduce the reporting of low-value transactions.  

Measure  3  -  Streamlining  notification  obligations  for  MNE  groups  under  DAC4  and 
DAC9 

The  proposed  policy  options  aim  to  streamline  the  notification  obligations  applicable  to 
MNE  groups  under  DAC4  and  DAC9  to  ensure  that  they  are  proportionate  and  better 
targeted to achieving the policy objectives of tackling tax fraud, evasion and avoidance. This 
will in turn contribute to strengthening the competitiveness of EU businesses and enhancing 
the functioning of the Internal Market. The notifications are an important preliminary step 
to inform tax authorities of the relevant reporting entity for the group. 

Baseline (Status Quo) 

Policy Option 3a 

Policy Option 3b 

Measure 3 

53 European Commission, A new Circular Economy Action Plan, COM (2020) 98 final; see also ongoing work on a Circular Economy 
Act (2025–2026) 

24 

 
 
 
Each  entity  of  the  MNE 
group is required to submit 
separate  notification 
a 
under  DAC4  and  DAC9 
identifying 
entity 
responsible  for  filing  the 
group-level 
relevant 
report, without harmonised 
deadlines  or  notification 
template. 

the 

Introducing a single 
notification obligation 
covering both DAC4 and 
DAC9 including a harmonised 
filing deadline and a common 
notification template. 

Policy Option 3a +  

Introducing  central  filing  of  the  single 
notification  in  one  Member  State  by  one 
entity  of  the  MNE  group,  followed  by 
exchange  of  the  notification  information 
between Member States.  

Policy Option 3a would introduce a single notification obligation covering both DAC4 and 
DAC9 for entities of the MNE group.  Under the single notification obligation, each entity 
would  submit  this  information  only  once,  and  it  would  be  accompanied  by  a  common 
notification template and a harmonised filing deadline. Policy Option 3b would build on 
Policy  Option  3a  with  the  introduction  of  central  filing  of  the  notification.  Under  this 
approach,  only  one  entity  within  the  MNE  group  would  submit  the  single  notification 
covering both DAC4 and DAC9 on behalf of the entire group. The information contained in 
the  notification  would  subsequently  be  exchanged  between  Member  States  through  the 
existing administrative cooperation framework. 

Measure 4 - Improving the accuracy of reported TINs 

The proposed policy options aim to address the current limitations in the verification of TINs 
that prevent  automatic matching of the information by tax administrations. Therein these 
options are designed to improve the use of exchanged information and effectively support 
the fight against tax fraud, avoidance and evasion.  

Measure 4 

Baseline (Status Quo) 

Policy Option 4a 

Policy Option 4b 

There is no centralised system 
for reporting entities and tax 
administrations to validate the 
accuracy of the TINs.  

Introducing a centralised TIN 
verification system, accessible 
only to Member States tax 
administrations.   

Introducing a centralised TIN 
verification system, accessible to 
both Member States tax 
administrations and reporting 
entities.  

Policy  Option  4a  would  introduce  a  centralised  TIN  verification  system  at  Union  level. 
Access to the system would be limited to tax administrations and would allow them to verify 
whether  a  reported  TIN  corresponds  to  an  identifiable  taxpayer  in  the  relevant  Member 
State. Under this option, the sending Member State would verify the TIN before transmitting 
information to the receiving Member State. Where a TIN cannot be verified, the sending tax 
administration would revert to the reporting entity to obtain corrected information from the 
taxpayer. Policy Option 4b would also introduce a centralised TIN verification system at 
Union  level  but  would  extend  access  to  reporting  entities.  Under  this  option,  reporting 
entities may on a voluntary basis also use the centralised TIN verification system to verify 
TINs before submitting information to tax administrations, allowing incorrect TINs to be 
corrected  at  source.  As  a  result,  tax  administrations  would  receive  information  that  has 
already been verified.  

25 

 
 
Measure 5 - Improving the completeness of information exchanged under DAC1 

The  proposed  policy  options  aim  to  address  limitations  in  the  current  DAC1  legislative 
framework  that  contribute  to  incomplete  reporting  and  differences  in  the  scope  of 
information  exchanged  between  Member  States.  Therein  these  options  are  designed  to 
improve the use of exchanged information and effectively support the fight against tax fraud, 
evasion  and  avoidance.  The  policy  options  focus  on  adjustments  to  the  scope  of  income 
categories  exchanged  and  the  sources  from  which  information  may  be  obtained  by  tax 
administrations  for  reporting  purposes.  Moreover,  the  proposed  policy  options  aim  to 
address the current duplicate reporting issues associated with the category of life insurance 
products (LIP). 

Baseline  
(Status Quo) 

Member States 
automatically 
exchange information 
available in their tax 
files on at least five 
out of seven DAC1 
categories. Member 
States may choose 
which categories to 
exchange. 

Measure 5 

Policy Option 5a 

Policy Option 5b 

Policy Option 5c 

The life insurance 
products (LIP) 
category is removed.  

Policy Option 5a + 
Member States are 
required to automatically 
exchange information 
available in their tax files 
on all remaining six 
categories of income and 
capital.  

Policy option 5a + 
Member States are 
required to 
automatically exchange 
information available to 
relevant public 
authorities on all 
remaining six categories 
of income and capital. 

Policy Option 5a would remove the requirement to exchange information on the category 
of  LIP.  Consequently,  Member  States  would  continue  to  be  required  to  automatically 
exchange information on at least five of the remaining six categories of income and capital, 
while retaining the flexibility to choose which categories to exchange. Within each category, 
only information that is “available” in the tax files would be exchanged. Policy Option 5b 
would also remove the requirement for AEOI on the category of LIP. In addition, Member 
States  would  be  required  to  automatically  exchange  information  for  all  six  remaining 
categories of income and capital. Within each category, only information that is available in 
the tax files would be exchanged. Policy Option 5c would also remove the requirement for 
AEOI on the category of LIP. Moreover, under this option Member States would be required 
to automatically exchange information available not only in their tax files but also in the 
files of other relevant public authorities in respect of all six remaining categories of income 
and capital. 

5.3   Discarded Options 

During  the  preparation  of  this  initiative,  stakeholders  suggested  additional  measures  that 
were considered but not retained for further analysis. These options were assessed against 
the specific objectives of this initiative, alignment with existing international standards and 
the policy objectives of the DAC in tackling tax fraud, evasion and avoidance. 

Repeal of DAC6 

Some business stakeholders proposed a repeal of DAC6 in its entirety. This option was not 
considered appropriate. DAC6 constitutes an important component of the EU administrative 
cooperation  framework  by  requiring  the  early  disclosure  of  potentially  aggressive  cross-

26 

 
border  tax  arrangements.  In  doing  so,  DAC6  provides  a  strong  dissuasive  effect  that 
effectively  discourages  aggressive  tax  planning  arrangements.  Removing  this  reporting 
obligation  would  significantly  reduce  the  ability  of  tax  administrations  to  identify  and 
address  risks  related  to  tax  fraud,  evasion  and  avoidance  involving  cross-border  tax 
arrangements.  The  repeal  of  DAC6  would  therefore  undermine  the  effectiveness  of  the 
Union  framework  for  combating  harmful  tax  practices  and  would  remove  the  dissuasive 
effects of the instrument.  

Carve-out from DAC4 reporting for groups reporting under DAC9 

Stakeholders  also  suggested  introducing  a  full  carve-out  from  CbCR  obligations  under 
DAC4 for MNE groups that are already subject to reporting under DAC9. This option was 
not retained for further consideration as DAC4 provides tax administrations with important 
information on the global allocation of income, taxes and economic activity within MNE 
groups,  which  is  used  in  particular  for  transfer  pricing  risk  assessment.  Reporting  under 
DAC9 does not cover this specific category of information.  

Excluding DAC4 MNE groups that report under DAC9 would therefore lead to the loss of 
valuable  transfer  pricing  information  for  tax  administrations  and  consequently  lower  the 
current  level  of  protection  against  tax  fraud,  evasion  and  avoidance.  In  addition,  such  a 
carve-out would create inconsistencies with the OECD BEPS Action 13 standard on CbCR 
with  which  DAC4  is  aligned.  Maintaining  alignment  with  this  international  standard  is 
essential for ensuring the effectiveness, comparability and international consistency of the 
information exchanged. 

6. WHAT ARE THE IMPACTS OF THE POLICY OPTIONS? 

This  Chapter  assesses  the  impacts  of  the  policy  options  identified  under  each  measure 
compared  with  the  baseline  scenario.  The  assessment  focuses  on  how  the  policy  options 
would affect reporting volumes, compliance costs, administrative burden, legal certainty and 
the effectiveness of administrative cooperation compared with the current framework. 

In  line  with  the  Better  Regulation  Guidelines,  the  analysis  considers  economic,  social, 
environmental and fundamental rights impacts, as well as the effects on competitiveness, 
SMEs and digitalisation. Given that the DAC primarily establishes reporting obligations and 
information exchange mechanisms between economic operators and tax administrations, the 
most significant impacts are expected to arise in the form of economic and administrative 
burden  reduction.  These  relate  mainly  to  compliance  costs  for  reporting  entities  and  tax 
authorities. 

Methodology and analytical approach 

The assessment combines quantitative estimates and qualitative analysis drawing on several 
sources  of  evidence.  These  include  the  DAC  evaluation  (published  in  2025),  statistical 
information  reported  by  Member  States  through  DAC  reporting  systems,  available 
analytical  studies  and  extensive  stakeholder  consultation  activities  with  business 
stakeholders and Member States. In the latter context targeted consultations were carried out 
with  stakeholders  in  2025  with  a  public  consultation  and  call  for  evidence  carried  out 
between the 16 December 2025 and 10 February 2026.  

Where  sufficient  data  were  available,  impacts  were  quantified  using  reporting  volumes, 
compliance  cost  estimates  and  administrative  workload  indicators.  Where  reliable 

27 

 
quantification  was  not  possible,  impacts  were  assessed  qualitatively,  based  on  the 
stakeholders’ inputs and indicating the expected direction and relative magnitude of effects. 
The quantification relies on several simplifying assumptions, including the use of average 
compliance cost estimates derived from evaluation evidence and stakeholder input, and the 
use of recent reporting statistics as proxies for future reporting volumes. Further details on 
the methodology, assumptions and sensitivity analysis are provided in Annex 4 (Analytical 
Methods).  In  the  case  of  DAC,  the  costs  associated  with  regulatory  obligations  (i.e. 
adjustment costs) are by nature, administrative. As a result, compliance costs overlap with 
administrative costs unless otherwise specified. 

6.1  Impact  on  simplification  while  preserving  the  policy  objectives  of  the  DAC 
framework (compliance costs and risks assessment) 

Policy  options  under  Measure  1  –  Ensuring  that  DAC6  reporting  obligations  remain 
proportionate and effective while promoting a more harmonised application of the MBT 

Baseline:  Intermediaries  and,  in  certain  instances,  relevant  taxpayers  are  required  to  report  information  on 
cross-border  arrangements  based  on  predefined  hallmark  criteria,  with  reportability  for  certain  hallmarks 
conditional on the MBT being met. 
PO1a: Excluding all companies within the scope of Pillar 2 from the reporting under DAC6. 
PO1b: PO1a + removing reporting requirements related to generic hallmarks (category A) and issuing guidance 
on application of the MBT to remaining hallmarks subject the test. 
PO1c:  PO1a  +  removing  reporting requirements  related  to  generic  hallmarks  (category A)  +  removing  the 
MBT and revising the remaining hallmarks previously subject to the MBT. 

All policy options have a direct and increasing impact on improving the proportionality of 
the framework by ensuring that reporting obligations are better targeted to compliance risks. 
Therein the options presented are intended to ensure that there is a much greater alignment 
between the reporting requirements and the associated compliance costs for business and 
tax administrations and the information that is necessary for tax administrations to tackle tax 
fraud, evasion and avoidance. Therefore, the analysis estimates the cost savings resulting 
from the reduced scope of reporting requirements while also assessing the extent to which 
these reductions may impact on the policy objectives of the DAC. 

In assessing the impacts of Measure 1, companies within the scope of the Pillar 2 Directive 
and  those  outside  its  scope  are  considered  separately.  This  distinction  reflects  both  the 
different policy treatment envisaged and the underlying differences in their compliance cost 
structures. MNE groups within the scope of the Pillar 2 Directive would benefit from a full 
exemption from DAC6 reporting obligations, whereas companies outside this scope would 
remain subject to DAC6, albeit with a reduced set of reporting requirements. MNE groups 
typically  have  a  broader  operational  and  tax  footprint,  as  they  conduct  activities  and 
maintain  entities  across  multiple  jurisdictions.  Consequentially  they  engage  in  a  higher 
volume of transactions across more complex cross-border structures. This necessitates more 
extensive  and  dedicated  internal  resources  to  identify,  assess  and  document  potentially 
reportable arrangements. As a result, both the baseline compliance costs and the expected 
cost savings differ significantly between the two groups, justifying a separate assessment. 

Under Policy Option 1a MNE groups within the scope of the Pillar 2 Directive are exempted 
from DAC6 reporting obligations. Approximately 3,000 MNE groups in the EU fall within 

28 

 
the scope of Pillar 2 and are considered relevant for this exemption54. As the compliance 
activities  under  ATAD  and  DAC6  can  be  considered  broadly  comparable  in  nature,  this 
assessment draws on evidence from the ATAD evaluation as a benchmark. Both ATAD and 
DAC6  require  companies  to  continuously  monitor  and  assess  cross-border  transactions 
against predefined tax rules, often involving detailed legal and economic analysis, internal 
coordination across group entities and the application of specialised tax expertise. Based on 
this parallel, MNE groups are estimated to dedicate around 1.5 FTE staff to DAC6 related 
administrative  work,  corresponding to  an annual  compliance cost  of approximately EUR 
100,000  per  group  (55).  The  total  compliance  cost  savings  are  therefore  estimated  at 
approximately EUR 300 million per year. 

DAC6 obligations are imposed on intermediaries and in certain instances relevant taxpayers 
meaning that, in principle, each entity within a  MNE group could be required to report a 
relevant  arrangement.  However,  in  practice,  large  MNE  groups  typically  centralise  their 
DAC6  compliance  processes  within  dedicated  in-house  tax  departments.  As  a  result,  the 
incremental compliance burden is not proportional to the number of entities but reflects the 
overall  complexity  and  volume  of  cross-border  arrangements  at  group  level.  Modelling 
compliance  costs  on  a  per-entity  basis  would  therefore  risk  significantly  overstating  the 
actual resource requirements. The present approach accordingly estimates compliance costs 
at group level, implicitly covering all constituent entities within the group structure. 

Under  this  option  and  based  on  statistical  reporting  data  covering  the  distribution  of 
disclosure reports across hallmarks combined with company level information on the share 
of  MNE’s  within  the  scope  of  the  Pillar  2  Directive,  the  number  of  disclosure  reports  is 
estimated to decrease by approximately 2,000 to 3,000 per year.  

This reduction is not expected to impact on the policy objectives of the DAC as MNE groups 
in scope will be subject to a minimum effective tax rate of 15%. While ex post empirical 
evidence  is  not  yet  available,  given  that  Pillar  2  has  only  recently  been  implemented, 
existing ex ante analyses provide important insights in this respect. Notably, the OECD’s 
impact  assessment  finds  that  the  Pillar  2  framework,  by  ensuring  a  minimum  level  of 
effective  taxation  (15%)  for  MNE  groups  in  each  jurisdiction  in  which  they  operate,  is 
limiting  effective  tax  rate  differentials  across  jurisdictions.  Therefore,  it  is  expected  to 
reduce the extent of profit shifting by MNE groups from high-tax to low-tax jurisdictions 
(56).  In this context, the reduction in DAC6 reporting obligations for Pillar 2 in-scope firms 
is  not  expected  to  materially  weaken  the  framework’s  effectiveness  in  addressing  tax 
avoidance risks but rather to remove reporting obligations which have become redundant 

54 Company level data from the ORBIS database indicate that approximately 4,700 multinational enterprise groups worldwide meet the 
relevant turnover threshold (EUR 750 million) and have a presence in the EU (as of 2024), of which around 1,900 are headquartered 
within the Union. Given that not all groups with a limited EU presence are equally exposed to DAC6 reporting obligations, a central 
estimate of 3,000 MNE groups is used as a pragmatic midpoint within this range (see Annex 4 for more details). 
55 Study prepared for the European Commission to support an evaluation of the Anti-tax Avoidance Directive (ATAD Evaluation), Final 
Report  (2026).  Estimates  cited  in  the  ATAD  evaluation  are  based  on  targeted  consultations  with  companies,  which  indicate  that 
compliance  costs  vary  significantly  depending  on  the  size  and  complexity  of  the  firm.  While  some  MNEs  report  relatively  modest 
compliance efforts (e.g. below 1 FTE where rules are not binding), costs for large and complex groups are typically higher and often in 
the range of around EUR 100,000 per year, corresponding to approximately 2–3 FTEs. At the same time, the evaluation acknowledges 
considerable uncertainty, with some firms reporting even higher costs in specific cases (e.g. related to exit taxation or high reliance on 
external advisors). To reflect this uncertainty, we have complemented the central estimate with a sensitivity analysis, including alternative 
low and high-cost scenarios (EUR 75,000 and EUR 125,000 per year) in Annex 4. 
56 See in particular chapter 3.6 of the impact assessment on the expected impact on profit shifting, which has been singled out as the most 
substantive risk: OECD (2020), Tax Challenges Arising from Digitalisation – Economic Impact Assessment: Inclusive Framework on 
BEPS, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris, https://doi.org/10.1787/0e3cc2d4-en.  

29 

 
 
 
following the implementation of the Pillar 2 framework. Moreover, MNE groups are subject 
to  extensive  cooperative  compliance  programmes  in  many  Member  States  of  the  Union, 
which  ensure  that  MNE  groups  are  subject  to  continuous  audit  interventions  and  have 
several  dedicated  caseworkers  from  the  tax  administration  assigned  to  monitor  their 
operations. 

Policy  Option  1b  removes  selected  hallmarks  (A1,  A2  and  A3)  affecting  approximately 
8,300 disclosures annually57 all of which were reported by companies outside of the scope 
of the Pillar 2 Directive. For those companies, compliance costs are approximated on the 
basis of an average cost per DAC6 disclosure report. Available evidence suggests that the 
administrative  cost  of  preparing,  assessing  and  submitting  a  report  range  between  EUR 
3,000 and EUR 5,000, depending  on the  complexity of the arrangement.  The estimate is 
based  on  information  obtained  through  stakeholder  consultations,  in  particular  from 
intermediaries such as tax advisory firms, which are responsible for filing a large share of 
DAC6 reports. These stakeholders indicated that the costs per report can vary depending on 
their complexity with higher costs associated with hallmarks requiring more extensive legal 
and  economic  analysis,  such  as  those  in  hallmark  A,  as  compared  to  the  more  specific 
hallmarks that often involve more straightforward assessments. The estimated cost of EUR 
5,000  per  report  is  consistent  with  this  feedback  and  is  broadly  in  line  with  available 
evidence from the DAC6 evaluation, which reports costs of up to approximately EUR 3,000 
per report (58). It should be noted that the external DAC6 evaluation is based on evidence 
collected  several  years  earlier.  In  this  context,  the  somewhat  higher  estimate  used  in  the 
present impact assessment reflects more recent stakeholder evidence and evolving reporting 
practices.  At  the  same  time,  both  estimates  clearly  fall  within  the  same  overall  order  of 
magnitude and should therefore be regarded as broadly consistent. 

Given that the generic hallmarks covered by this option tend to involve broader and less 
clearly defined concepts, requiring more extensive analysis and documentation, the upper 
bound of EUR 5,000 per report is used as the central estimate. The associated compliance 
cost savings are therefore estimated as EUR 41 million per year, bringing the total savings 
from  this  and  the  previous  measure  under  Policy  option  1a  to  approximately  EUR  340 
million  annually.  These  estimates  are  indicative,  as  arrangements  may  remain  reportable 
under other hallmarks59. Under this option the number of disclosures reports is expected to 
further decrease by  approximately 8,300 per annum. This  reduction further improves the 
proportionality of the framework while not undermining the policy objectives as reporting 
linked  to  these  hallmarks  has  provided  limited  added  value  for  tax  administrations.  This 
assessment is  supported by the findings  from  the evaluation,  feedback from  stakeholders 
and from the Member States where most of the reporting takes places. In particular, evidence 
gathered from Member States (i.e. the tax administrations that have used DAC6 information 
to  establish  if  the  reported  arrangements  pose  a  risk  of  tax  fraud,  evasion  or  avoidance) 
provides strong support for concluding that this measure is not expected to have significant 

57 Over the period 2019–2025, the hallmarks linked to category accounted for a significant share of all disclosures (namely, A1: 24.3%, 
A2: 0.8%, A3: 42.6%). They account for approximately 9,000 disclosures annually in absolute terms. Combined with information from 
Member States indicating that around 92% of all disclosures are filed by companies outside the scope of Pillar Two, the final number of 
relevant disclosures is estimated at approximately 8,300 per year. See Annex 4 for further details. 

(58) See external support study by Ramboll “Evaluation of the Directive 2011/16 and its amendments”, 2024, Table 30. 

59 DAC6 disclosures occasionally refer to more than one hallmark for the same arrangement. As a result, the removal of specific hallmarks 
does not necessarily imply that all corresponding disclosures would disappear entirely, as some arrangements may remain reportable under 
other applicable hallmarks (see Annex 4 for a discussion of this aspect). 

30 

 
 
 
negative effects on the fight against tax fraud, evasion and avoidance. A broad majority of 
Member  States,  particularly  high-reporting  Member  States  such  as  Germany,  the 
Netherlands,  Luxembourg  and  Sweden  find  that  the  hallmarks  in  Category  A  generate  a 
large volume  of disclosure reports with  limited tax relevance (“noise”).  These disclosure 
reports  are  widely  seen  as  imposing  significant  administrative  burdens  on  both  tax 
administrations and intermediaries without materially contributing  to the detection of tax 
risks.  

Policy Option 1c removes the MBT from the remaining hallmarks currently subject to it 
(notably  those  in  Category  B  and  certain  hallmarks  in  Category  C).  The  impact  of  this 
change  on  reporting  volumes  cannot  be  robustly  quantified.  This  is  because  there  is  no 
historical evidence where identical hallmarks have alternated between being subject to and 
exempt from the MBT, which would allow isolating its effect on disclosure behaviour. The 
effect of the MBT is ambiguous. On the one hand, stakeholder consultations indicate that 
the MBT can provide useful guidance to intermediaries in assessing whether an arrangement 
is reportable, therefore limiting disclosures by acting as a filter. On the other hand, the MBT 
may also give rise to defensive reporting, as intermediaries may choose to report in cases of 
uncertainty,  thereby  increasing  the  number  of  disclosures.  In  the  absence  of  reliable 
empirical evidence and given that comparisons across hallmarks with and without the MBT 
are not informative due to differences in their underlying scope, no quantitative estimate of 
the impact is provided. 

The  combined  costs  savings  from  Policy  Options  1a  and  1b  is  approximately  EUR  340 
million per annum, while the impact from Policy Option 1c is not quantifiable. All policy 
options are not expected to lower the ambition or have any significant negative effect on the 
fight against tax fraud, evasion and avoidance.  

Finally, concerning the cost savings for tax administrations, the proposed simplifications are 
expected  to  result  in  an  overall  reduction  of  administrative  costs  for  tax  administrations, 
primarily  through a decrease in  the volume and complexity of reported information.  The 
removal of certain generic hallmarks and the clarifications or elimination of the MBT are 
likely to reduce the number of disclosure reports submitted, in particular those driven by 
defensive  reporting.  This  would,  in  turn,  lower  the  resources  required  for  processing, 
validating, storing and analysing reports, as well as for the exchange of information between 
Member States. 

In  addition  to  the  volume  effects,  the  measures  are  expected  to  improve  the  quality  and 
relevance of reported information. By reducing the reporting of arrangements with limited 
tax risk relevance, tax administrations may be able to  allocate resources  more efficiently 
towards higher-risk cases, thereby improving the effectiveness of risk assessment and audit 
selection. At the same time, the implementation of the revised framework may entail short-
term  administrative  costs.  Tax  administrations  may  need  to  update  IT  systems,  adapt 
reporting  schemas,  revise  guidance  and  provide  support  to  intermediaries  and  taxpayers 
during the transition phase. Changes to the interpretation or structure of hallmarks may also 
require internal training and adjustments to risk assessment tools. 

At the same time, while the implementation of the revised framework may entail short-term 
administrative costs (e.g. updates to IT systems, reporting schemas, guidance and training), 
these costs are expected to be limited and largely marginal in nature. This is because the 
underlying  DAC6  reporting  infrastructure  is  already  in  place,  and  the  proposed  changes 

31 

 
primarily affect the scope and interpretation of reporting obligations rather than requiring 
the  development  of  new  systems.  As  a  result,  adjustments  are  expected  to  concern 
incremental  modifications  (such  as  updates  to  reporting  templates  or  system  parameters) 
rather than substantial investments.  

This  assessment is  supported  by  stakeholder feedback, which did  not  identify significant 
transition costs and generally indicated that the proposed changes would be straightforward 
to implement. Given their limited scale and the absence of robust and comparable data across 
Member States, these adjustment costs could not be meaningfully quantified. 

Overall,  while  some  transitional  costs  are  expected,  Measure  1  is  likely  to  generate  net 
administrative savings in the medium to long term, driven by reduced reporting volumes, 
improved  data  quality  and  more  targeted  use  of  administrative  resources.  However,  the 
precise  magnitude  of  these  effects  cannot  be  quantified  due  to  differences  in  national 
systems and the absence of detailed data on current administrative costs. 

Quantified Cost Savings under Policy Option 1 

PO1a 

PO1b 

PO1c 

Companies 

EUR 300mn 

EUR 341mn 

Not quantifiable 

Policy  options  under  Measure  2  -  Amending  the  reporting  threshold  for  activities 
involving the sale of goods under DAC7  

Baseline: Digital platform operators are required to report information on sellers who carry out 30 or more activities or receive income of 
EUR 2000 or more during the calendar year. 

PO2a: Removing the activity threshold of 30 and retaining the monetary threshold of EUR 2,000. 

PO2b: Removing the activity threshold of 30 and increasing the monetary threshold to EUR 3,000. 

PO2c: Removal of the activity threshold of 30 and increase of the monetary threshold to EUR 5,000.  

All policy options have a direct and increasing impact on improving the proportionality of 
the framework by ensuring that reporting obligations are better targeted to compliance risks. 
Therein the options presented are intended to ensure that there is much greater alignment 
between the reporting requirements and associated compliance costs for business and the 
information  that  is  necessary  for  tax  administrations  to  tackle  tax  fraud,  evasion  and 
avoidance.  Therefore,  the  analysis  estimates  the  cost  savings  resulting  from  the  reduced 
scope of reporting requirements while also assessing the extent to which these reductions 
may impact on the policy objectives of the DAC. 

Under the current framework, a substantial share of reported sellers consists of individuals 
with low levels of economic activity. This information is of limited relevance for tax risk 
assessment  yet  generates  significant  data  volumes  for  both  platform  operators  and  tax 
administrations. By narrowing the scope of reportable sellers, the policy options allow tax 
administrations  to  focus  more  effectively  on  higher-value  and  higher-risk  cases,  thereby 
improving the efficiency of risk analysis and enforcement activities. At the same time, they 
reduce  the  administrative  burden  linked  to  processing,  validating  and  exchanging  large 
amounts  of  low-value  information  without  materially  undermining  the  core  objective  of 
DAC7.  However,  as  the  monetary  threshold  increases  and  a  larger  share  of  sellers  are 

32 

 
 
 
 
excluded from reporting, the overall information available to tax administrations is reduced. 
While  this  may  improve  efficiency,  it  could  also  entail  a  risk  of  reduced  visibility  over 
certain  segments  of  economic  activity,  potentially  limiting  the  ability  to  detect  non-
compliance at the margin. 

Evidence  collected  from  major  EU  market  participants  suggests  that  annual  compliance 
costs  associated  with  the  operation  of  DAC  reporting  systems  are  approximately  EUR 
50,000  per  platform.  Furthermore,  DAC7  statistics  indicate  that  approximately  52,000 
platforms  were  operating  in  the  EU  in  2024.  Taken  together,  this  implies  total  recurrent 
reporting  costs  of  around  EUR  2.6  billion  per  year  across  all  reporting  and  compliance 
functions  supported  by  these  systems,  including  DAC7  as  well  as  other  DAC-related, 
regulatory and tax reporting obligations. 

To isolate the DAC7-specific component of these overall system costs, a share of 30% is 
applied,  reflecting  the  fact  that  platform  operators  typically  use  the  same  reporting 
infrastructure for multiple compliance purposes.   

Concretely, DAC7 constitutes the primary and, in many cases, the only EU tax reporting 
obligation  specifically  targeting  platform  operators  (60).  The  chosen  30%  share  therefore 
represents a balanced assumption, acknowledging both the multi-purpose nature of reporting 
systems and the central role of DAC7 in driving compliance costs for platform operators. 
Therefore, under a simplifying assumption that 30% of total reporting costs relate to DAC7, 
total  DAC7-related  compliance  costs  are  estimated  at  approximately  EUR  780  million 
annually (61). 

DAC7 statistics  made available to  the Commission services  combined  with  the feedback 
from  business  indicates  that  approximately  13.5  million  sellers  in  the  EU  are  currently 
reportable  under  DAC7,  corresponding  to  around  20%  of  all  individuals  engaged  in 
platform-based  selling  activities  while  the  remaining  majority  fall  below  the  applicable 
thresholds62.  While  DAC7  covers  several  categories  of  reportable  activities  (including 
immovable property, transport, personal services and the sale of goods), it is not possible to 
isolate the share of sellers engaged in the sale of goods,  to which the reporting threshold 
applies. Available  evidence from France,  a  relatively  service-oriented market  (e.g. short-
term  accommodation  platforms),  suggests  that  the  split  between  goods  and  services  is 
broadly  balanced  (around  50/50  in  value  terms)  (63).  In  other  Member  States,  such  as 
Sweden, the composition is expected to be more tilted towards goods-based activities. As a 
result, the estimates presented should be interpreted as upper-bound approximations. 

On this basis and using an estimated total annual compliance cost of approximately EUR 
780  million  for  platform  operators,  the  average  compliance  cost  per  reported  seller  is 
estimated at around EUR 60 per seller per year. To reflect uncertainty in both the allocation 

(60) This is further corroborated by evidence collected through the call for evidence, where approximately three quarters of responding 
platform operators indicated that DAC7 constituted the only DAC-related reporting obligation they had filed during the previous year. 
One quarter  of  respondents  reported that they  were  also  subject  to  DAC4  and/or  DAC6  reporting obligations, suggesting that  DAC7 
represents the primary DAC-related compliance burden for the large majority of platform operators. 
61 The precise share of total reporting system costs attributable specifically to DAC7 cannot be observed directly and is therefore subject 
to uncertainty. The 30% assumption is based on stakeholder feedback and the operational characteristics of reporting systems  used by 
platform  operators.  To  account  for  this  uncertainty,  the  assessment  includes  robustness  checks  further  below  and  in  Annex  4  using 
alternative parameter values in order to assess the sensitivity of the estimated compliance costs and cost savings to different assumptions. 
62 This estimate is based on survey evidence from Sweden on the share of individuals engaging in platform-based selling and the proportion 
of reportable sellers. The figures are extrapolated to the EU level by adjusting for differences in internet usage across Member States and 
applying these shares to national population data. See Annex 4 for further details on the methodology and underlying assumptions. 
63 Statistique publique de la fiscalité, “Près de 40 Md€ de ventes sur les plateformes en 2022 : une diversité de profils de vendeurs”, DGFIP 
Analyses N° 09. 

33 

 
 
of system costs to DAC7 and the estimation of the reportable seller base, a sensitivity range 
is applied, resulting in a per-seller cost of EUR 40 (low scenario), EUR 60 (central scenario) 
and EUR 80 (high scenario). 

In  respect  of  Policy  Option  2a  of  the  13.5  million  sellers  that  are  reported  by  platform 
operators, around 79% are reportable solely due to exceeding the 30-transaction threshold 
while remaining below the EUR 2,000 monetary threshold (64). Applying this share to the 
total  population  of  13.5  million  reported  sellers  implies  that  approximately  10.7  million 
sellers per year would be removed from scope under this option. The associated compliance 
cost savings are estimated as follows: 

•  Low-cost scenario: 10.7 million sellers × EUR 40 = EUR 428 million 
•  Central scenario :10.7 million sellers × EUR 60 = EUR 642 million 
•  High-cost scenario: 10.7 million sellers × EUR 80 = EUR 856 million 

In respect of Policy Option 2b, according to platform data on seller income distribution, 
increasing the monetary threshold to EUR 3,000 is estimated to increase the share of non-
reportable sellers by around 16 percentage points compared to the status quo, corresponding 
to approximately 11.3 million fewer reported sellers per year. The associated compliance 
cost savings are estimated as follows: 

•  Low-cost scenario: EUR 452 million 
•  Central scenario: EUR 678 million 
•  High-cost scenario: EUR 904 million 

In  respect  of  Policy  Option  2c  stakeholder  information  suggests  that  this  option  would 
increase the share of non-reportable sellers by around 17 percentage points compared to the 
status  quo  (65).  Applied  to  the  population  of  71  million  sellers,  this  corresponds  to 
approximately 12.1 million fewer reported sellers per year. The associated compliance cost 
savings are estimated as follows: 

•  Low-cost scenario: EUR 484 million 
•  Central scenario: EUR 726 million 
•  High-cost scenario: EUR 968 million 

Concerning the impact on tax administrations, the proposed changes are strongly expected 
to reduce administrative costs for tax administrations, primarily through a reduction in the 
volume of reported sellers and the associated data flows. By removing the activity threshold 
and  increasing  the  monetary  threshold,  a  significant  share  of  low-value  sellers  would  no 
longer be reported. This would decrease the amount of data to be processed, validated, stored 
and exchanged between Member States, thereby lowering the administrative workload. 

64 The estimate is based on evidence collected through stakeholder engagement, in particular input from major platform operators in the 
EU. These platforms provided detailed simulations on the distribution of sellers across different reporting thresholds, including the share 
of sellers reportable solely due to the activity threshold. 
65 This is based on information obtained through stakeholder consultations, in particular from major platform operators in the EU. These 
operators provided detailed simulations on the distribution of sellers across different thresholds and the corresponding number of sellers 
that would fall out of scope under alternative policy scenarios. This evidence was used to calibrate the estimates. 

34 

 
 
 
In addition to reducing volumes, the measures are expected to improve the relevance of the 
information  collected.  In  line  with  the  rationale  for  Measure  1  by  focusing  reporting  on 
sellers with higher levels of economic activity, tax administrations may be able to conduct 
more targeted and effective risk assessments, reducing the need to filter large amounts of 
low-value data. At the same time, some limited one-off administrative costs may arise from 
adapting  IT  systems  and  reporting  processes  to  reflect  the  revised  thresholds.  However, 
these adjustments are expected to be relatively small compared to the ongoing efficiency 
gains. 

Overall, Measure 2 is expected to lead to net administrative savings for tax administrations, 
driven by lower data volumes and improved targeting of enforcement activities, although 
the exact magnitude of these savings cannot be quantified. 

Quantified Cost Savings under Policy Option 2 

PO2a 

PO2b 

PO2c 

Companies 

EUR 428mn (low-cost case) 
EUR 642mn (central case) 
EUR 856mn (high-cost case) 

EUR 452mn (low-cost case) 
EUR 678mn (central case) 
EUR 904mn (high-cost case) 

EUR 484mn (low-cost case) 
EUR 726mn (central case) 
EUR 968mn (high-cost case) 

Policy  options  under  Measure  3  –  Streamlining  notification  obligations  from  MNE 
groups under DAC4 and DAC9 

Baseline: DAC4 and DAC9 requires each entity of the MNE group to file separate notifications for reporting purposes often under 
different formats and timelines.  

PO3a: Introduce a single notification obligation for DAC4/DAC9, including a harmonised deadline and a common notification template 

PO3b: PO3a + central filing of notification followed by exchange of information between Member States. 

Both policy options have a direct and increasing impact on improving the proportionality of 
the  framework  by  eliminating  duplicative  notification  requirements  without  undermining 
the policy objectives of the DAC. This will be achieved by ensuring that Member States 
receive the same information in a more streamlined manner, thereby ensuring a much greater 
alignment between the reporting requirements and associated compliance costs for business 
and the information that is necessary for tax administrations to tackle tax fraud, evasion and 
avoidance.  Therefore,  the  analysis  estimates  the  cost  savings  resulting  from  the  reduced 
scope of reporting requirements while also assessing the extent to which these reductions 
may impact on the policy objectives of the DAC. 

Under the current framework, there are overlapping notification obligations under DAC4 
and DAC9. The duplication identified does not relate to the substantive reporting obligations 
under  DAC4  and  DAC9,  which  remain  distinct,  but  rather  to  the  notification  layer  that 
precedes reporting. While the information included in the notification is limited in scope, 
the associated compliance effort extends beyond the mere transmission of data. In practice, 
it requires internal coordination across the group to identify the reporting entity, verification 
of  consistency  across  jurisdictions,  preparation  and  validation  of  the  notification,  and 
submission in accordance with national formats and timelines. Where these processes must 
be carried out separately for DAC4 and DAC9, often at different points in time and under 
non-harmonised  requirements  businesses  may  need  to  replicate  these  steps,  including 

35 

 
 
 
internal  communication,  checks  and  administrative  handling.  The  resulting  duplication 
therefore  arises  primarily  at  the  level  of  processes  and  workflows,  rather  than  the  data 
content  itself.  This  assessment  is  supported  by  stakeholder  feedback,  including  from 
businesses  and  national  tax  administrations,  which  highlighted  the  absence  of  alignment 
between the two frameworks in practice. 

The  proposed  measures  aim  to  streamline  these  processes  and  eliminate  unnecessary 
duplication.  The  analysis  therefore  focuses  on  estimating  the  compliance  cost  savings 
resulting  from  the  simplification  and  consolidation  of  notification  requirements.  The 
estimation is based on the number of MNE groups currently required to submit notifications 
and assumptions regarding the staff time needed to prepare them.  

Available information from the company level database ORBIS indicates that approximately 
4,700 MNE groups worldwide meet the relevant requirements under DAC4 and DAC9 and 
have  operations  within  the  EU.  As  of  2024,  these  groups  collectively  account  for 
approximately  109,000  constituent  entities  (subsidiaries)  located  in  the  EU.  Under  the 
current framework each of those 109,000 constituent entities is required to submit a DAC4 
notification. According to information made available by MNE groups, the administrative 
costs  for  collecting  the  relevant  information,  coordinating  within  the  group  and  for 
submitting  the  notification  can  be  estimated  at  around  28  hours  per  entity  per  year,  that 
results in an overall compliance cost estimate of EUR 135 million per year (66). Assuming 
similar notification requirements under DAC9 and no operational synergies, the combined 
annual cost is EUR 135 million × 2 = EUR 270 million per year.  

Under Policy Option 3a, a single harmonised notification (based on a common template 
and  common  deadline)  would  replace  the  current  separate  notification  obligations  under 
DAC4  and  DAC9.  This  would  streamline  reporting  for  each  entity  in  the  group  without 
affecting the content of the information provided to tax authorities. In practice, under the 
current framework, the ultimate parent entity (UPE) or designated reporting entity must first 
collect and coordinate relevant group-level information and subsequently disseminate this 
information to all constituent entities, which then submit separate notifications, to support 
the  reporting  requirements  under  the  DAC4  and  the  DAC9  framework  using  different 
templates and timelines. Under Policy Option 3a, these notification requirements would be 
aligned  and  standardised,  thereby  eliminating  duplication  related  to  the  preparation, 
coordination and submission of notifications across the two frameworks. Consequentially 
duplicative administrative processes would be effectively eliminated leading to estimated 
compliance cost savings of approximately EUR 135 million per year for affected businesses. 
These  savings  arise  primarily  from  the  elimination  of  duplicative  notifications  across 
constituent entities.  

Policy Option 3b builds on Option 3a by introducing central filing, whereby a single entity 
submits the notification on behalf of the entire MNE group, instead of each entity of the 
MNE group. This would further reduce duplicative filings and allow groups to centralise 
compliance  processes,  while  ensuring  that  all  relevant  tax  administrations  continue  to 
receive the necessary information through automatic exchange. Under the current system, 
each  constituent  entity  is  required  to  submit  a  notification  to  its  domestic  tax  authority 
containing largely identical information on the reporting entity, the fiscal year and group 
affiliation.  This  requires  the  dissemination  of  centrally  held  information  throughout  the 

66  Applying  average  EU  labour  costs  for  the  sector  “Accounting,  bookkeeping  and  auditing  activities;  tax  consultancy”,  the  cost  per 
notification is estimated at EUR 1,270 per entity. 

36 

 
 
group and the coordination of multiple entity-level filings. Under Policy Option 3b, these 
separate filings would be replaced by a single notification submitted centrally by the UPE 
or another designated entity using one harmonised template and timeline applicable to both 
DAC4 and DAC9 obligations. 

Importantly, the proposed centralisation would not materially affect the internal collection 
and  analysis  of  information  within  MNE  groups,  which  would  largely  remain  necessary 
irrespective of the reporting channel. The main savings instead arise from eliminating the 
repeated  dissemination,  coordination  and  submission  of  notifications  by  individual 
constituent entities. Instead of entity-level notifications, one notification would be submitted 
per MNE group. The annual compliance cost would therefore be 4,700 × EUR 1,270 = EUR 
6 million per year. The resulting compliance cost savings are therefore EUR 270 million − 
EUR 6 million = EUR 264 million per year. 

As only one Member State would receive the notification, the information would need to be 
exchanged with other Member States. This would require the development of an appropriate 
IT exchange schema and the establishment of an exchange channel. The adjustment costs 
linked to this investment are expected to be limited, as tax administrations can build upon 
the existing secure communication infrastructure under the DAC framework. At the same 
time, the streamlining of notification requirements is expected to generate efficiency gains 
by  reducing  duplicative  submissions  and  simplifying  administrative  processes  across 
Member States. Fewer notifications and more harmonised formats would lower the need for 
data validation, reconciliation and manual processing, while improving the consistency and 
usability of the information received. Overall, while some limited one-off implementation 
costs  are  expected,  the  measure  is  likely  to  result  in  net  administrative  savings  for  tax 
administrations  in  the  medium  to  long  term,  although  their  precise  magnitude  cannot  be 
quantified. 

Quantified Cost Savings under Policy Option 3 

Companies 

PO3a 

PO3b 

EUR 135mn 

EUR 264mn 

Policy Options under measure 4 – Improving the verification of the taxpayer identification 
number 

Baseline: No centralised system for reporting entities and tax administrations to validate accuracy of TINs. 

PO4a: Introduce a centralised TIN verification system accessible only to the Member States tax administrations. 

PO4b: Introduce a centralised TIN verification system accessible to both Member States tax administrations and reporting entities. 

Policy Option 4a would introduce a centralised TIN verification system accessible to the 
tax administrations of Member States. The tool would allow tax administrations to verify 
whether  a  reported  TIN  corresponds  to  the  indicated  taxpayer  before  transmitting 
information to another Member State.  

Compared with the baseline scenario, this option is expected to improve the verification of 
TINs prior to the exchange of information which would, in turn, reduce the need for post-
exchange correction procedures and the associated administrative workload. In particular, 

37 

 
 
 
 
the tax administration of the sending Member State would be able to detect inconsistencies 
between reported TINs and taxpayer identities before the information is exchanged. This 
would reduce the number of follow-up requests and corrections required after the exchange 
of  information.  For  the  tax  administration  of  the  receiving  Member  State,  the  receipt  of 
information that has already been verified by the sending Member State would improve the 
automatic matching of exchanged data with national taxpayer records, thereby reducing the 
need for manual verification procedures and follow-up actions. Therefore, when the TIN has 
been  verified,  tax  administrations  can  use  the  information  much  more  effectively  and 
efficiently and in a manner that maximises the benefits of the framework. The administrative 
burden  for  reporting  entities  would  not  change  significantly  compared  with  the  baseline 
scenario,  as  reporting  entities  would  continue  to  provide  identification  information  as 
currently required under DAC. However,  earlier detection of inconsistencies may reduce 
delays in the overall exchange process. 

The implementation of this option would entail initial development and recurrent operational 
costs for the Commission, related to the creation and maintenance of the  centralised TIN 
verification system, and for Member States’ tax administrations, related to the development 
of  national  access  points  and  the  integration  with  the  central  system.  At  EU  level,  the 
development of the central component, including IT infrastructure, common specifications 
and training, is estimated to generate one-off costs in the range of approximately EUR 0.5 
million to EUR 0.9 million. In addition, recurrent operational, maintenance and technical 
assistance costs are expected to amount to around EUR 0.6 million per year67. 

At national level, tax administrations would incur one-off costs related to the development 
of national access points and integration with the central system. These costs are estimated 
at approximately EUR 11 million across the EU. Recurrent costs would include both system 
maintenance and administrative costs associated with the validation of TINs. Maintenance 
costs  are  estimated  at  around  EUR  1.4  to  2  million  annually  across  Member  States.  In 
addition,  the  administrative  burden  linked  to  TIN  validation  activities,  including  the 
handling of mismatches and follow-up procedures, is not expected to exceed EUR 10 million 
per year at EU level. While tax administrations would need to process a large volume of 
TIN  validations,  a  high  degree  of  automation  and  economies  of  scale  are  expected  to 
significantly  limit  the  marginal  cost  of  processing  additional  records.  No  significant 
additional costs are expected for reporting entities under this option, as the responsibility for 
TIN verification would remain entirely with tax administrations. 

Policy  Option  4b  would  extend  access  to  the  centralised  TIN  verification  system  to 
reporting entities. Under this option, reporting entities would, on a voluntary basis, be able 
to verify whether a collected TIN corresponds to the indicated taxpayer before submitting 
information to the tax authority of the sending Member State. 

This  option  is  expected  to  further  improve  the  quality  and  reliability  of  information 
transmitted under DAC, as inaccuracies could be detected and corrected directly at source. 
Reporting entities would be able to identify incorrect or incomplete TIN information before 
submitting reports, thereby significantly reducing the number of correction requests initiated 
by tax administrations. In addition, this option will reduce the need for reporting entities to 

67 These estimates are based on cost benchmarks from comparable EU-level IT systems developed under the DAC and VAT frameworks. 
They draw  in  particular on  experience  with the  development of  common  specifications,  validation  tools and  training activities under 
programmes such as Fiscalis, as well as on the operational costs of existing central systems (e.g. the Excise Movement and Control System 
(EMCS), the VAT Information Exchange System (VIES) and DAC-related infrastructures). The figures should be understood as indicative 
and limited to the central EU component, excluding national implementation costs (see Annex 4 for details). 

38 

 
 
collect  and  report  additional  identification  information,  such  as  date  of  birth  or  other 
supplementary identifiers, which are used by tax administrations to compensate for missing 
or  inaccurate  TINs.  By  allowing  reporting  entities  to  confirm  the  validity  of  TINs  at  the 
point  of  reporting,  this  option  will  simplify  data  collection  requirements  and  generate 
administrative savings for reporting entities over time from a reduction of data collection 
points (e.g. date of birth). While these administrative savings are expected to be significant, 
they cannot be quantified. 

Similar  to  Policy  Option  4a  for  tax  administrations  in  both  the  sending  and  receiving 
Member States, this option is expected to further increase automatic matching rates, reduce 
manual validation procedures and improve the efficiency of information exchange and risk 
analysis in a manner that maximises the benefits of the framework. Extending access to the 
verification tool will require additional system development and access arrangements, and 
reporting entities may need to adapt their internal systems and processes in order to use the 
tool. These adjustments will generate adjustment costs for reporting entities, although these 
costs may be partly offset over time by reductions in correction requests and compliance 
risks linked to incorrect reporting of the TIN. 

Under Policy Option 4b the main costs arise from extending access to the centralised TIN 
verification  system  to  reporting  entities.    At  EU  level,  one-off  costs  would  arise  for 
developing the central component of the system, drafting common specifications and access 
rules, and training tax administrations. These one-off costs are estimated at approximately 
EUR 1.0 to 1.8 million in total. In addition, recurrent EU-level IT costs for infrastructure, 
operations,  maintenance  and  technical  support  are  estimated  at  around  EUR  1.8  to  2.4 
million  per  year.  These  costs  are  higher  than  under  the  tax-administration  only  option 
because the system development would need to accommodate access by a potentially very 
large number of private  users. At national  level,  tax administrations would incur  one-off 
costs  related  to  the  development  of  national  access  points,  system  integration  and  the 
implementation of access management arrangements for reporting entities. These one-off 
costs are estimated at around EUR 15 to 25 million across the EU. Recurrent national IT 
costs, including  maintenance of national access  points and user support,  are  estimated at 
approximately EUR 4.5 to 12 million per year EU-wide. 

For reporting entities, access to the validation tool would be entirely voluntary and therefore 
would not give rise to mandatory compliance costs. While companies choosing to use the 
tool may incur certain adjustment and operational costs (e.g. related to IT integration and 
process  adaptation),  these  would  be  offset,  at  least  in  part,  by  reductions  in  other  data 
collection and verification requirements,  such as the need to  obtain and report additional 
identifiers (e.g. date of birth or address) to compensate for missing or inaccurate TINs. Given 
the voluntary nature of the measure and the interplay between additional costs and expected 
savings,  it  is  not  possible  to  derive  a  robust  ex  ante  estimate  of  the  net  cost  impact  for 
reporting  entities.  Overall,  while  upfront  costs  are  expected,  the  measure  is  expected  to 
deliver  net  administrative  savings  over  time  through  improved  data  quality,  and  use  of 
information and reduced correction and validation efforts, although the precise magnitude 
of these effects cannot be quantified at this stage.  

The cost estimates of both Policy Option 4a and 4b should be assessed against the costs of 
alternative  approaches  that  would  achieve  a  comparable  level  of  TIN  matching  in  the 
absence of ex ante validation. In particular, under the current system, inconsistencies in TIN 
data  are  often  identified  only  after  the  exchange  of  information,  requiring  follow-up 
procedures  between Member States  and reporting  entities.  According to DAC2 statistics, 

39 

 
approximately 64 million financial accounts were reported in 2024, of which around 73% 
(i.e. approximately 47 million accounts) included a TIN that would be subject to validation. 
Assuming that 10% to 20% of these records require follow-up, this would correspond to 
approximately 4.7 to 9.4 million cases across the EU. In practice, this implies that, following 
an  initial  automatic  matching  exercise,  the  receiving  Member  State  requests  clarification 
from the sending Member State, which in turn must contact the reporting entity to verify or 
complete the information. These processes often involve multiple jurisdictions and require 
manual, case-by-case handling. Assuming that around 1 million such cases arise annually 
and that resolving each case requires approximately 1.5 hours of combined effort across the 
relevant  stakeholders,  the  associated  administrative  costs  would  amount  to  up  to 
approximately EUR 70 million per year (based on average EU labour costs for financial and 
tax specialists). This illustrates that, while the introduction of a TIN validation tool entails 
upfront and operational costs, it will also generate significant savings by reducing the need 
for resource-intensive ex post correction procedures. 

Policy Options under measure 5 - Improving the completeness of information reported 
under DAC1 

Baseline: Member States exchange information available in their tax files on at least five out of seven categories of income and capital. 

PO5a: The category of life insurance products (LIP) is removed.  

PO5b:  PO5a  +  Member  States  are  required  to  automatically  exchange  information  “available”  in  their  tax  files  on  all  six  remaining 
categories of income and capital. 

PO5c: PO5a + Member States are required to automatically exchange information available to relevant public authorities in the Member 
States with respect to all six remaining categories of income and capital. 

This measure aims to address the structural limitations of the framework and enhance the 
effective  functioning  and  efficiency  of  DAC1.  Firstly,  the  measure  seeks  to  improve  the 
proportionality  of  the  reporting  framework  by  removing  reporting  requirements  that  are 
duplicate and of limited value for tax administrations. Secondly, the measure also seeks to 
enhance the scope and completeness of income categories that are subject to AEOI under 
DAC1. By removing categories of limited added value and where appropriate, enhancing 
the completeness and accessibility of relevant information, the measure aims to ensure that 
administrative  resources  are  focused  on  data  that  is  more  effective  in  identifying  non-
compliance, while avoiding unnecessary processing and exchange of low-value information. 

The  main  impact  of  Policy  Option  5a  is  the  simplification  of  the  existing  framework 
stemming from the removal of the LIP category. 68Given the limited use of the LIP category 
and its partial overlap with information exchanged under DAC2, removing this category is 
expected to have minimal impact on the effectiveness of administrative cooperation, while 
slightly reducing the administrative workload associated with processing and exchanging 
information that appears to have limited operational relevance. 

Policy  Option  5b  would,  in  addition  to  Policy  Option  5a,  require  Member  States  to 
exchange information “available” in their tax files for all six remaining income categories. 
Compared  with  the  baseline,  this  option  is  expected  to  improve  the  consistency  and 
comparability of information exchanged across Member States, thereby strengthening the 
level playing field within the Union and reinforcing the overarching objective of tackling 
tax  fraud,  evasion  and  avoidance.  Moreover,  more  complete  exchanges  of  information 

68 According to the DAC Statistics, the LIP category is exchanged only by 10 Member States and represents less than 1% of both the 
number of taxpayer and the total value of income exchanges under DAC1. 

40 

 
 
 
improve  the  effectiveness  of  risk  analysis  and  enforcement  activities  carried  out  by  tax 
administrations in relation to taxpayers. 

The main impacts would arise for tax administrations that currently exchange information 
on fewer categories and would therefore need to activate exchange processes for additional 
data already available in their systems (see Figure 4). These adjustment costs relate to IT 
configuration, data extraction and processing changes for tax administrations, rather than 
new data collection. As such, the associated costs are not expected to be significant, as tax 
administrations can build on existing national IT systems and infrastructure. Nevertheless, 
the  magnitude  of  these  costs  may  vary  across  Member  States  depending  on  the  state  of 
digitalisation of their current systems and the extent of the required adaptations. 

Policy Option 5c represents the most comprehensive reform. In addition to removing the 
LIP  category  (Policy  Option  5a)  and  requiring  the  exchange  of  information  on  all  6 
remaining  income  categories,  it  would  require  Member  States  to  exchange  information 
available  to  all  public  authorities  at  national  level,  rather  than  limiting  exchanges  to 
information contained in the files of tax administrations. Implementing this option would 
likely require organisational and technical adjustments at national level, including improved 
access  for  tax  administrations  to  information  held  by  other  public  authorities,  such  as 
pension  institutions  and  land  registries,  and  potentially  the  establishment  of  new  data-
sharing arrangements or IT interconnections between databases. This would therefore entail 
higher one-off adjustment costs for the Member States concerned compared to Policy option 
5b. While these costs cannot be reliably quantified at this stage, information made available 
to the Commission services by Member States indicates that these costs will be significantly 
limited by several factors. Firstly, information made available to the Commission services 
by  Member  States  indicates  that  tax  authorities already  intend  to  increase  the  number  of 
categories  of  information  that  are  exchanged  by  1  July  2028.  Consequentially,  and  as 
demonstrated by Figure  5, the impact of the requirement for Member States to exchange 
information on six categories will be limited to certain Member States and certain categories 
of information.  

Figure 5: Categories of information to be exchanged by Member States for the taxable 
period 2026 with effect from 1 January 2028 

Category  of  income  and 
capital  
Income from employment 
Ownership  of  and  income 
from immovable property 
Directors Fees 
Pensions 
Royalties 
Non-custodial 
income 

dividend 

Number  of  Member  States  that  will  exchange  as  of 
1/7/2028 
27 Member States 
27 Member States 

24 Member States 
23 Member States  
22 Member States  
8 Member States 

With  respect  to  the  three  Member  States  that  do  not  currently  exchange  information  on 
directors' fees this information is already available to the tax authorities of these Member 

41 

 
 
 
States. However, these Member States are currently unable to exchange this information as 
directors'  fees  are  reported  nationally  under  the  category  of  income  from  employment. 
Therefore, only limited technical national reporting adjustments are required to ensure that 
all Member States exchange information on directors' fees. The lower number of Member 
States that intend to exchange information on royalties and non-custodial dividend income 
is reflective of the fact that these categories of information were only recently introduced by 
DAC7 and DAC8 respectively. However, as this income is taxable in the vast majority of 
Member States69, it is expected that this income will be available to the tax authorities.  

PO5C also proposes that Member States shall exchange all information that is available at 
the  national  level.  A  key  rationale  for  this  proposal  is  to  ensure  alignment  with  the 
Commission’s ‘Once-Only Principle’70 according to which citizens and businesses should 
provide the same information to public authorities only once. To achieve this objective the 
principle  provides  that  public  administrations  should  then  securely  reuse  and  share  that 
information across authorities with an appropriate legal basis that will be provided for under 
this initiative, which upon transposition will then be applied in accordance with the domestic 
of law of Member States. Appropriate data sharing safeguards will be applied at the national 
level in accordance with the requirements of the GDPR, while the automatic exchange of 
information  shall  take  place  in  accordance  with  the  well-established  secure  transmission 
system of the European Commission.  

DAC5  already  provides  tax  authorities  with  access  to  certain  beneficial  ownership 
information that has been collected under anti-money laundering legislation. Consistent with 
the  once-only  principle  and  in  accordance  with  the  existing  well-established  access 
safeguards that have been applied at national level in accordance with the requirements of 
the GDPR, this initiative will enhance access to relevant information under DAC5 in line 
with  the  new  Anti-Money  Laundering  Directive  (Directive  (EU)  2024/1640).  More 
specifically this enhancement will ensure that the tax authorities of Member States have the 
necessary  legal  basis  to  access  relevant  information  held  by  other  public  authorities  at 
national  level  with  respect  to  ownership  of  and  income  from  immovable  property, 
specifically the single access point for real estate information. 

By providing tax authorities with a legal basis to access relevant information held by other 
public authorities at national level this is also expected to significantly reduce the associated 
technical implementation costs. However, these costs cannot be quantified, the main reasons 
for  this  is  the  significant  heterogeneity  across  Member  States  in  terms  of  existing  data-
sharing arrangements, IT infrastructures, legal frameworks and administrative capacities. In 
some  Member  States,  tax  administrations  already  have  relatively  broad  access  to 
information held by other public authorities, while in others such access remains limited and 
would require more substantial adjustments. 

69 As at 2025, 24 of the 27 EU Member States impose, or may impose in specified cases, domestic withholding tax on outbound royalty 
payments falling outside the exemption in Council Directive 2003/49/EC; the exceptions are Hungary, Luxembourg and Malta. See IBFD, 
European Tax Handbook 2025, country surveys; see also IBFD, European Tax Handbook 2025, EU Direct Taxation chapter, section on 
the Interest and Royalties Directive.“All 27 EU Member States include dividend income in the tax base of resident taxpayers. Following 
the introduction of the concept of ‘non-custodial dividend income’ in the DAC8 amendments, Member States are required to exchange 
information on dividends or dividend-equivalent income paid or credited to an account other than a custodial account, reflecting the fact 
that such income remains taxable in the residence State notwithstanding its exclusion from CRS custodial-account reporting.” See Council 
Directive (EU) 2023/2226 (DAC8), recitals and Article 8; IBFD, European Tax Handbook 2025, country chapters. 

70 European Commission, “The Once Only Principle System: A breakthrough for the EU’s Digital Single Market”, available at: European 
Commission – Once Only Principle System (accessed 17 May 2026). 

42 

 
 
A robust cost estimate would therefore require a detailed, country-by-country assessment of 
(i) the current level of data integration, (ii) the additional data sources to be covered under 
the policy option, and (iii) the technical and organisational changes needed to enable access 
and exchange. Such granular and comparable information is not available at EU level and 
goes beyond the scope of the present analysis. As a result, the magnitude of adjustment costs 
is  expected  to  vary  considerably  across  Member  States.  That  said,  this  option  would 
significantly improve the level playing field and completeness of the information available 
to  tax  administrations,  thereby  strengthening  their  capacity  to  effectively  assess  and  tax 
cross-border income. 

6.2 Impact on competitiveness and SME’s 

Impact on competitiveness 

By introducing  targeted  simplifications, greater harmonisation and clarity across existing 
DAC  instruments,  the  initiative  is  expected  to  have  a  positive  impact  on  business  cost 
competitiveness.  The  proposed  measures  reduce  administrative  burdens  associated  with 
reporting, notification and compliance obligations, thereby lowering recurring compliance 
costs  for  businesses  operating  in  the  Internal  Market.  In  particular,  the  removal  or 
streamlining  of  certain  reporting  requirements  under  DAC6  and  DAC7,  as  well  as  the 
elimination of duplicative notification processes under DAC4 and  DAC9 are expected to 
reduce operational complexity and associated costs for businesses. 

The  initiative  is  also  expected  to  contribute  to  a  more  level  playing  field  within  the 
Internal Market. By reducing divergences in the interpretation and application of reporting 
obligations,  the  measures  aim  to  facilitate  cross-border  activity  and  reduce  compliance 
frictions for businesses operating in multiple Member States. This, in turn will enhance the 
overall  competitiveness  of  EU  businesses,  including  in  comparison  with  businesses 
operating in jurisdictions with less complex reporting frameworks. 

While the initiative does not directly target business capacity to innovate, the reduction in 
compliance costs may indirectly support investment and growth by freeing up resources that 
can be reallocated to productive activities. Depending on business-specific decisions, such 
resources could be used, for example, to support expansion, digitalisation, or innovation-
related investments. The magnitude of such effects remains uncertain, as it depends on how 
businesses  choose  to  use  the  resources  made  available  through  the  reduction  in 
administrative burdens. The impact on business competitiveness is further analysed in the 
Competitiveness Test (Annex 5). 

Impact on SMEs 

Although  the  initiative  does  not  include  measures  specifically  targeted  at  SMEs,  it  is 
expected to be particularly relevant for them due to the nature of tax compliance costs. Such 
costs  typically  weigh  more  heavily  on  smaller  businesses  in  relative  terms,  as  they  have 
more limited administrative capacity and face higher fixed  costs per reporting obligation 
compared to large enterprises (see also Annex 6 “SME check” for more details). 

Evidence  from  DAC6  reporting  indicates  that,  among  taxpayer  filed  reports,  only  a 
relatively  small  share  (around  8%)  is  attributable  to  large  MNE  groups  with  annual 
consolidated revenues of at least 750 million. This implies that the vast majority of taxpayer 
reporting entities, approximately 90% or more, consist of smaller businesses, including a 

43 

 
significant proportion of large SMEs (those at the upper limits of the SME threshold 71). As 
a result, it can be assumed that SMEs account for a substantial share of DAC6 reporting 
activity and are therefore directly affected by the associated reductions in compliance costs. 
This is further supported by evidence collected through the call for evidence, where more 
than three quarters of responding companies filing DAC6 reports identified themselves as 
small or medium-sized enterprises. Taken together, this suggests that a substantial share of 
the expected compliance cost savings from the proposed DAC6 simplifications is likely to 
accrue to SMEs. 

The proposed simplification measures, in particular the reduction of reporting obligations 
under DAC6 and DAC7, are expected to reduce compliance costs for businesses across all 
size categories. However, given that SMEs typically face higher compliance costs relative 
to their size, these reductions are likely to be particularly beneficial for smaller businesses. 
In relative terms, the resources made available from reduced compliance obligations may 
represent a more significant share of operating costs for SMEs than for large enterprises. 

More  broadly,  by  reducing  administrative  complexity  and  improving  legal  clarity,  the 
initiative  may  facilitate  SMEs’  participation  in  cross-border  economic  activities,  where 
compliance burdens have traditionally been identified as a barrier. While the measures do 
not  introduce  SME-specific  exemptions,  they  contribute  to  alleviating  a  structural 
disadvantage faced by smaller businesses in navigating complex tax reporting frameworks 
within the Internal Market. SME impacts are further analysed in the SME Test (Annex 6). 

6.3 Other impacts  

The  measures  considered  are  not  expected  to  have  any  direct  and  immediate  impact  on 
environmental outcomes. However, by reducing compliance costs, they may indirectly free 
up  financial  resources  within  companies.  Depending  on  business  priorities  and  existing 
constraints,  these  resources  could  be  channelled  into  a  range  of  activities,  including 
investments  in  more  environmentally  sustainable  technologies  or  processes.  From  an 
employment and social perspective, lower compliance burdens may allow businesses to 
reallocate  resources  towards  productive  uses,  such  as  business  expansion,  workforce 
recruitment, or employee training, and potentially also higher remuneration, resulting from 
higher productivities of workers. Alternatively, companies may decide to distribute part of 
these gains to shareholders. Improved tax transparency and more effective detection of tax 
avoidance may indirectly support fair taxation and public finances. The scale and direction 
of these indirect effects remain uncertain, as they depend on individual business decisions 
regarding the use of the resources made available. 

The  initiative  has  also  been  also  assessed  with  regard  to  its  potential  implications  on 
fundamental rights, in particular those enshrined in the Charter of Fundamental Rights of 
the European Union72.  

Regarding  the  exchange  of  increased  data  sets  due  to  TIN  identification  measures,  with 
respect to PO4b, it must be clarified from the outset there is no potential for an increase in 
the data that is collected and exchanged as this policy option only focuses on introducing a 
centralised system to enable tax authorities and, potentially, also reporting entities, to verify 

71 SMEs are defined in accordance with Commission Recommendation 2003/361/EC as enterprises with fewer than 250 employees and 
either annual turnover not exceeding EUR 50 million or a balance sheet total not exceeding EUR 43 million. 
72 Charter of Fundamental Rights of the European Union [2012] OJ C 326/391 

44 

 
 
the correctness of the reported TIN. By enabling this TIN verification, PO4b envisages that 
certain  data  points  may  no  longer  be  required  (if  a  validated  TIN  is  provided),  which  is 
therefore  likely  to  lead  to  a  reduction  in  the  data  points  collected  and  exchanged.  This 
privacy by design mechanism actively promotes the GDPR principle of data minimisation. 
For  all  configurations,  by  querying  up-to-date  national  records  rather  than  a  centralised 
repository,  the  decentralised  architecture  minimises  the  risk  of  processing  outdated  or 
duplicated information.  

TINs qualify as personal data and validation requests necessarily involve accompanying the 
TIN with additional taxpayer identifying elements (such as name, date of birth or place of 
birth). The operation of the TIN verification system would thus engage Articles 7 and 8 of 
the  Charter,  respectively,  the  rights  to  private  and  family  life  and  to  the  protection  of 
personal data, as it would involve the processing of personal data relating to a large number 
of EU taxpayers across all Member States on a continuous basis. The same applies to the 
automatic exchange of information under DAC 1, to the extent that the measures involve the 
collection, exchange or processing of information, including potentially personal data. 

As regards the TIN verification system, first it must be clarified that it will be based on a 
decentralised architecture (a gateway) that avoids central data storage: the gateway acts as a 
distribution hub among the 27 national validation access points  and does not itself store 
personal  data  or  national  registry  information,  which  limits  the  scope  of  EU-level 
processing. Second, it will be designed based on a number of safeguard features, including 
the following:  

•  Restriction of input and output data to predefined minimum sets in light of data 
minimisation and purpose limitation to tax administration objectives: under PO4b, 
the system will only facilitate a yes/no confirmation for such operators. 

•  Transient data retention for individual queries: the Gateway will be designed to 
perform without accessing or storing underlying national registry data. The Union-
level legal instrument establishing the verification system   will clearly delineate the 
roles and responsibilities of the Gateway operator and the national tax authorities, to 
prevent  accountability  gaps,  in  particular  as  regards  the  handling  of  data  subject 
rights and the allocation of liability. 

•  Access  controls:  The  verification  system  will  operate  solely  for  the  purpose  of 
taxpayer identification in the context of administrative cooperation under the DAC. 
The Union legal instrument establishing the verification system will clearly define 
this  purpose  and  preclude  any  secondary  use  incompatible  with  it.  Moreover,  to 
prevent function creep, the verification system will be accessible on a need-to-know 
basis only, with access limited to authorised personnel within tax authorities and, 
where applicable, reporting entities with each organisation responsible for defining 
internal access rights and procedures.  

•  Audit logging:  Traceability of use  will be  ensured through an audit log function, 
which  documents  the  actions  carried  out  by  each  authorised  account  and,  in  the 
context  of  optional  use by  reporting  entities,  could  also  support  tax  authorities  in 
avoiding duplicating validation requests already carried out. 

•  Architectural  and  technical  safeguards  providing  secure  communication 
channels: For the use by tax authorities, the system will leverage the existing private 
CCN/CSI network infrastructure of the European Commission, which substantially 

45 

 
limits exposure to external threats. Communication between reporting entities and 
national  validation  access  points  will  occur  over  the  public  Internet,  requiring 
appropriate, hardened network level security measures—on the side of each national 
validation  access  points.  At  the  data  transport  level,  communication  between 
reporting  entities  and  national  validation  access  points  must  deploy  secure 
communication protocols, and digital certificates or credentials for system-to-system 
communication.  

As regards the collection and exchange of information available in the files of other national 
public entities(PO5c), it is important to clarify that this policy option does not require the 
centralisation  of  information  held  by  different  national  authorities  in  one  single 
communication  system  but  only  requires  that  this  information  is  shared  with  tax 
administrations or that tax administration have access to the information so that it can be 
subsequently exchanged. In other words, the fact that certain information is not immediately 
available  in  the  tax  files  of  the  tax  administration  should  no  longer  prevent  tax 
administrations from exchanging this information, if that information is available in the files 
of other relevant public authorities at national level (therefore excluding regional and local 
level, which would be much more difficult and costly to implement).  

As mentioned above, this will be achieved by enhancing the DAC5 legal basis to provide 
access to updated and relevant AML information for tax authorities. As regards additional 
safeguards required under the GDPR, those in place both at the level of Member States and 
at  the level  of the Commission  covering the processing of personal  data  will continue to 
apply. For example, for tax authorities, user authentication and authorisation are managed 
through existing national Identity and Access Management (IAM) frameworks. In addition, 
for the use by tax authorities, the system will leverage the existing private CCN/CSI network 
infrastructure of the European Commission, which substantially limits exposure to external 
threats. 

The  initiative  is  therefore,  overall,  considered  to  be  compatible  with  the  Charter  of 
Fundamental Rights. 

7. HOW DO THE OPTIONS COMPARE? 

The comparison assesses the extent to which the options contribute to achieving the specific 
objectives  of  reducing  complexity  and  improving  legal  clarity  and  certainty,  ensuring 
reporting and notification obligations are proportionate and better targeted while preserving 
the  policy  objectives,  and  improving  the  effectiveness  and  usability  of  information 
exchanged  between  Member  States.  The  relative  effectiveness  of  the  different  options 
against  the  general  and  specific  objectives  is  summarised  in  each  table.  The  symbol  ‘0’ 
represents no change compared to the baseline ‘no action’ while ‘+’ (/ “ –“) symbols point 
to  a  better/  worse  performance  of  the  option  compared  to  the  baseline.  Performance 
increases with the number of ‘+’ (/ “ –“) symbols. 

Measure  1  –  Ensuring  that  DAC6  reporting  obligations  remain  proportionate  and 
effective while promoting a more harmonised application of the MBT 

PO1a excludes all companies within the scope of the Pillar 2 Directive from reporting under DAC6.  PO1b 
involves PO1a + removing reporting requirements related to generic hallmarks (category A), combined with 

46 

 
 
 
 
guidance  on  application  of  MBT  to  the  remaining  hallmarks  subject  to  the  test.  PO1c  involves  PO1a  + 
removing reporting requirements related to generic hallmarks (category A), removing the MBT and revising 
the remaining hallmarks previously subject to the test. 

Effectiveness 

Specific Objectives 

Baseline 

PO1a 

Reduce complexity and improve legal clarity and 
legal certainty for stakeholders 
Ensure reporting and notification obligations are 
proportionate and better targeted while 
preserving the policy objectives 
Improve the effectiveness and usability of 
exchanged information 

0 

0 

0 

+ 

+ 

+ 

PO1b 

+++ 

+++ 

+++ 

PO1c 

++ 

++ 

++ 

The policy options contribute to different positive degrees, to the specific objectives of the 
initiative and to the reduction of compliance costs. PO1a would significantly improve the 
proportionality  of  the  reporting  framework  and  reduce  the  administrative  burden  for  the 
3,000  MNE  groups  within  the  scope  of  the  Pillar  2  Directive.  Simultaneously  it  is  not 
expected to negatively impact on the fight against tax fraud, evasion and avoidance due to 
the  Pillar  2  minimum  effective  tax  rules.  PO1b  would  have  a  greater  impact  on  the 
proportionality  of  the  framework  than  PO1a  as  it  further  reduces  reporting  volumes  and 
their  associated  costs  for  arrangements  that  provide  limited  added  value  for  tax 
administrations, thereby preserving the policy objectives. In addition, targeted guidance on 
the  interpretation  of  the  MBT  for  the  remaining  hallmarks  would  promote  greater 
consistency in its application across Member States, thereby improving legal certainty for 
intermediaries  and  taxpayers.  PO1c  would  go  further  by  removing  the  MBT  from  the 
remaining  hallmarks  currently  subject  to  the  test  and  replacing  it  with  revised  hallmarks 
based on objective criteria. While this is expected to address the complexity related to the 
MBT, the impact on reporting outcomes is not predictable. While the removal of the MBT 
may  reduce  defensive  reporting  (i.e.  situations  where  intermediaries  choose  to  report  in 
cases of uncertainty due to the complexity of the test), several business stakeholders have 
indicated that the MBT can provide useful guidance to intermediaries in assessing whether 
an arrangement is reportable therefore limiting disclosures by acting as a filter.  

Moreover, the redesign of some of the hallmarks would involve higher adjustment costs for 
reporting  entities  than  PO1b  as  this  would  require  updates  to  internal  procedures, 
compliance systems and staff training. This was one of the key findings from the targeted 
consultations  with  business  stakeholders  as  they  stated  that  further  modifications  to  the 
DAC6 reporting hallmarks should be avoided as they would require businesses to once again 
adapt  their  internal  reporting  systems  and  compliance  processes,  which  would  increase 
compliance costs. 

All options will reduce the complexity and enhance the legal certainty of the framework for 
all stakeholders. This is more limited for PO1a than PO1b and PO1c, as all companies and 
intermediaries benefit from the latter two options. All options are expected to improve the 
effectiveness and use of information. PO1b scores higher than PO1a as it ensures that tax 
administrations can better dedicate resources to arrangements that present a higher risk of 
tax fraud, evasion and avoidance thereby further improving the functioning of the Internal 

47 

 
 
Market and strengthening competitiveness. PO1c scores slightly lower than PO1b due to 
the less predictable nature of revised reporting outcomes.  

Efficiency 

Baseline 

PO1a 

PO1b 

PO1c 

Companies and intermediaries 

Administrative cost 

One-off adjustment and implementation 
costs   
Public authorities 

Administrative cost 

0 

0 

0 

- 

0 

 - 

--- 

 0 

--- 

 -- 

 ++ 

-- 

One-off adjustment and implementation 
costs  
Measure 2 – Amending the reporting threshold for activities involving the sale of goods 
under DAC7  

 ++ 

+ 

0 

0 

PO2a removes the activity threshold of 30 transactions while retaining the monetary threshold of EUR 2,000. 
PO2b removes the activity threshold and increases the monetary threshold to EUR 3,000. PO2c removes the 
activity threshold and increases the monetary threshold to EUR 5,000. 

Effectiveness 

Specific Objectives 

Baseline 

PO2a 

PO2b 

PO2c 

Reducing complexity and 
improving legal clarity and 
certainty for stakeholders  
Ensuring reporting 
obligations are 
proportionate and better 
targeted while preserving 
policy objectives  
Improving the 
effectiveness and usability 
of exchanged information  

0 

0 

0 

++ 

++ 

++  

+++ 

++ 

+++ 

++ 

+ 

+ 

The policy options contribute to different degrees, to the specific objectives of the initiative 
and  to  the  reduction  of  compliance  costs.  While  all  options  reduce  compliance  costs  for 
business stakeholders and improve legal certainty, certain options score lower as they do not 
fully preserve the policy objectives and improve the effectiveness and use of information. 
This is the case for PO2c, as increasing the monetary threshold to EUR 5,000 will mean that 
tax administrations may no longer receive information that is relevant for the application of 
national tax rules. 

Under PO2a reporting obligations would be triggered solely by the value of the income 
received, eliminating reporting linked to sellers carrying out a high number of low-value 
transactions.  PO2b  further  simplifies  the  framework  by  introducing  a  single  monetary 
reporting  threshold  of  EUR  3,000.  This  improves  legal  clarity  for  reporting  entities  and 
ensures that reporting obligations are triggered primarily by economically meaningful levels 

48 

 
 
 
 
 
 
 
 
 
 
 
 
 
of  activity.  The  option  also  improves  the  targeting  of  reporting  obligations  by  excluding 
low-value sellers whose transactions are unlikely to generate tax relevant income. Policy 
Option  2c  would  reduce  reporting  volumes  even  further  by  increasing  the  monetary 
threshold  to  EUR  5,000.  However,  this  option  would  also  reduce  the  availability  of  tax 
relevant information and therefore performs less strongly in terms of effectiveness as it may 
negatively impact on preserving the policy objectives.  

Efficiency 

Companies (platform operators) 

Administrative cost 

One-off implementation and adjustment 
costs 
Public authorities 

Administrative cost 

One-off adjustment and implementation 
costs 

Baseline 

PO2a 

PO2b 

PO2c 

0 

0 

0 

0 

- 

0/+ 

- 

0 

-- 

0/+ 

-- 

0 

--- 

0/+ 

-- 

0 

All options generate efficiency gains by reducing reporting obligations for digital platform 
operators. PO2a would reduce the administrative costs for platforms related to reports linked 
to  sellers  carrying  out  a  high  number  of  low-value  transactions,  as  reporting  obligations 
would be triggered solely by the EUR 2,000 monetary threshold. PO2b would further reduce 
administrative costs for platforms by increasing the standalone monetary threshold to EUR 
3,000 whilst continuing to ensure reporting on economically relevant activity. PO2c would 
result in  the highest reduction of  administrative  costs for platforms as reporting volumes 
would significantly decrease due to the increase of the reporting threshold to EUR 5,000. 
However, there are expected to be one-off minor implementation costs for companies due 
to the reconfiguration of reporting processes.  

Similarly, there will be a reduction of administrative costs for tax administrations as they 
will be able to deploy resources to areas that present a greater risk of tax fraud, evasion and 
avoidance. However, as far as PO2c is concerned, the savings are partially offset by the fact 
that Member States may lose information that is relevant for tax purposes and, therefore, 
may need to carry out additional compliance activities to effectively apply their tax rules. 
There are expected to be no adjustment and implementation costs for tax administrations as 
every option removes reporting obligations thereby negating the need for IT adjustments.  

Measure 3 – Streamlining notification obligations for MNE group under DAC4 and 
DAC9 

PO3a  introduce  a  single notification  obligation  covering  DAC4  and  DAC9,  including a  harmonised  filing 
deadline and a common notification template. PO3b builds on PO3a and adds a central filing of the single 
notification followed by exchange of information between Member States. 

Effectiveness 

Specific objective 

Baseline 

PO3a 

PO3b 

49 

 
 
 
 
 
 
 
 
 
 
 
 
 
Reducing complexity and improving legal 
clarity and certainty 
Ensuring reporting and notification obligations 
are proportionate and better targeted while 
preserving policy objectives 
Improving the effectiveness and usability of 
exchanged information 

0 

0 

0 

 ++ 

++ 

++ 

+++ 

+++ 

+++ 

Both  options  address  the  duplication  in  notification  obligations  for  MNE  groups  under 
DAC4  and  DAC9  and  therefore  positively  contribute  to  all  3  specific  objectives.  PO3a 
would improve legal  clarity  and certainty and reduce complexity by introducing  a single 
harmonised notification that supports the reporting requirements for both DAC4 and DAC9. 
This  would  reduce  parallel  compliance  processes  within  MNE  groups  and  simplify 
interactions  with  national  tax  administrations.  PO3b  performs  more  strongly  across  all 
objectives. By allowing a single entity within the MNE group to file the notification centrally 
in a Member State, this option would remove the need for multiple local notifications by 
entities  across  the  Union.  The  subsequent  exchange  of  the  notification  between  Member 
States would ensure that all relevant tax administrations continue to receive the information 
required for effective tax enforcement.  

Efficiency 

Baseline 

PO3a 

PO3b 

Companies (MNE groups) 
Administrative cost 

One-off adjustment and implementation costs 

Public authorities 

Administrative cost 

One-off adjustment and implementation costs 

0 

0 

0 

0 

 - 

+ 

- 

+ 

--- 

+ 

-- 

+ 

Both options generate efficiency gains by eliminating duplicative notification requirements. 
PO3a  would  reduce  compliance  costs  and  administrative  burden  by  replacing  2 
notifications,  1  under  DAC4  and  the  other  1  under  DAC9,  with  a  single  harmonised 
notification. PO3b would generate larger efficiency gains by allowing central filing of the 
notification. This would remove the need for local notifications by each entity of the MNE 
group and, therefore, further reduces compliance costs for them. Both options would require 
limited  one-off  adjustment  and  implementation  costs  for  both  companies  and  tax 
administrations due to the need to revise current processes and procedures. In addition, the 
exchange  of  notification  information  between  Member  States  would  require  limited  IT 
adjustments, which are expected to be modest relative to the compliance savings generated. 

Measure 4 - Improving the verification of TINs 

PO4a introduces a centralised TIN verification system, accessible only to Member States tax administrations 
while  PO4b  introduces  a  centralised  TIN  verification  system,  accessible  to  both  Member  States  tax 
administrations and reporting entities. 

50 

 
 
 
 
 
 
 
 
 
 
 
Effectiveness 

Specific objective 

Baseline 

PO4a 

PO4b 

Reducing complexity and improving legal 
clarity and certainty 
Ensuring reporting and notification obligations 
are proportionate and better targeted while 
preserving policy objectives 
Improving the effectiveness and usability of 
exchanged information 

0 

0 

0 

+ 

+ 

++ 

+ 

++ 

+++ 

Both policy options are expected to improve legal clarity and legal certainty, as reporting 
entities  and  tax  administrations  can  more  effectively  comply  with  their  reporting  and 
exchange  of  information  obligations.  Both  policy  options  would  ensure  that  reporting 
obligations  are  proportionate  and  better  targeted  as  verification  of  the  TIN  ensures  that 
accurate information is reported and exchanged thereby limiting following up requests for 
information. Simultaneously, they would both preserve the policy objectives of tackling tax 
fraud, evasion and avoidance, as accurate reporting facilitates the enforcement of tax rules. 
PO4b scores higher as it is envisaged that in situations where a validated TIN is provided 
by  the  reporting  entity,  they  will  no  longer  be  required  to  provide  other  identification 
information  (for  example  the  date  of  birth  of  the  taxpayer),  which  are  used  by  tax 
administrations  to  compensate  for  missing  or  inaccurate  TINs.  This  provides  for  more 
proportionate  reporting  obligations  while  not  undermining  the  policy  objectives  of  the 
framework. Finally, both policy options score very positively in improving the effectiveness 
and use of exchanged information as they are predicated on the fact that a verified TIN will 
increase the automatic matching rate of information thereby facilitating enhanced use of the 
information.  PO4b  scores  higher  in  this  area  as  in  situations  where  the  TIN  cannot  be 
verified  the  reporting  entity  can  directly  contact  the  taxpayer  to  correct  the  information 
whereas, under PO4a tax administrations must first contact the reporting entity who must 
then contact the taxpayer to correct the information, thereby reducing the effectiveness and 
efficiency of the framework.  

Efficiency 

Baseline 

PO4a 

PO4b 

Companies (Reporting entities) 

Administrative cost 

One-off adjustment and implementation costs 

Public authorities 

Administrative cost 

One-off adjustment and implementation costs 

0 

0 

0 

0 

0 

0 

-- 

+ 

- 

+ 

-- 

++ 

PO4a does not envisage any reduction in administrative costs for reporting entities as access 
to the verification system is restricted to tax administrations. Consequentially there are no 
one-off  adjustment  and  implementation  costs  for  reporting  entities.  PO4a  is  expected  to 
reduce administrative costs for tax administrations as it foresees that TINs will be validated 
by  the  sending  Member  State  thereby  reducing  follow  up  requests  for  correction 

51 

 
 
 
 
 
 
 
 
 
 
information. Simultaneously, it is expected that the reporting of verified TINs will lead to 
higher automatic matching rates in receiving Member States thereby reducing the human 
and technical resources assigned to manual matching processes and procedures. As clearly 
identified in Chapter 6 there are expected to be one-off adjustment and implementation costs 
for tax administrations arising from the introduction of a centralised verification system. 

As PO4b envisages access by reporting entities, on a voluntary basis, administrative costs 
are expected to decline for those reporting entities because they will receive less follow up 
requests for correction information from tax authorities. Simultaneously in instances where 
a verified TIN is provided, reporting entities choosing to use the centralised TIN verification 
system, will no longer be required to verify and report additional identifying information 
(e.g. the date of birth of the taxpayer), thereby further reducing administrative costs. Under 
PO4b, tax authorities are expected to see a reduction in administrative costs as the reporting 
of a verified TIN will reduce the need for follow up requests for correction information while 
also  reducing  the  necessity  for  human  and  technical  investment  in  manual  matching 
processes  and  procedures.  Finally,  as  detailed  in  Chapter  6,  one-off  adjustment  costs  are 
expected  to  be  higher  than  PO4a,  as  tax  administrations  will  be  required  to  verify 
authentication and access to the system by reporting entities.  

Measure 5 - Improving the completeness of information reported under DAC1 

Under PO5a the LIP category is removed. This is also applicable to PO5b where, in addition, Member States 
are required to automatically exchange information available in their tax files on all remaining six categories 
of income and capital. PO5c builds on the preceding options and requires Member States to automatically 
exchange information available to  all relevant public authorities in the Member States  on all remaining six 
categories of income and capital. 

Effectiveness 

Specific Objective 

Baseline 

PO5a 

PO5b 

PO5c 

Reducing complexity and 
improving legal clarity 
and certainty 
Ensuring reporting 
obligations are 
proportionate and better 
targeted while preserving 
policy objectives 
Improving the 
effectiveness and usability 
of exchanged information 

           0 

              + 

        ++ 

        ++ 

            0 

             + 

        ++ 

        +++ 

            0 

             + 

         ++ 

        +++ 

All options improve the functioning of AEOI under DAC1 by addressing limitations in the 
completeness and consistency of the data exchanged between Member States. PO5a would 
primarily simplify the existing framework, by removing the LIP category from the list of 
categories subject to AEOI. In doing so, this policy option would not significantly affect the 
overall effectiveness of administrative cooperation, given the limited use of the LIP category 
and its partial overlap with information exchanged under DAC2. PO5b would, in addition 
to the benefits brought about by PO5a, also improve the consistency and comparability of 
information  exchanged  across  Member  States  and  strengthen  the  level  playing  field. 
Moreover,  by  ensuring  that  all  Member  States  exchange  information  on  the  same  set  of 

52 

 
 
 
categories, this option would also improve the usability of exchanged information for tax 
compliance  purposes.  PO5c  represents  the  most  comprehensive  approach,  as  it  would 
extend  the  scope  of  information  exchange  to  data  available  to  other  public  authorities  at 
national  level.  By  enabling  the  exchange  of  relevant  information  held  by  other  public 
authorities, this option would significantly improve the completeness and usability of the 
information  available  to  tax  administrations,  while  strengthening  the  level  playing  field 
within the Union. 

Efficiency 

Companies  
Administrative cost 

One-off implementation and adjustment 
costs 

Public authorities 

Administrative cost 

One-off implementation and adjustment 
costs 

Baseline 

PO5a 

PO5b 

PO5c 

0 

0 

0 

0 

0 

0 

- 

0 

0 

0 

+ 

+ 

0 

0 

++ 

++ 

Because DAC1 exchanges take place between tax administrations with no specific reporting 
obligation  for  any  reporting  entity,  none  of  the  options  introduce  additional  reporting 
obligations for taxpayers or companies. As a result, no direct compliance costs or savings 
arise for the private sector under this measure. 

PO5a would generate limited efficiency gains for tax administrations by removing the LIP 
category,  which  currently  has  low  operational  relevance  and  overlaps  partially  with 
information exchanged under DAC2. This option would slightly reduce the administrative 
workload associated with processing and exchanging information. PO5b would entail an 
increase  of  administrative  costs  resulting  from  the  increased  volume  of  exchanged 
information.  In  addition,  it  would  involve  certain  one-off  administrative  adjustments  for 
some tax administrations that currently exchange information on fewer than  6 categories. 
These adjustments would mainly involve IT configuration, data extraction and processing 
changes  rather  than  new  data  collection.  However,  the  benefits  associated  with  more 
consistent and complete information exchanges will improve the effectiveness of tax risk 
analysis and enforcement activities. PO5c would entail a larger increase of administrative 
costs resulting from the increased volume of exchanged information. It would also require 
more  substantial  organisational  and  technical  adjustments  at  national  level,  including 
improved access for tax administrations to information held by other public authorities and 
the establishment of appropriate data-sharing arrangements. While this option may involve 
higher  implementation  costs,  it  would  also  provide  the  most  comprehensive  set  of 
information for administrative cooperation and therefore generate the greatest benefits for 
the enforcement of taxation rules. 

Coherence 

All  options  ensure  coherence  with  the  existing  framework  of  the  DAC  and  its  policy 
objectives  of  tackling  tax  fraud,  evasion,  and  avoidance.  In  the  context  of  the  DAC6 

53 

 
 
 
 
 
 
 
 
 
 
 
  
measure,  the  preferred  policy  option  of  PO1b,  which  excludes  all  companies  within  the 
scope  of  Pillar  2  from  DAC6  reporting  obligations  and  which  removes  the  reporting 
requirements related to the generic category A hallmark for all other reporting entities and 
taxpayers is coherent with the existing international framework. The assessment is supported 
by  the  fact  that  DAC6  does  not  implement  any  existing  international  standard  into  EU 
legislation and the proposed carve out for Pillar 2 companies does not therefore have any 
impact on the ability of the Pillar 2 Directive to prevent base erosion and profit shifting by 
ensuring that MNE groups in scope pay a minimum effective tax rate of 15% on profits in 
each jurisdiction that they operate.  

In the context of the DAC7 measure, the preferred policy option of PO2b, which removes 
the activity threshold of 30 transactions and increases the monetary threshold to EUR 3,000 
ensures coherence with the existing international framework as the proposed amendment is 
consistent with the proposed amendment to the OECD MRDP, as provisionally agreed at 
technical level. 

In the context of the DAC4/DAC9 measure, the preferred policy option of PO3b proposes 
the introduction of a single notification obligation including a harmonised filing deadline, 
common  notification  template,  central  filing  and  exchange  of  information  of  that  single 
notification.  This  proposed  measure  will  not  affect  the  existing  coherence  with  the 
international OECD frameworks of Country-by-Country Reporting (CbCR) and the Pillar 2 
rules. The rationale for this assessment is underpinned by the fact that the measure will not 
amend the existing DAC4 reporting requirements and therefore remains aligned with the 
OECD CbCR framework. The same rationale applies in the context of the Pillar Two rules, 
as the measure does not in any way impact on the information that is reported under DAC9 
to ensure that MNE groups and large domestic groups pay a minimum effective tax rate of 
15% in each jurisdiction where they operate hence remaining aligned with the corresponding 
OECD Global Information Return (GIR).   

In addition, the proposed measure will have no impact on the existing EU Public Country-
by-Country Reporting (PCbCR) Directive which enhances the corporate tax transparency 
and accountability by requiring large MNE’s to publicly disclose where they generate their 
profits and where they pay their taxes. The rationale for this assessment is underpinned by 
the fact that DAC4 CbCR and Public CbCR have two different objectives. The objective of 
DAC4 is to provide EU tax authorities with information on the structure, transfer-pricing 
policies and internal transactions of MNE groups. This information is used by tax authorities 
to check for risks of tax abuse due to aggressive tax planning and other base-erosion and 
profit-shifting risks  related to  the MNE group. Public CbCR requires MNE’s  to  publicly 
disclose  specific  corporate  tax  information.  The  objective  is  to  increase  corporate 
transparency and enhance public scrutiny. In summary while the scope of both Directives 
covers the same MNE’s, the differing objectives and possibilities to use the information will 
not be impacted by the measure therefore ensuring coherence with the existing broader EU 
framework.  

In the context of the measure to improve the verification of the TINs, the preferred policy 
option of PO4b proposes the introduction of a centralised TIN verification system accessible 
to the tax administrations of Member States and to reporting entities on an optional basis. 
This measure is fully coherent with the existing EU and international legislative frameworks.  

54 

 
Finally, in the context of the measure to improve the completeness of information reported 
under DAC1, the preferred policy option of PO5c proposes that the LIP category is no longer 
required to  be  exchanged and that Member States are obliged to  automatically exchange 
information that is available to all national authorities in the Member State with respect to 
the  remaining  six  categories  of  income  and  capital.  DAC1  does  not  have  a  directly 
equivalent international framework for reporting and exchange of information.  

However,  the  current  scope  of  information  reported  and  exchanged  under  the  DAC1 
category of ownership of and income from immovable property will be enhanced to ensure 
coherence  with  the  recent  OECD  initiative  to  exchange  readily  available  information  on 
immovable property73 

8.  PREFERRED OPTION 

8.1 Preferred policy options and option package 

This  chapter  lists  the  preferred  policy  options  under  each  measure,  as  resulting  from  the 
analysis performed in the previous chapter and then identifies the preferred policy package. 
The preferred policy package combines the options under each measure that best contribute 
to the specific objectives of the initiative. It also considers the quantitative and qualitative 
impacts  identified  in  the  previous  chapter,  including  reductions  in  compliance  costs  for 
reporting  entities,  improvements  in  the  efficiency  of  administrative  cooperation  between 
Member States, and the need to preserve the operational value of the information exchanged. 

The preferred policy options under each measure are presented below. 

Measure  1  –  Ensuring  proportionate  and  effective  DAC6  reporting  obligations  while 
promoting a more harmonised application of the MBT 

The preferred option is Policy Option 1b. 

This option combines the exclusion of companies within the scope of the Pillar 2 Directive 
from DAC6 reporting obligations with the removal of the generic hallmarks (category A) 
and the issuance of guidance on the interpretation of the MBT for the remaining hallmarks 
subject to the test. 

This option performs best across the evaluation criteria. It significantly reduces reporting 
volumes associated with hallmarks that generate large numbers of disclosures with limited 
added  value  for  tax  administrations,  thereby  improving  the  proportionality  of  DAC6 
reporting obligations. At the same time, the issuance of guidance would contribute to greater 
legal clarity and more consistent application of the MBT across Member States. 

Compared with Policy Option 1a, this option addresses the broader issues related to the 
functioning of DAC6 reporting beyond the interaction with the Pillar 2 Directive. Compared 
with  Policy  Option  1c,  it  achieves  substantial  simplification  while  avoiding  the  more 
extensive  redesign  of  the  DAC6  reporting  framework  which  would  involve  an  uncertain 
outcome in terms of reporting volumes and also an increase in one-off administrative burden 

73 Organisation for Economic Co-operation and Development, Framework for the Automatic Exchange of Readily Available 
Information on Immovable Property for Tax Purposes: OECD Report to G20 Finance Ministers and Central Bank Governors (OECD 
Publishing October 2025) https://www.oecd.org/content/dam/oecd/en/topics/policy-issues/tax-transparency-and-international-co-
operation/framework-for-the-automatic-exchange-of-readily-available-information-on-immovable-property-for-tax-purposes.pdf 

55 

 
 
for business and tax authorities, stemming from the removal of the MBT from the remaining 
hallmarks. 

Overall,  Policy Option  1b  provides the best  balance between simplification  of reporting 
obligations, legal certainty for stakeholders and the continued effectiveness of DAC6 as a 
tool for identifying potentially aggressive cross-border tax arrangements. 

Measure 2 – Amending the reporting threshold for activities involving the sale of goods 
under DAC7  

The preferred option is Policy Option 2b. 

This  option  removes  the  activity  threshold  and  introduces  a  single  monetary  reporting 
threshold  of  EUR  3,000.  By  relying  on  a  single  reporting  trigger  based  on  the  value  of 
income received, this option simplifies the DAC7 reporting framework and improves legal 
certainty and clarity for digital platform operators. 

Compared with Policy Option 2a, which maintains the EUR 2,000 threshold, Policy Option 
2b further improves the proportionality of reporting obligations by excluding additional low-
value sellers whose activities are unlikely to generate tax-relevant income. At the same time, 
it ensures that tax relevant income remains subject to reporting and exchange of information. 

Compared with Policy Option 2c, which would increase the threshold to EUR 5,000, Policy 
Option 2b provides a better balance between reducing administrative burden and preserving 
the effectiveness of DAC7 reporting. A threshold higher than EUR 3,000 would reduce the 
availability of information relevant for the enforcement of national tax rules. Policy Option 
2b is also fully consistent with developments in the OECD MRDP, thereby contributing to 
greater international alignment in the design of digital platform reporting rules. 

Overall,  this  option  best  ensures  that  reporting  obligations  remain  proportionate  while 
preserving the effectiveness of the DAC7 framework. 

Measure  3  –  Streamlining  notification  obligations  for  MNE  group  under  DAC4  and 
DAC9 

The preferred option is Policy Option 3b. 

This option builds on the introduction of a single harmonised notification requirement by 
allowing  central  filing  of  the  notification  by  a  single  entity  within  the  MNE  Group  in  a 
Member State, followed by the exchange of the notification information between Member 
States. 

Compared with Policy Option 3a, which introduces a single notification requirement but 
still requires local filing in each Member State, this option further reduces the administrative 
burden for MNE groups by eliminating duplicative filings by multiple constituent entities. 
At the same time, the exchange of the notification between Member States ensures that all 
relevant  tax  administrations  continue  to  receive  the  information  necessary  for  effective 
administrative cooperation. 

Policy Option 3b therefore achieves the greatest simplification of notification obligations 
while maintaining the effectiveness of the DAC reporting framework. 

56 

 
Measure 4 – Improving the verification of TINs 

The preferred option is Policy Option 4b. 

This  option  envisages  the  development  of  a  centralised  TIN  verification  system  that  is 
accessible to tax authorities and reporting entities.  

Policy  Option  4b  supports  more  proportionate  and  targeted  reporting  requirements  by 
reducing  the  necessity,  for  reporting  entities  that  choose  to  use  the  centralised  TIN 
verification tool, to report additional identification information  in  circumstances  where a 
verified TIN is reported. This option also preserves the policy objectives of the framework. 
Simultaneously, Policy Option 4b scores higher in improving the effectiveness and use of 
information, as reporting entities will have more streamlined processes and procedures in 
place to attain corrected information from the taxpayer than those of tax authorities.  

As  regards  administrative  costs,  Policy  Option  4b  scores  higher  as  it  envisages  that 
reporting entities that choose to use the centralised TIN verification too will benefit from a 
reduction  in  administrative  costs  stemming  from  less  follow  up  requests  for  corrective 
information  from  tax  authorities  and  the  possibility  to  not  require  reporting  of  certain 
additional identification information in circumstances where a verified TIN is reported.  

Measure 5: Improving the completeness of information reported under DAC1 

The preferred option is Policy Option 5c. 

This option removes the category of LIP from the list of categories subject to exchange and 
requires  Member  States  to  exchange  information  available  to  all  public  authorities  with 
respect to the remaining 6 income and capital categories. 

Compared  with  Policy  Options  5a  and  5b,  this  option  most  effectively  improves  the 
completeness and usability of information exchanged between Member States. By extending 
the scope of information exchange beyond data contained in the files of tax administrations 
it addresses a key limitation which currently affect the completeness of DAC1 exchanges. 

While this option may involve higher implementation costs for Member States due to the 
need to ensure access to information held by other public authorities, it provides the most 
comprehensive improvement in  the functioning of  AEOI  and contributes  to  a more level 
playing field within the Union. 

8.2 Summary of the preferred policy package 

Taken  together,  the  preferred  options  form  a  coherent  package  aimed  at  simplifying  the 
DAC reporting framework, reducing administrative burdens for reporting entities and tax 
administrations and improving the effectiveness of administrative cooperation in taxation 
within the Union. 

Specific Objectives 

Reducing 
complexity and 
improving legal 
clarity and certainty 
for stakeholders 

Ensuring reporting 
obligations are 
proportionate and 
better targeted while 
preserving policy 
objectives 

Improving the 
effectiveness and 
usability of 
exchanged 
information 

57 

 
Baseline 

Measure 1 – DAC6 

0 

+++ 

0 

+++ 

0 

+++ 

PO1b: Excluding companies 
within the scope of the Pillar 2 
Directive from reporting under 
DAC6 + removing the generic 
hallmarks (category A) + 
guidance to promote a more 
harmonised interpretation of the 
MBT for the remaining hallmarks 
subject to the test. 

Measure 2 – DAC7 

++ 

+++ 

+++ 

PO2b: Removing the activity 
threshold of 30 transactions and 
increasing the monetary threshold 
to EUR 3,000 

Measure 3 – DAC4/DAC9 

+++ 

+++ 

+++ 

PO3b: Introducing a single 
notification requirement for 
DAC4/DAC9 via a common 
standard template and harmonised 
deadlines + central filing of the 
notification followed by exchange 
of information between Member 
States 

Measure 4 – TIN 

+ 

++ 

+++ 

PO4B:  Introducing a centralised 
TIN verification system 
accessible to both Member States 
tax administrations and reporting 
entities. 

Measure 5 – DAC1 

++ 

+++ 

+++ 

PO5c: The LIP category is no 
longer required to be exchanged. 
Member States are obliged to 
automatically exchange 
information available to all public 
authorities in the Member States 
with respect to the remaining six 
categories of income and capital. 

Efficiency 

Companies 

Administrative cost 

Baseline  Measure 1 

DAC6 
PO1b  

Measure 2 
DAC7 
PO2b 

Measure 3 
DAC4/DAC9 
PO3b 

Measure 4 
TIN 
PO4b 

Measure 5 
DAC1 
PO5c 

0 

--- 

-- 

--- 

- 

0 

58 

 
 
 
 
 
 
 
 
 
One-off  implementation  and 
adjustment costs 
Public authorities 

Administrative cost 

One-off  implementation  and 
adjustment costs 

0 

0 

0 

0 

0/+ 

--- 

+ 

-- 

0 

+ 

-- 

+ 

+ 

0 

-- 

++ 

++ 

++ 

Total cost savings for the preferred policy measures 

Policy Measure 

Measure 1: DAC6 (PO1b) 

Measure 2: DAC7 (PO2b) 

Measure 3: DAC4/DAC9 (PO3b) 

Total Savings 

Cost Savings 

341 million  

678 million  

264 million  

1,283,000,000 — One billion two hundred eighty-
three thousand 

8.3 REFIT (simplification and improved efficiency) 

The preferred policy package contributes to the simplification objectives of the Union and 
supports  the  REFIT  programme  by  reducing  unnecessary  administrative  burdens  while 
improving the effectiveness of the administrative cooperation framework. These measures 
directly  simplify  existing  reporting  obligations  and  remove  duplicative  procedures.  In 
particular, the removal of certain DAC6 hallmarks and the exclusion of MNE groups subject 
to  the  Pillar  2  Directive  remove  reporting  requirements  that  generate  limited  operational 
value  for  tax  administrations.  Similarly,  the  simplification  of  DAC7  reporting  thresholds 
reduces the volume of reports associated with low-value transactions, while the introduction 
of  centralised  notifications  for  the  purposes  of  DAC4  and  DAC9  eliminates  the  current 
duplicative notification obligations for MNE groups. Simultaneously the introduction of a 
new verification system for TINs combined with improvements in the completeness of the 
DAC1 framework improve the efficiency of the DAC. Together, these measures simplify 
compliance procedures for EU businesses and SME’s and improve the quality, completeness 
and use of exchanged information by tax administrations.  

8.4 

Application of the ‘one in, one out’ approach 

The  simplification  initiative  generates  significant  reductions  in  reporting  volumes  and 
notification obligations for EU businesses and SMEs. Based upon the estimates presented 
in  Chapter  6,  the  preferred  options  are  expected  to  generate  substantial  compliance  cost 
savings and consequential reductions in administrative burden for EU businesses and SMEs. 
These compliance costs savings will be primarily achieved via the simplification of certain 
DAC6 reporting requirements for example the exclusion of MNE groups within the scope 
of the Pillar 2 Directive is estimated to achieve compliance cost savings of approximately 
EUR 263 million per year. Additional cost savings will be achieved from the simplification 
of the DAC7 framework by increasing the reporting threshold for activities involving the 
sale  of  goods  and  by  simplifying  and  streamlining  the  notification  obligations  under 

59 

 
 
 
 
 
 
 
 
 
DAC4/DAC9. Overall, the initiative results in a significant net reduction in administrative 
burden  for  EU  businesses  and  SMEs  in  line  with  the  Commission’s  ‘one-in,  one-out’ 
approach. 

9.  HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED? 

The actual impacts of these measures will be monitored and evaluated by the Commission 
services in close cooperation with the Member States. The monitoring framework will assess 
whether the initiative is achieving its specific objectives, namely, reducing complexity and 
improving  legal  certainty,  ensuring  that  reporting  and  notification  obligations  are 
proportionate and better targeted while preserving the policy objectives and improving the 
effectiveness and use of exchanged information.  Collection of factual data on the suggested 
monitoring indicators will also provide the basis for the future evaluation of the initiative 

The following indicators are suggested to measure the success of the initiative in light of the 
specific objectives (Chapter 4). An indication of the target for success is also provided.  

Indicators74 

Targets   

Compliance  cost 
reporting  

from  DAC6 

Reduction of EUR 300 million/year for large MNEs 
Reduction of EUR 41.4 million/year for other MNEs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

Compliance  cost  reductions  from 
DAC7 reporting  

Overall  reduction  from  EUR  452  million  to  EUR  904  million  for  digital 
platforms. 

Compliance 
DAC4/DAC9 

cost 

from 

Reduction of EUR 264 million/year for large MNEs 

Regulatory cost for Tax authorities   Cost for tax authorities is expected to decrease following the decrease in the 
number of disclosures. Given the difficulties to isolate such component from 
other costs, the decrease will be appreciated qualitatively. 
Reduction of the number of disclosures to be analysed by tax authorities:  
9,000 disclosures less for DAC6: 
11.3 million reported sellers less annually for DAC7 
109,000  MNEs  in  scope  of  DAC9  not  filing  separate  DAC4  and  DAC9 
notifications anymore. 

Average  automatic  matching  rate 
for TINs  

Average automatic matching rate increased up to 100% within 3 years from 
the full implementation of the system by all Member States                                                                                                                                                                                                              

One-off  costs  for  development  of 
IT system for TIN 

For EU (central component): EUR 970,000–1,770,000; For Member States 
(national component): EUR 15–25 million  

Recurrent 
assistance for TIN 

IT  maintenance  and 

For EU (central component): EUR 1.8–2.4 million/year;  
For Member States (national component): EUR 5.5–18 million/year 

The  monitoring  framework  will  largely  rely  upon  the  existing  statistical  reporting 
mechanisms  under  DAC.    Where  necessary,  these  may  be  complemented  by  additional 
relevant indicators to better assess the impacts of the proposed measures. 

74 The ability of the Commission services to effectively monitor the compliance cost savings for EU businesses will be dependent upon 
the detailed scope of information provided by EU businesses to the Commission service surveys. 

60 

 
 
 
 
 
9.1.  Monitoring arrangements 

The following  indicators will be used to monitor the implementation  and impacts  of  this 
simplification initiative. 

Specific objective 

Indicator 

Data source 

Frequency 

Ensure proportionate and legally certain DAC6 
reporting (removal of certain MBT-related A 
hallmarks and exclusion of Pillar 2 entities) 

Number of annual DAC6 
disclosures  

DAC6 central directory 
statistics 

Annual 

Ensure proportionate and legally certain DAC6 
reporting (removal of certain MBT-related A 
hallmarks and exclusion of Pillar 2 entities)   

Reductions in 
administrative 
compliance costs 

Survey of 
intermediaries 

Every 5 years 
in view of 
evaluation 

Ensure proportionate and better targeted 
reporting of sellers under DAC7 

Number of annual sellers 
reported for the sale of 
goods.  

Statistics reported by 
Member States 

Annual 

Ensure proportionate and better targeted 
reporting of sellers under DAC7   

Reductions in 
administrative 
compliance costs 

Survey of Platform 
Operators 

Every 5 years 
in view of 
evaluation 

Eliminate duplicative (DAC4/DAC9) and non-
harmonised notification obligations for MNE 
Groups   

Number of notifications 
submitted by constituent 
entities and number of 
notifications submitted at 
group level 

Statistics reported by 
Member States  

Annual 

Eliminate duplicative (DAC4/DAC9) and non-
harmonised notification obligations for MNE 
Groups    

Reductions in 
administrative 
compliance costs 

Survey of Platform 
Operators 

Every 5 years 
in view of 
evaluation 

Annual 

DAC1 statistics 
reported by Member 
States 

Statistics reported by 
Member States 

Annual 

Improve the quality and completeness of 
DAC1 exchanges 

Strengthen tax compliance and protection of 
tax bases 

Number of categories 
exchanged by Member 
States and increase in the 
volume of information 
exchanged 

 Member States 
qualitative and/or 
quantitative appreciation 
of the ability to protect 
tax base  

61 

 
Increase in tax revenues/tax base as a 
direct/indirect consequence of making all 
DAC1 categories mandatory and ensuring that 
all information that is available is exchanged 

Assessment of the impact 
of the new reporting 
requirements on tax 
fraud, tax evasion and tax 
avoidance 

Statistics reported by 
Member States or 
qualitative appreciation 

Annual 

Monitoring  will  be  carried  out  via  the  existing  cooperation  structures  involving  the 
Commission  services  and  the  Member  States.  Accordingly,  the  Working  Group  on 
Administrative  Cooperation 
the 
implementation and functioning of the revised framework. This forum allows the Member 
States and Commission services to discuss implementation practices, identify operational 
challenges and share experiences regarding the application of the framework.  

in  Direct  Taxation  (WG  ACDT),  will  discuss 

Where  appropriate,  the  Commission  services  will  also  collect  feedback  from  relevant 
stakeholders  (e.g.  intermediaries,  MNE  groups,  digital  platform  operators,  etc.)  to  better 
assess the practical impact of the reforms. The Commission services will survey reporting 
entities  to  establish  that  the  measures  are  delivering  the  expected  reductions  in 
administrative costs. The survey will cover the following areas: 

•  DAC6:  Survey  of  intermediaries  and  Pillar  2  companies  to  confirm  the  expected 
reductions in administrative compliance costs as a direct consequence of the removal 
of hallmark A and the exclusion of Pillar 2 companies from the scope of reporting.  
•  DAC7: Survey of reporting platform operators to confirm the expected reductions in 
administrative  compliance  costs  as  a  direct  consequence  of  the  increase  in  the 
reporting threshold for the sale of goods. 

•  DAC4/DAC9:  Survey  of  MNE  groups  to  confirm  the  expected  reductions  in 
administrative compliance costs as a direct consequence of streamlining the current 
dual notification obligations.  

The  information  attained  from  these  indicators  will  further  inform  the  Commissions 
evaluation of the effective functioning of the directive. 

Evaluation 

The Commission is required to carry out an evaluation of the DAC every five years based 
on Article 27 of the Directive. The evaluation will assess the performance of the revised 
framework in terms of effectiveness, efficiency, relevance, coherence and EU added value. 
The evaluation will pay particular attention to assessing whether the simplification initiative 
has: 

• 

• 
• 

reduced compliance costs for reporting entities and eliminated duplicate notification 
obligations; 
improved the quality, completeness and use of exchanged information, 
increased automatic matching rates; contributed to improvements in tax compliance, 
tax revenues and the protection of national tax bases; 

•  contributed to a more consistent implementation of reporting rules across Member 

States. 

62 

 
 
Changes in tax revenues will be interpreted cautiously, as revenue developments may also 
be  influenced  by  economic  conditions  or  national  policy  changes.  The  evaluation  will 
therefore assess the extent to which improvements in tax compliance and revenue outcomes 
can reasonably be linked to the enhanced availability and use of information under the DAC.  

63 

 
 
ANNEX 1: PROCEDURAL INFORMATION 

1. LEAD DG, DECIDE PLANNING/CWP REFERENCES 

DG TAXUD, PLAN/2025/2140.  

The  initiative  will  complement  the  Omnibus  initiative  in  the  field  of  taxation  that  will 
streamline, simplify and clarify the EU direct tax acquis and which, in turn, is part of a series 
of  simplification  initiatives  and  omnibus  packages  aimed  at  simplifying  rules  across  key 
policy areas. 

The  initiative  is  planned  as  a  recast  of  the  directive  and  its  8  amendments  comprising  a 
codification of the legal text with the addition of amendments that are aimed to simplify, 
clarify and improve the functioning of the DAC framework. 

2. ORGANISATION AND TIMING 

An  inter-service  steering  group  was  set  up  to  steer  and  provide  input  to  this  impact 
assessment  report.  The  steering  group  was  composed  of  the  following  services:  SG, 
TAXUD, COMP, CNECT, EEAS, GROW, JUST, FISMA, ECFIN, SJ. The steering group 
met 4 times before the report was submitted to the Regulatory Scrutiny Board. 

3. CONSULTATION OF THE RSB 

On 8 April 2026, a draft version of the impact assessment was presented to the Regulatory 
Scrutiny  Board.  On  4  May  2026,  the  RSB  issued  a  positive  opinion  with  reservations. 
Afterwards,  the  draft  report  has  been  revised  in  order  to  take  into  account  the 
recommendations for improvement, as explained in more detail in the table below. 

RSB Recommendations 

The report does not sufficiently specify 
key policy measures included under 
different policy options, in particular 
for options ‘improving the accuracy of 
reported TINS and improving the 
completeness of information exchanged 
under DAC1’. The report does not 
adequately specify what type of 
information is to be collected and 
exchanged, and from which 
entities/public bodies the information is 
expected to be automatically collected 
and exchanged. The report should also 
clarify whether some measures are new 
or not. 

How  have  the  recommendations  led  to 
changes to the report? 

required 

Explanations  have  been  developed  further 
in Chapter 6. In the context of measure 4, 
the  objective  of  which  is  to  improve  the 
accuracy  of  the  reported  TIN’s.  This  is  a 
new  measure;  however,  no  additional 
information  shall  be 
to  be 
collected. There is already an existing legal 
requirement to  collect  the TIN, measure 4 
ensures that there is a new tool to verify the 
correct of the TIN. In addition, measure 4 
also  provides  the  possibility  for  reporting 
entities  that  opt  to  use  this  new  tool,  to 
report  less  identification  information  e.g. 
place  of  birth  may  no  longer  be  required 
where  a  validated  TIN  is  reported.  As 
regards,  measure  5,  which  implements  a 
key  recommendation  of  the  ECA.  The 
measure ensures that the existing legislative 
framework  is  enhanced  by  making  all 

64 

 
the 

tax  authorities 

categories  of  information  (excluding  LIP) 
tax 
mandatory  and  by  requiring 
authorities  of  Member  States  to  exchange 
all  information  that  is  available  to  public 
authorities at national level. Currently, only 
information that is available in the tax files 
of 
to  be 
exchanged,  and  Member  States  are  only 
required  to  exchange  information  on  5  of 
the  7  categories.  The  categories  of 
information are income from employment, 
life 
pensions, 
ownership of and income from immovable 
property, directors fees, royalties and non-
custodial dividend income. 

is  required 

insurance 

products, 

evidence 

of 
and 
The 
assumptions  have  been  explained  further. 
Explanations  have  been  developed  further 
in Chapter 6. 

robustness 

As  regards,  administrative  costs  for  tax 
administrations,  it  is  expected  that  the 
implementation  of  the  revised  framework 
may entail short-term administrative costs. 
Tax administrations may need to update IT 
systems,  adapt  reporting  schemas,  revise 
to 
guidance 
intermediaries  and  taxpayers  during  the 
transition 
the 
phase.  Changes 
interpretation or structure of hallmarks may 
also 
and 
training 
internal 
adjustments to risk assessment tools.  

provide 

support 

require 

and 

to 

The report should better explain how 
the values used for the calculation of 
administrative costs have been derived. 
It should also assess, based on 
observational data, the related 
uncertainty and what difference the use 
of alternative assumptions would make. 
It should explain why it was not possible 
to quantify costs or cost savings 
resulting from the measures on tax 
administrations. 

At the same time, while the implementation 
of the revised framework may entail short-
term administrative costs (e.g. updates to IT 
systems,  reporting  schemas,  guidance  and 
training),  these  costs  are  expected  to  be 
limited and largely marginal in nature. This 
is because the underlying DAC6 reporting 
infrastructure  is  already  in  place,  and  the 
proposed changes primarily affect the scope 
and  interpretation  of  reporting  obligations 
rather  than  requiring  the  development  of 
new  systems.  As  a  result,  adjustments  are 
expected 
incremental 
modifications (such as updates to reporting 

concern 

to 

65 

 
templates or system parameters) rather than 
substantial investments.  

is 

that 

indicated 

supported 

assessment 

by 
This 
stakeholder 
feedback,  which  did  not 
identify  significant  transition  costs  and 
the  proposed 
generally 
changes  would  be  straightforward 
to 
implement.  Given  their  limited  scale  and 
the absence of robust and comparable data 
across Member States, this adjustment cost 
could  not  be  meaningfully  quantified. 
Similarly  in  the  context  of  measure  5  and 
given  the  existing  heterogeneity  across 
Member  States  it  was  not  possible  to 
meaningfully quantify the costs. 

The report needs to assess the legal and 
technical  feasibility,  as  well  as  the 
possible  costs,  of  the  obligation  to 
automatically  exchange  the  information 
held not only by tax authorities, but also 
held by other national public entities etc. 
This assessment should take into account 
the underlying reasons for some member 
states not collecting or  exchanging such 
information at national level so far. 

that 

basis 

facilitates 

Explanations  have  been  developed  further 
in Chapter 6. In this context, the report now 
clarifies that the initiative will introduce a 
legal 
tax 
administrations  in  obtaining  information 
held  by  other  public  authorities  at  the 
national  level.  The  absence  of  an  existing 
legal  basis  and  appropriate  data  sharing 
arrangements with  other public authorities 
is the key reason that some tax authorities 
do not have access to this information. By 
providing a legal basis this will ensure that 
the costs of attaining the information are to 
the  greatest  extent  possible  limited,  as  the 
alternative  would  be  to  oblige  third  party 
entities  to  report  information.  As  regards 
the 
the  safeguards 
safeguards  will  be  in  line  with  the  GDPR 
while 
the  reporting  and  exchange  of 
information  will  take  place  in  accordance 
with  the  existing  well-established  security 
processes  and  procedures  in  place  for  the 
DAC. 

that  will  apply, 

Based on a clear definition and an 
improved assessment of impacts and 
risks, the report must contain an 
adequate analysis of the measures 
included in options 4 and 5 to allow for 
the assessment of their proportionality. 

Explanations  have  been  developed  further 
in Chapter 2, and Annex 9 has been added 
to provide further analysis of the matching 
rates across the EU Member States. 

In the context of measure 4, it is imperative 
to recall that this measure does not impose 

66 

 
 
that 

any new reporting obligation. The objective 
of the measure is to ensure that the current 
reporting  obligations  are  efficiently  and 
effectively  implemented  in  a  manner  that 
ensures 
tax  administrations  can 
automatically  use  all  information  reported 
under the DAC. The proportionality of the 
measure is further enhanced by the fact that 
the system is optional for reporting entities 
and  where  such  reporting  entities  report  a 
valid  TIN, 
identification 
additional 
information  e.g.  place  of  birth  may  no 
longer be required. 

reporting 

In the context of measure 5, it is imperative 
to  recall  that  the  measure  is  intended  to 
implement  a  key  recommendation  of  the 
ECA, which cited the fact  that  the current 
DAC1 
framework  was  not 
sufficiently robust to prevent tax fraud, tax 
evasion and tax avoidance. The measure is 
intended  to  ensure  that  all  Member  States 
report all categories of information, which 
ensures  a  level  playing  and  effective 
harmonization. 
the 
proportionality  of  the  measure  is  further 
enhanced  by  the  fact  that  in  line  with  the 
Commission  once only  principle, Member 
States  are  required  to  report  information 
that  is  already  to  public  authorities  at  the 
national level. The alternative of requiring 
third  party  reporting  would  therefore  be 
disproportionate as it would lead to possible 
duplicate reporting. 

Simultaneously, 

The report should provide an 
assessment of the risks on fundamental 
rights, including privacy, resulting from 
the exchange of increased data sets due 
to TIN identification measures and the 
automatic exchange of information 
under DAC 1. 

Explanations  have  been  developed  further 
in Chapter 6. In particular, section 6.3 of the 
report has been significantly enhanced. 

The TIN verification system will be based 
on a decentralised architecture (a gateway) 
the 
that  avoids  central  data  storage: 
gateway  acts  as  a  distribution  hub  among 
the 27 national validation access points and 
does  not  itself  store  personal  data  or 
national registry information, which limits 
the scope of EU-level processing. Second, 
it  will  be  designed  based  on  a  number  of 
safeguard features, including the following:  

67 

 
•  Restriction  of  input  and  output 
data to predefined minimum sets. 

•  Transient  data  retention 

for 

individual queries 

•  Access  controls:  The  verification 
system  will  operate  solely  for  the 
purpose of taxpayer identification in 
the 
administrative 
cooperation under the DAC.  

context  of 

•  Audit  logging:  Traceability  of  use 
will be ensured through an audit log 
function. 

and 
providing 

•  Architectural 
technical 
safeguards 
secure 
communication channels: For the 
use  by  tax  authorities,  the  system 
will  leverage  the  existing  private 
CCN/CSI network infrastructure of 
the  European  Commission,  which 
substantially 
to 
external threats.  

limits  exposure 

it 

As regards the collection and exchange of 
information  available  in  the  files  of  other 
national  public  entities(PO5c), 
is 
important to clarify that this policy option 
does  not  require  the  centralisation  of 
information  held  by  different  national 
authorities  in  one  single  communication 
this 
system  but  only 
tax 
information 
administrations  or  that  tax  administration 
have access to the information so that it can 
be  subsequently  exchanged.  As  regards 
additional  safeguards  required  under  the 
GDPR,  those  in  place  both  at  the  level  of 
Member  States  and  at  the  level  of  the 
Commission  covering  the  processing  of 
personal data will continue to apply.  

requires 
that 
shared  with 

is 

example, 

For 
authentication 

tax 
and 

authorities,  user 
are 
authorisation 

68 

 
  
 
 
 
 
 
 
Access  Management 

managed through existing national Identity 
(IAM) 
and 
frameworks. In addition, for the use by tax 
authorities,  the  system  will  leverage  the 
existing 
network 
private  CCN/CSI 
infrastructure of the European Commission, 
which  substantially  limits  exposure  to 
external threats.  
Explanations  have  been  developed  further 
in  Chapter  6  and  in  particular  6.3.  These 
explanations  are  detailed  in  the  previous 
text box 

Explanations  have  been  developed  further 
in Chapter 2, and Annex 8 has been added. 

The rationale for selecting PO1b over PO1c 
is primarily due to feedback from business 
stakeholders who cautioned that removing 
the MBT and adapting the related hallmarks 
would 
for 
businesses  due 
the  consequential 
requirement  to  adapt  reporting  systems, 
processes and procedures. 

increased  costs 

result 

to 

in 

For the introduction of a centralised 
TIN verification system, the analysis 
should also clarify what safeguards will 
be put in place. For collecting and 
exchanging information available in the 
files of other national public entities, the 
report should specify what measures 
will be taken to address data protection 
and privacy concerns. It should assess 
the resulting increased cybersecurity 
risks and the measures envisaged to 
mitigate them. 

The analysis supporting the comparison 
and identification of preferred options 
needs to be improved, including 
sensitivity analysis where relevant to 
illustrate the impact of different 
parameters, for example regarding the 
increase in reporting thresholds from 
EUR 3,000 to EUR 5,000. The report 
neither demonstrates why option PO1b 
is preferred over PO1c adequately, nor 
why PO2b is preferred over PO2a. 

The  rationale  for  preferring  PO2b  over 
PO2a is to ensure alignment with the OECD 
MRDP  framework.  The  removal  of  the 
activity  threshold  and  increase  of  the 
monetary  threshold  from  EUR  2,000  to 
EUR 3,000 was provisionally agreed at the 
OECD technical level and endorsed by 26 
Member States. In addition, Annex 8 details 
practical  examples  of  the  application  of 
national  taxation  rules  in  certain  Member 
States, which further justifies the preferred 
policy option.  

Coherence with other measures, outside 
of the strictly defined tax policy area, 
should also be analysed. The EU 
country-by-country reporting directive 

Explanations  have  been  developed  further 
in  Chapter 
explanations 
7.  These 
demonstrate  that  measure  3  will  have  no 
impact  on  existing  international  and  EU 

69 

 
is, for example, a relevant point of 
consideration for understanding 
whether policy options under DAC4 and 
Pillar 2 are coherent with the EU legal 
framework. 

The monitoring and evaluation 
framework should contain specific and 
measurable indicators allowing for an 
understanding of what success would 
look like for this initiative. 

that 

impact  on 

frameworks.  In  particular,  the  measure 
the  DAC4  and  OECD 
ensures 
equivalent  CbCR  reporting  requirements 
remain  aligned.  In  addition,  the  measure 
does  not  have  any 
the 
information  that  is  made  available  under 
DAC9  and  the  equivalent  OECD  Global 
Information  Return  to  apply  the  Pillar  2 
minimum  tax  rate  of  15%.  Finally,  the 
measure does not in any way impact on the 
requirement of MNE’s to publicly disclose 
certain  information  as  part  of  the  Public 
CbCR transparency initiative.  

Further details on consultations have been 
added,  and  explanations  have  been 
developed  further  in  Chapter  9.  These 
details  and  explanations  include  specific 
monitoring  targets  related  to  decreases  in 
reporting  volumes, 
tax 
revenues,  and  reductions  in  compliance 
costs for EU businesses. These targets will 
be  monitored  and  evaluated  by 
the 
Commission services in collaboration with 
Member States and in tandem via dedicated 
survey questionnaires to EU businesses, to 
better establish ongoing savings.  

increases 

in 

4.  EVIDENCE, SOURCES AND QUALITY 

The evidence for the impact assessment report was gathered through various activities and 
from different sources:  

•  2025 Evaluation of the Directive on administrative cooperation. 
•  2021 Special Report of the European Court of Auditors. 
•  2024 Special Report of the European Cour of Auditors. 
•  Study  by  an  external  contractor:  “Evaluation  of  the  Directive  2011/16  and  its 

Amendments”75 

•  Study by an external contractor: “Study on Taxpayer Identification Numbers (TIN) 

and possible verification instruments” 

•  Targeted  consultation  with  Member  States  in  the  Working  Party  IV  (WPIV) 

Commission Expert group on direct taxation. 

75 Final Report, 11 January 2024, Ramboll 

70 

 
 
 
 
 
•  Outcome  from  work  in  the  VISDAC  Expert  Team  (Fiscalis  program)  which 
collected evidence through on-site visits to Member States tax administrations. 
•  Consultations in the expert group Platform on Tax Good Governance which gathers 

experts from business, interest groups and Member States. 

•  Yearly questionnaires to Member States on automatic exchange of information and 

other forms of administrative cooperation, respectively. 

•  Targeted consultation with relevant stakeholders, such as business associations, tax 

consultants, and leading corporations in the global market. 

•  Public consultation and Call for evidence. 
•  Desk research.  

5.  EXTERNAL EXPERTISE 

Two  studies  by  external  consultants  have  been  used  to  inform  this  impact  assessment:  a 
study supporting the 2025 evaluation of the DAC, and a Study on Taxpayer Identification 
Numbers (TIN) and possible verification instruments.  

The  study  supporting  the  evaluation  of  the  DAC  covers  directives  DAC1  to  DAC6.  It 
provides  a  basis  for  assessing  the  usefulness  of  DAC1  income  categories  and  DAC6 
hallmarks and MBT. The study also provides a general analysis of the quality and use of 
data for all DAC’s, which is used for the assessment of all of the measures in this impact 
assessment. 

The  TIN  study  specifically  targets  the  use  and  quality  of  the  TIN  and  assesses  different 
options to improve these. The preliminary results have been used in this report for assessing 
the costs of a centralised verification tool.  

71 

 
 
 
 
 
 
 
ANNEX 2: STAKEHOLDER CONSULTATION (SYNOPSIS REPORT) 

1. INTRODUCTION 

To  inform  the  preparation  of  this  initiative,  DG  TAXUD  carried  out  the  following 
consultation activities:  

➢  targeted consultations of business stakeholders;  
➢  targeted consultations of Member States;  
➢  Call for Evidence (CfE) and public consultation (PC). 

The  targeted  consultations  of  business  stakeholders  took  the  form  of  interviews  and 
meetings  with  different  private  stakeholders,  including  businesses  of  different  sizes 
operating  in  different  sectors,  business  associations,  associations  of  tax  consultants  and 
academia.  The consultations were mainly aimed at identifying areas for simplification in 
relation to DAC4/DAC9, DAC6 and DAC7.  

As  far  as  Member  States  are  concerned,  DG  TAXUD  organised  5  Working  Party  IV 
meetings. These meetings focused on potential topics for simplification/improvement and 
possible solutions related to DAC4/DAC9, DAC7, DAC1 and DAC6. 

Finally, on 16 December 2025, DG TAXUD launched a CfE and, in parallel, a PC to collect 
stakeholders’ views on the main policy options for simplification and their possible impact, 
including potential cost savings associated with the simplification of reporting requirements. 
The possibility to participate in the consultation process was published on the Commission’s 
‘Have  your  say’  portal,  allowing  stakeholders  to  submit  feedback  in  any  official  EU 
language and to upload additional supporting documents. The consultation remained open 
until 10 February 2026 and received a total of 60 written responses. 

The  PC  consisted  in  the  submission  of  a  close-ended  questionnaire,  structured  to  gather 
views  on  the  proposed  recast,  including  aspects  such  as  simplification  of  reporting 
obligations (e.g., under DAC4 and its interplay with DAC9, DAC6, and DAC7), potential 
administrative burden reductions, and overall impacts on stakeholders. Respondents to the 
PC  could  also  upload  additional  documents  integrating  their  answers  or  more  generally 
covering the subject of the consultation.  

2.  RESULTS OF CONSULTATION ACTIVITIES 

2.1 Results of targeted consultations of business stakeholders 

The targeted consultation of business stakeholders covered overall 50 stakeholders. These 
were  business  organisations  for  the  whole  economy  as  well  as  for  specific  industries, 
individual businesses in different industries and tax consultants. 

Overall, the stakeholders favour the objectives of simplification and burden reduction, but 
their current issues and needs vary relatively to their activities. The key take-aways from the 
discussions are summarised below.  

Concerning the interaction between DAC4/DAC9, many business stakeholders asked for a 
carve-out from reporting under DAC4 for MNEs group in scope of the Pillar 2 Directive 
(therefore reporting under DAC9), arguing that the transparency framework brought about 

72 

 
by  DAC9  makes  DAC4  redundant.  More  generally,  business  stakeholders  supported  the 
harmonisation of reporting requirements to eliminate the current fragmented landscape. In 
particular,  there  is  significant  support  for  merging  DAC4  and  DAC9  notifications  into  a 
single, group-level submission and adopting a "change-only" approach to reduce redundant 
filings.  

As far as DAC6 is concerned, respondents emphasised the disproportionate administrative 
burden  and  high  staffing  costs  associated  with  DAC  6  and  some  of  them  called  for  a 
complete repeal. In particular, the Main Benefit Test (MBT) was considered as particularly 
complex and difficult to apply, also considering the different interpretation of the concept 
across Member States. To mitigate this issue, the large majority of the business stakeholders 
called  for  harmonised  EU-level  guidance.  While  few  of  them  supported,  instead,  the 
complete removal of the MBT, coupled with a revision of the hallmarks subject to the test 
to make them more objective, several other opposed this idea, arguing that it would result in 
an increase of the reporting and would also entail the need to change their current practices. 
To  make  DAC6  more  targeted  and  efficient,  some  stakeholders  proposed  narrowing  the 
directive’s  scope  through  quantitative  de  minimis  thresholds,  “whitelists”  for  routine 
commercial transactions, and the deletion of redundant hallmarks that overlap with Pillar 2 
rules or carving out from DAC6 all MNEs groups that are withing the scope of the Pillar 2 
Directive. There was a very broad consensus on the need to repeal the ‘generic hallmarks’ 
(category  A)  as  it  has  led  to  excessive  burden  with  limited  impact  on  Member  States’ 
revenues.  

Finally,  in  relation  to  DAC7,  two  umbrella  organisations  for  platform  operators,  two  tax 
advisers  specialised  in  DAC7  and  five  single  platform  operators  were  consulted.  The 
consultations  focused  mainly  on  platforms  specialised  in  the  sale  of  goods  and  rental  of 
immovable property, but platforms for rental of transport modes and for personal services 
were consulted in the context of the umbrella organisations. A major point of contention is 
the current reporting thresholds: stakeholders strongly advocated for raising the monetary 
threshold  (EUR  2000)  and  removing  the  activity  threshold  (30  transactions)  to  avoid 
capturing  occasional,  non-professional  sellers.  Additionally,  there  is  a  clear  demand  for 
enhanced EU-level TIN verification tools to ease the data collection burden.  

2.2   Results of targeted consultations of Member States 

As far as DAC1 is concerned, Member States stressed the need to avoid duplications with 
respect  to  the  LIP  category,  since  information  may  also  be  included  in  DAC2  reports. 
However, they insisted that no information should be lost. 

Regarding  mandatory  categories  of  information,  Member  States  stressed  that  not  all 
information  is  readily  available,  and  access  other  public  databases  can  be  very  costly  to 
build. Most of them could however support, provided that the implementation timeline is 
adequate. 

Member  States  were  overall  sceptical  on  the  streamlining  of  reporting  under  DAC4  and 
DAC9, due to  the risks of introducing discrepancies with  the international  standards that 
would create different reports inside and outside the EU.  

73 

 
As regards DAC6, the large majority of the Member States expressed the view that the MBT 
is an essential filter to prevent reporting of arrangements with little value. Therefore, several 
of them were in favour of clarifying the MBT, as opposed to removing it and revising the 
hallmarks subject to the test, to make them more objective.  

Member States were also consulted on the relevance of hallmarks, and no Member State 
opposed  the  deletion  of  the  category  A  (generic  hallmarks).    Regarding  the  rest  of  the 
hallmarks, views of Member States were varied and there was no clear preference to remove 
or significantly change any other hallmark. 

On  DAC7,  the  majority  of  the  Member  States  that  gave  an  opinion  expressed  a  clear 
preference for the removal of the activity threshold. However, there was a divergence of 
views  on  the  possible  increase  of  the  monetary  threshold,  with  some  Member  States 
supporting the current threshold, others supporting a threshold between EUR 3,000 and EUR 
5,000 and a minority even favouring an increase above EUR 5,000. 

2.3 Results of CfE and PC 

Identification of respondents 

Overall, a total of 50 different stakeholders participated in the consultation process. Of these, 
30  respondents  completed  the  PC  questionnaire,  and  the  remaining  30  stakeholders 
contributed exclusively through written feedback submissions in the CfE76. The largest share 
of responses came from tax intermediaries, accountants, and tax advisors (14), reflecting the 
strong  engagement  of  professionals  directly  involved  in  tax  reporting  and  compliance. 
Online platforms (13), banking and financial services (12), and general business associations 
(12)  were  also  well  represented  among  respondents.  By  contrast,  very  few  contributions 
were  submitted  by  individual  EU  citizens  and  no  feedback  was  received  from  SMEs  or 
SME-specific business organisations. 

76 Although 10 of them contributed by written feedback and online questionnaire, and 4 respondents did not include their identification 
data. 

74 

 
 
 
 
Figure 1: Distribution of respondents by area of activity 

Distribution by area of activity

16
14
12
10
8
6
4
2
0

Tax
intermediary,
accountant, or
tax advisor

Generalist
business
association

Online
platforms

Banking and
other financial
services

EU citizen

N/A

Blockchain
security
company

General Comments 

The distribution of comments across the different DAC instruments highlights which parts 
of the framework stakeholders considered most relevant or impactful. DAC7 (the rules for 
online platforms) received by far the highest number of comments, followed by DAC6, and 
DAC4/DAC9.  

A strong consensus emerged from the business sector on the need for codifying the DAC 
by bringing together DAC1 and all its eight amendments (DAC2-DAC9) into a single new 
legal  act  which  would  replace  the  current  fragmented  legal  framework.    There  was  also 
broad  agreement  that  the  existing  framework  creates  disproportionate  administrative  and 
compliance  burdens  for  reporting  entities.  5  stakeholders  from  business  and  associations 
proposed  simplification  and  burden-reduction  measures,  such  as  simplified  (5  inputs)  or 
excluded  reporting  for  low-risk,  or  low-value  transactions.  The  once-only  reporting 
principle was emphasized by 4 associations, along with the elimination of overlaps which 
was supported by 2 associations.  

5 business and tax advisor associations suggested relying on existing national identification 
systems  combined  with  a  centralised  validation  tool.  As  regards  the  latter,  contributors 
advocated for centralised validation tools connected to authoritative sources, made available 
to  reporting  entities  early  in  the  process,  with  interoperable  verification  mechanisms 
preferred over new obligations on taxpayers.  

More generally, business stakeholders emphasised the need for technical modernization and 
digital-friendly  infrastructures  to  support  efficiency  and  prevent  future  administrative 
burdens from piecemeal updates. 

Finally, 2 contributors stressed that reporting obligations should remain limited to objective 
data already held by reporting entities, without imposing investigative or interpretative roles. 
3  stakeholders  from  business  associations  stressed  the  need  to  ensure  full  alignment  and 
consistency  with  existing  international  frameworks  to  avoid  duplicative  or  conflicting 
requirements.  

Specific comments 

75 

 
 
 
DAC4/DAC9 

The  feedback  provided  by  business  stakeholders  and  tax  advisors  on  this  topic  can  be 
summarised as follows. 

Tax  advisors  and  business  stakeholders  (12)  strongly  supported  a  single  notification  to 
support the reporting requirements under DAC4/DAC9, based on a common template 
and  a  harmonised  timeline,  to  avoid  duplications  and  address  the  current  fragmentation 
within the MS. They also advocated in favour of “central filing”, i.e. enabling one entity of 
the group which is located in the EU to file the notification on behalf of the entire group, 
thereby avoiding multiple notifications. To further simplify the notification requirements, 
stakeholders  proposed  the  "change-only"  approach,  which  would  keep  the  existing 
notifications valid until there is a change in the underlying data.   

On  the  contrary,  tax  advisors  and  businesses  stakeholders  expressed  mixed  views  on 
merging  DAC4  and  DAC9  reporting  schemas,  with  4  stakeholders  supporting  the 
proposal, as a means to cut duplication and costs, and 2 others considering it premature given 
the need to keep full consistency with international standards.  

DAC6  

30  respondents  to  the  PC  and  CfE  provided  feedback  on  DAC6.  12  stakeholders  from 
business, and intermediaries called for clear and harmonised EU-level guidance to ensure 
consistent interpretation and application of DAC6 across MS. One intermediary therefore 
stressed  the  need  for  uniform  guidelines  clarifying  key  concepts  such  as  “arrangement,” 
“participant,”  and  “tax  advantage”.  2  associations  also  suggested  that  guidance  should 
clarify  the  relationship  between  DAC6  and  other  EU  frameworks,  such  as  ATAD,  the 
Parent-Subsidiary  Directive,  the  Interest  and  Royalties  Directive,  and  Pillar  2  rules,  to 
prevent overlapping reporting obligations. 

The Main Benefit Test (MBT) has been widely recognised as a key filtering tool to limit 
the number of reporting under DAC6. However, 2 intermediaries reported that there have 
been  practical  difficulties  in  applying  the  MBT.  The  divergence  of  national  approaches, 
particularly with regard to the requirement for the relevant tax advantage to arise within the 
EU or to include third countries, has been a source of concern.  

5  intermediaries’  associations  (tax  advisors,  lawyers)  emphasised  the  significant 
compliance burden associated with DAC6. In particular, businesses must systematically 
assess every cross-border transaction to determine whether it falls within the scope of the 
directive,  even  when  it  ultimately  does  not  trigger  a  reporting  obligation.  This  screening 
process  requires substantial  internal  resources, with  3 tax advisors reporting the need for 
several full-time employees to manage DAC6 compliance.  

Similarly, business respondents argued that the scope of DAC6 reporting should be more 
narrowly  targeted  to  arrangements  presenting  genuine  tax  risks.  In  the  light  of  this, 
several  business  stakeholders  argued  in  favour  of  carving  out  from  DAC6  reporting  all 
companies that are within the scope of the Pillar 2 Directive. Other business stakeholders 
suggested  limiting  reporting  to  implemented  arrangements  rather  than  potential  ones, 
assigning the primary reporting obligation to taxpayers to avoid duplicative reporting, and 
removing reporting obligations for secondary intermediaries that are not directly involved 
with  taxpayers.  5  business  respondents  also  proposed  introducing  safe  harbours  for 

76 

 
transactions  already  covered  by  other  EU  frameworks  and  exempting  entities  subject  to 
extensive regulatory oversight, such as companies participating in cooperative compliance 
programmes  or  continuous  audits.  17  stakeholders  from  business  and  tax  advisors 
recommended reviewing and refining the DAC6 hallmarks to better target arrangements that 
pose a genuine risk of aggressive tax planning. Business stakeholders were aligned on the 
need to  remove the  category A  hallmarks  (generic hallmarks),  which was  regarded  as 
having  a  very  limited  added  value  in  terms  of  identifying  potentially  harmful  tax 
arrangements. However, their views were very divergent on the potential removal of other 
hallmarks, with each of them suggesting different hallmarks, linked to the   sector in which 
they operate. 

Evidence  gathered  through  stakeholder  consultations  with  business  representatives 
consistently indicates that the cost of preparing and filing a DAC6 report is approximately 
EUR 5,000 per report on average. Similar estimates were also reported by tax intermediaries, 
accountants and tax advisory firms involved in DAC6 compliance processes. Stakeholders 
highlighted  that  these  costs  primarily  reflect  the  need  for  legal  and  tax  analysis,  internal 
coordination, documentation and the preparation and submission of the report, with costs 
varying depending on the complexity of the arrangement and the applicable hallmarks. 

DAC7 

22  respondents  to  the  PC  and  CfE  (including  tax  advisors,  online  platforms,  and 
associations)  gave  their  opinion  on  DAC7.  6  stakeholders  (4  of  them  associations 
representing  online  platforms,  1  online  platform  and  1  tax  adviser)  expressed  concerns 
regarding the thresholds for the sales of goods. They argued that the thresholds are too 
low, which results in reporting sales that are not relevant for tax purposes.  In this respect, 2 
stakeholders  from  online  platforms  and  an  association  suggested  raising  the  current 
monetary  threshold  up  to  EUR  5,000.  Stakeholders  also  suggested  removing  the  activity 
thresholds (30 transactions) and keeping only the monetary threshold.  

Two tax advisor associations stressed the need for increased harmonisation of reporting 
systems within the MS. These stakeholders identified that there are considerable variations 
in  national  portals,  formats,  documentation  requirements,  timelines,  and  technical 
specifications, which cause operational problems for cross-border platforms. One business 
suggested that there is a need for the development of a unified reporting system for the 
EU, including the adoption of a single XML reporting template that is accepted within all 
the MS. Some suggestions were raised from 6 stakeholders about the reporting deadlines, 
2  associations  expressed  their  views  that  the  current  reporting  deadline  is  giving  rise  to 
certain problems, as the availability of certain information concerning the transactions that 
took  place  in  the  later  part  of  the  year  might  only  occur  after  the  reporting  date.  8 
stakeholders (associations, business and online platforms) requested the development of a 
centralised verification tool for TIN. Platforms face challenges in obtaining certain seller 
information, such as place of birth as it may not be recorded in identification documents. To 
address  these  issues,  stakeholders  suggested  focusing  on  essential  data  points  like  name, 
address, and TIN, while also developing enhanced verification tools for TIN at the EU level. 
They  highlighted  the  fragmented  nature  of  current  verification  tools  across  MS  and 
expressed  concerns  about  the  costs,  burdens,  and  GDPR/cybersecurity  implications  for 
sellers and platforms. 

77 

 
Some respondents expressed concerns about the uneven enforcement between EU and non-
EU  platforms,  uncertainty  regarding  sanctions  for  incomplete  data,  and  situations  where 
platforms must retain seller funds while awaiting missing information. 

78 

 
 
 
ANNEX 3: WHO IS AFFECTED AND HOW? 

1.  PRACTICAL IMPLICATIONS OF THE INITIATIVE 

The  initiative  aims  to  streamline  and  simplify  the  DAC,  significantly  reducing 
administrative  burdens  for  reporting  entities  while  improving  the  efficiency  of  tax 
administrations. 

On the business side, we distinguish between large MNE groups which are in scope of the 
Pillar  2  Directive,  other  companies  outside  of  the  scope  of  the  Pillar  2,  and  platform 
operators of any size. 

MNE groups within the scope of the Pillar 2 Directive (consolidated annual revenues of at 
least EUR 750 million) will no longer be obliged to report cross-border arrangements under 
DAC6,  as  risks  are  deemed  covered  by  the  global  minimum  tax  rules.  This  will  directly 
reduce the associated compliance costs for those companies. They will also benefit from a 
single  notification  to  support  the  reporting  requirements  under  DAC4/DAC9,  filing  only 
once  per  group  via  a  common  template  and  harmonised  deadline,  instead  of  separate 
notifications for DAC4 and DAC9 purposes by each of the 109,000 subsidiaries of MNEs 
in scope of Pillar 2.  

Smaller MNE groups, i.e. those outside the scope of the Pillar 2 Directive, will benefit from 
a reduction in the number of DAC6 disclosures (about 8,300 per year). Given their larger 
population, a significant share of the resulting compliance cost savings is expected to accrue 
to smaller companies, including those with fewer than 50 employees. Within the population 
of MNEs in Europe, companies with fewer than 50 employees account for nearly two thirds, 
meaning that a substantial proportion of the benefits is likely to be concentrated among these 
smaller entities. 

Platform operators, both larger and smaller ones, will see a reduction in reporting volumes 
due to increased monetary thresholds (to EUR 3,000) and the removal of the 30-transaction 
activity threshold for sellers of goods, eliminating the need to report low-value occasional 
sellers. The preferred option has the potential to reduce the number of reported sellers by up 
to 11.3 million per year. 

Finally, tax intermediaries, e.g., advisors and accountants, will benefit from the removal of 
Category A (generic) hallmarks under DAC6 and clearer guidance on the Main Benefit Test 
(MBT), reducing “defensive reporting” of standard commercial transactions. 

Tax authorities will process higher-quality data due to centralized TIN verification and more 
complete DAC1 exchanges, while the volume of low-value information  from  DAC6 and 
DAC7 will decrease, allowing for better-targeted risk assessments. Costs are expected to be 
driven primarily by the need to adjust IT systems and data-sharing arrangements in order to 
access and exchange information held by a broader set of public authorities. The magnitude 
of these costs will depend on the existing level of digitalisation and interoperability of public 
sector databases in each Member State. In more advanced systems, where data is already 
centrally  accessible,  the  required  adjustments  may  be  relatively  limited.  By  contrast, 
Member States with more fragmented data infrastructures may face higher initial investment 
costs  related  to  system  integration,  data  standardisation  and  governance  frameworks. 

79 

 
Evidence from national assessments, such as in Sweden 77, suggests that while such reforms 
may entail upfront IT development and coordination costs, they can also lead to efficiency 
gains  over  time  through  improved  data  quality,  reduced  manual  processing  and  more 
effective risk analysis. 

2.  SUMMARY OF COSTS AND BENEFITS 

I. Overview of Benefits (total for all provisions) – Preferred Option 

Description 

Amount 

Direct benefits 

Comments 

Compliance  cost  reductions 
from DAC6 

EUR 300 million/year for large MNEs 
EUR 41.4 million/year for other MNEs 

Compliance  cost  reductions 
from DAC7 

From EUR 452 million to EUR 904 million for 
digital platforms  

Compliance  cost  reductions 
from DAC4/DAC9 

Compliance  cost  reduction 
for 
overall  DAC 
framework 

the 

EUR 264 million/year for large MNEs 

Quantification is not available  

Regulatory cost reduction 

Quantification is not available  

Large  MNEs  are  those  within  the  scope  of 
Pillar 2. “Other MNEs” are those outside of 
the scope of Pillar 2. 

Estimated  EU-wide  savings  for  DAC7 
compliance costs, based on a range of costs 
per reported seller from EUR 40 to EUR 80. 

Large  MNEs  are  those  within  the  scope  of 
DAC9 reporting. 

Recast  of  Directive  2011/16/EU  to  reduce 
complexity and strengthen legal certainty. 

For  tax  authorities  dealing  with  a  reduced 
number  of  disclosures 
(DAC6:  9,000 
disclosures from A hallmarks and those filed 
by companies in scope of Pillar 2 under other 
to  11.3  million 
hallmarks;  DAC7:  up 
reported  sellers  annually 
less;  DAC4: 
109,000 entities of MNEs in scope of DAC9 
not  filing  separate  DAC4  and  DAC9 
notifications anymore).  

Protect MS tax base (DAC1 
and TIN) 

Quantification is not available  

Quantification is not available 

business 
EU 
Support 
competitiveness 
trough 
simpler, harmonised and less 
burdensome  DAC  reporting 
obligations 

Tax  administrations  will  benefit 
from 
improved  effectiveness  of  risk  analysis 
stemming  from  (1)  information  on  all  six 
income 
(2) 
centralised TIN verification system. 

categories 

(DAC1) 

and 

reducing 

administrative 

supports  EU  business 
initiative 
The 
competitiveness 
and 
simplifying 
by 
streamlining  DAC  reporting  obligations, 
thereby 
and 
compliance  costs  for  companies.  Greater 
across  Member  States 
harmonisation 
improves  legal  certainty  and  reduces  the 
need  for  businesses  to  navigate  divergent 
national requirements. Taken together, these 
changes  facilitate  cross-border  activity  and 
allow businesses to allocate more resources 
to 
growth-enhancing 
and 
activities. 

productive 

Indirect benefits 

77 Skatteverket, “Rapportering och utbyte av upplysningar om inkomster från digitala plattformar och vissa andra ändringar i EU:s direktiv 
om administrativt samarbete på direktskatteområdet”, 2022. 

80 

 
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
 
 
 
 
(1) Estimates are gross values relative to the baseline for the preferred option as a whole (i.e. the impact of 
individual  actions/obligations  of  the  preferred  option  are  aggregated  together);  (2)  Please  indicate  in  the 
comments column which stakeholder group is the main recipient of the benefit;(3) For reductions in regulatory 
costs,  please  describe  in  the  comments  column  the  details  as  to  how  the  saving  arises  (e.g.  reductions  in 
adjustment costs, administrative costs, regulatory charges, enforcement costs, etc.).  

II. Overview of costs – Preferred option 

Citizens/Consumers 

Businesses 

Administrations 

One-off  Recurrent 

One-off 

Recurrent 

One-off 

Recurrent 

EU 

Development 
of  IT  system, 
access  points, 
and  training of 
staff  for  TIN 
verification 
scheme. 
For 
(central 
component): 
EUR  970,000–
1,770,000;  For 
Member States 
(national 
component): 
EUR 
million 

15–25 

IT 

1.8–2.4 

Recurrent 
maintenance 
and  assistance: 
For EU (central 
component): 
EUR 
million/year; 
For  Member 
States (national 
component): 
EUR 
million/year 

5.5–18 

Direct adjustment 
costs 

None 

None 

Potential  set-up 
costs  for  TIN 
verification 
scheme  if  used 
by 
reporting 
entities  

Potential 
recurrent  costs 
for 
IT 
maintenance 
TIN 
verification 
scheme  if  used 
reporting 
by 
entities 

All 
actions  (1 
to 7)   

Direct 
administrative 
costs 

Direct regulatory 
fees and charges 

Direct 
enforcement costs 

None 

None 

None 

Potential 
recurrent  costs 
TIN 
for 
verification 
scheme  if  used 
by 
reporting 
entities  

None 

None 

None 

None 

None 

None 

None 

None 

None 

Non-identified  Non-identified  Non-identified  Non-identified 

Indirect costs 

None 

None 

Non-identified  Non-identified  Non-identified  Non-identified 

(1)  Estimates (gross values) to be provided with respect to the baseline; (2) costs are provided for each 
identifiable  action/obligation  of  the  preferred  option  otherwise  for  all  retained  options  when  no 
preferred  option  is  specified;  (3)  If  relevant  and  available,  please  present  information  on  costs 
according  to  the  standard  typology  of  costs  (adjustment  costs,  administrative  costs,  regulatory 
charges, enforcement costs, indirect costs).  

III. Contribution to the administrative burden reduction targets – Preferred option(s) 

Measure 1 (DAC6): Excludes Pillar 2 companies and removes Category A hallmarks. It targets a EUR 341 million total annual 
reduction in compliance costs for businesses. 

81 

 
 
 
 
 
 
 
 
 
Measure 2 (DAC7): Increases threshold to EUR 3,000 and removes the 30-transaction rule, reducing platform reporting costs 
by approximately EUR 678 million/year. 

Measure 3 (DAC4/DAC9): Introduces central filing for notifications, saving MNEs EUR 264 million/year. 

Measure 4 (TIN): Establish a centralised TIN verification system accessible to the tax administrations of Member States and 
reporting entities.  

Measure 5 (DAC1): Removes life insurance products (LIP) from exchange requirements while mandating the exchange of all 
"available" information across other categories to close reporting gaps. 

There is no reliable element to assess the following removed costs in Euro. However, the overall benefit / costs balance 
should be in favour of the private stakeholders, and relatively neutral for the tax administrations.   

New recurrent costs 
(INs) 

Removed recurrent 
costs (OUTs) 

(nominal values per 
year) 

(nominal values per 
year) 

Administrative 
costs 
 [M€] 

Net cost   
(INs – 
OUTs) 

(nominal 
values per 
year)  

New one-off 
costs (INs)  
(annualised total 
net present value 
over the relevant 
period) 

Removed one-
off costs 
(OUTs) 
(annualised total 
net present value 
over the relevant 
period) 

All businesses 

None or 
negative (if 
reporting 
entities opt-
in for access 
to the 
centralised 
TIN 
verification 
system) 

EUR 1,283 * 

EUR 1,283 
net savings* 

Yes 
(adaption to new 
TIN schemas) 

None 

- 

in 
SMEs 

which 

Possibly 

Yes 

(Quantitative 
estimates not 
available) 

Yes 

Yes 

Public 
administrations 

(Quantitative 
estimates not 
available) 

(Quantitative 
estimates not 
available) 

Yes 
(adaption to new 
schemas) 

None 

Yes 

Yes 
(adaption to new 
schemas) 

No 

None 

(Quantitative 
estimates not 
available) 

Citizens 

None 

None 

None 

None 

3.  RELEVANT SUSTAINABLE DEVELOPMENT GOALS 

IV. Overview of relevant Sustainable Development Goals – Preferred Option(s) 
Relevant SDG 

Expected progress towards the Goal 

Comments 

SDG  8  –  Decent  work  and 
economic growth 

The  initiative  reduces  tax  compliance  costs  and 
in 
administrative  burdens 
particular  through  simplification  of  DAC6  and 

for  businesses, 

82 

Lower  compliance  costs  may  free  up 
investment, 
resources 
employment  or  wage  growth.  Impacts  are 

productive 

for 

 
 
 
 
 
 
 
 
 
DAC7 reporting obligations and the streamlining 
of  notification  requirements.  This  is  expected  to 
the  business  environment,  support 
improve 
productivity and facilitate cross-border economic 
activity within the Internal Market. 

indirect and depend on companies’ allocation 
of cost savings. 

Reduced  administrative  complexity  and 
improved  legal  certainty  may  indirectly 
support innovation and investment decisions, 
although  no  direct  R&D  incentives  are 
introduced. 

indirect  and  depend  on 
Effects  are 
enforcement 
Simplification 
outcomes. 
measures are designed not to undermine core 
anti-avoidance objectives. 

improved  exchange  of 

Enhanced  data  quality,  reduced  duplication 
and 
information 
contribute  to  more  efficient  and  fair  tax 
systems.  Some  measures 
(e.g.  DAC7 
threshold  adjustments)  may  slightly  reduce 
available information but aim to better align 
reporting with risk relevance. 

Improved 
cooperation 
administrative 
supports coordinated action at EU level and 
strengthens  the  functioning  of  the  Internal 
Market. 

SDG 9 – Industry, innovation 
and infrastructure 

SDG 
10 
inequalities 

–  Reduced 

SDG 16 – Peace, justice and 
strong institutions 

SDG  17  –  Partnerships  for 
the goals 

simplifying 

reporting  obligations 

By 
and 
improving  the  coherence  of  EU  tax  information 
systems,  the  initiative  contributes  to  a  more 
efficient  regulatory  framework  and  supports 
digitalisation  of  tax  administration  processes, 
including data exchange and verification systems. 

the 

improving 

effectiveness  of 

tax 
By 
transparency  frameworks, 
initiative  may 
contribute indirectly to fairer taxation and a more 
level playing field across taxpayers. 

the 

tax 

initiative  strengthens 

transparency, 
The 
administrative  cooperation  and  the  effectiveness 
of  tax  enforcement  across  Member  States,  while 
improving 
reporting 
the  proportionality  of 
obligations. 

initiative 

enhances 

cooperation 

The 
and 
information  exchange  between  Member  States’ 
tax administrations, including through harmonised 
reporting  frameworks  and  potential  centralised 
systems  (e.g.  TIN  verification,  DAC4/DAC9 
notifications). 

83 

 
 
 
 
 
 
ANNEX 4: ANALYTICAL METHODS 

This  appendix  provides  the  technical  details  underlying  the  quantification  of  compliance 
cost savings associated with the DAC Recast measures. It describes the data sources used, 
the assumptions applied  and the methodologies to estimate  the magnitude of the savings 
across the different policy options. In particular, it sets out the numerical inputs, calculation 
steps and simplifying assumptions used in deriving the estimates presented in the main text. 
The purpose of this appendix is to ensure transparency regarding the analytical approach 
and to allow the estimates to be reproduced and interpreted in light of the underlying data 
limitations and methodological choices. 

1. DAC6 (Measure 1) 

The quantification of compliance cost savings under Measure 1 is based on the estimated 
number of DAC6 disclosures affected by the removal or modification of certain hallmarks 
and on the average cost of preparing a DAC6 disclosure. 

In estimating the compliance cost savings under Measure 1, companies within the scope of 
Pillar 2 and those outside its scope are considered separately, both because they are affected 
to  different  extents  by  the  proposed  simplifications  and  because  their  compliance  cost 
structures differ. Large MNE groups within the scope of Pillar 2, i.e. those with consolidated 
turnover  of  at  least  EUR  750  million,  would  benefit  from  a  full  exemption  from  DAC6 
reporting obligations, whereas companies outside this scope would remain subject to DAC6 
but  would  experience  a  reduction  in  reporting  obligations  through  the  removal  or 
modification of specific hallmarks. This distinction is particularly relevant as Pillar 2 entities 
are typically large MNEs with more complex business models, a significantly higher volume 
of  cross-border  transactions  and  more  complex  group  structures,  requiring  substantial 
resources to identify, analyse and document reportable arrangements. 

At the same time, companies differ in how they organise their tax compliance functions. 
Entities outside the scope of Pillar 2 are more likely to rely on external advisory services 
due to  more limited in-house capacity, meaning  that compliance costs can be reasonably 
approximated using a cost per disclosure, based on the EUR 3,000–5,000 range identified 
in stakeholder consultations. By contrast, large MNE groups typically maintain dedicated 
in-house tax and compliance departments and manage reporting obligations on a continuous 
basis. For these entities, compliance costs are better captured through an estimation based 
on internal resources, e.g., expressed in FTE staff devoted to DAC6-related activities. This 
approach reflects economies of scale in internal compliance functions and provides a more 
realistic  representation  of  their  cost  structure  than  a  per-disclosure  methodology. 
Consequently,  the  simplification  measures  are  expected  to  generate  comparatively  larger 
compliance cost savings for entities within the scope of Pillar 2, both in absolute terms and 
in terms of the intensity of administrative effort avoided. 

Compliance cost savings for companies falling within the scope of the Pillar 2 Directive 

Starting with policy option 1a, the estimation of compliance costs for companies within the 
scope of Pillar 2 requires an approximation of the number of MNE groups with a relevant 
presence  in  the  EU.  Company-level  data  from  the  ORBIS  database  indicate  that 
approximately  4,700  global  ultimate  owner  (GUO)  groups  worldwide  meet  the  turnover 
threshold of EUR 750 million and have at least one subsidiary in the EU, of which around 

84 

 
1,900 are headquartered within the Union. However, for DAC6, the relevant unit of analysis 
differs, as reporting is trigger-based and depends on the existence of potentially reportable 
cross-border arrangements. As a result, not all MNE groups in scope of DAC4/Pillar Two 
will necessarily generate DAC6 reporting obligations, in particular those with only a limited 
footprint in the EU. 

For the purpose of estimating DAC6-related compliance costs, the analysis therefore focuses 
on MNE groups that are likely to be actively engaged in DAC6 compliance activities. The 
upper bound is given by all MNE groups with a presence in the EU (around 4,700), while 
the lower bound corresponds to those headquartered in the EU (around 1,900), which are 
assumed  to  have  a  sufficiently  significant  footprint  to  systematically  assess  DAC6 
obligations.  Against  this  background,  a  central  estimate  of  approximately  3,000  MNE 
groups is used as a pragmatic midpoint, capturing those non-EU groups with a sufficiently 
substantial operational presence, such as multiple subsidiaries and cross-border intra-group 
activities, that are most likely to give rise to DAC6-relevant arrangements. The estimation 
of compliance costs for MNE groups within the scope of Pillar 2 is informed by evidence 
from the evaluation of the Anti-Tax Avoidance Directive (ATAD), which suggests that large 
entities incur compliance costs of approximately EUR 100,000 per year (78). While ATAD 
and  DAC6  differ  in  their  specific  objectives  and  instruments,  both  frameworks  require 
entities  on  a  continuous  basis  to  identify,  monitor  and  assess  cross-border  transactions 
against predefined criteria, implying a comparable level of analytical effort and operational 
complexity.  Given  that  DAC6  compliance  involves  highly  specialised  tax  expertise, 
including the assessment of complex legal and economic arrangements, it is appropriate to 
base the cost estimation on sector-specific labour costs. Using average EU labour costs for 
tax  specialists  in  the  sector  “Accounting,  bookkeeping  and  auditing  activities;  tax 
consultancy” of approximately EUR 45 per hour (average value for the  EU in  2024),  an 
annual compliance cost of EUR 100,000 corresponds to around 2,200 hours of work input. 
This is equivalent to approximately 1.3 to 1.5 full-time equivalent (FTE) staff dedicated to 
DAC6-related compliance activities per MNE group. This approach provides a reasonable 
approximation  of  the  internal  resources  required  by  large  MNEs  to  comply  with  DAC6 
obligations. 

Taken together, the estimated compliance cost savings for entities within the scope of Pillar 
2 amount to approximately 3,000 MNEs × EUR 100,000 = EUR 300 million per year in 
total (79). 

The ATAD evaluation indicates that compliance costs vary significantly depending on the 
size  and  complexity  of  the  MNE  group.  While  some  firms  report  relatively  limited 
compliance efforts, large and complex groups often incur annual compliance costs in the 
range  of  around  EUR  100,000,  corresponding  to  approximately  2–3  full-time  equivalent 
staff  dedicated  to  compliance  activities.  At  the  same  time,  the  evaluation  also  highlights 
considerable uncertainty, with  some firms reporting  substantially higher  costs in  specific 
cases, for example where significant external advisory support is required. 

78 Study prepared for the European Commission to support an evaluation of the Anti-tax Avoidance Directive (ATAD Evaluation), Final 
Report (2026). 
79 This estimate is consistent with the findings of the 2025 DAC Evaluation (Evaluation of the Directive 2011/16 and its amendments, 
Final Report, Table 32, p. 149), which identifies recurrent administrative burdens of approximately EUR 300 million per year for large 
and very large MNE groups in relation to DAC6 reporting over the period 2020–2022. This aligns with the central estimate used in the 
present impact assessment for the compliance cost reductions associated with exempting Pillar 2 in-scope entities from DAC6 reporting 
obligations. 

85 

 
 
To reflect this uncertainty, sensitivity analysis was carried out using alternative low- and 
high-cost scenarios. Under a lower-bound assumption of annual compliance costs of EUR 
75,000  per  MNE  group,  the  estimated  compliance  cost  savings  would  amount  to 
approximately EUR 225 million per year (3,000 MNEs × EUR 75,000). Under a higher-cost 
scenario assuming annual compliance costs of EUR 125,000 per MNE group, the estimated 
savings would increase to approximately EUR 375 million per year (3,000 MNEs × EUR 
125,000). 

Overall, this suggests that the estimated annual compliance cost savings for Pillar 2 in-scope 
entities  are  likely  to  fall  within  a  range  of  approximately  EUR  225  million  to  EUR  375 
million,  with  EUR  300  million  representing  the  central  estimate  used  in  the  impact 
assessment. 

Compliance cost for companies outside of the scope of the Pillar 2 Directive.  

Policy  option  1b  extends  policy  option  1a  by  removing  reporting  obligations  related  to 
generic  hallmarks  in  Category  A.  According  to  the  DAC  evaluation,  the  average  cost  of 
screening, assessing and reporting a DAC6 arrangement is estimated to range between EUR 
3,000  and  EUR  5,000  per  disclosure.  This  range  reflects  the  heterogeneity  of  reporting 
obligations across different hallmarks. Some hallmarks require a more detailed assessment, 
including legal and economic analysis, documentation of the underlying structure and the 
preparation of comprehensive descriptions for reporting purposes. These cases often involve 
significant input from tax, legal and compliance functions and may require external advisory 
support. By contrast, other hallmarks are more straightforward in nature and may rely on 
relatively simple criteria, in some cases amounting to binary (“yes/no”) determinations with 
limited additional documentation requirements. In the case of the generic hallmarks under 
Category  A,  which  tend  to  involve  broader  and  less  precisely  defined  concepts  and  may 
therefore require more extensive assessment and documentation, the upper bound of EUR 
5,000 per disclosure is used for the purpose of the quantification to reflect their relatively 
higher complexity. 

For Policy Option 1b, which removes the generic hallmarks A.1, A.2(a), A.2(b) and A.3, the 
estimation  relies  on  DAC6  reporting  statistics  indicating  that  approximately  9,000 
disclosures per year are associated with these A hallmarks 80. 

According  to  the  available  information  from  Member  States,  approximately  8%  of 
disclosures are submitted by MNE groups within the scope of Pillar 2. Assuming that the 
same proportion applies to the affected disclosures, 92% of those disclosures are filed by 
companies  outside  of  the  scope  of  Pillar  2.  Thus,  the  estimated  annual  compliance  cost 
savings  for  companies  outside  of  the  scope  of  Pillar  2  are  calculated  by  multiplying  the 
number of relevant disclosures by the average cost per disclosure 81. 

80 The respective numbers of disclosures between July 2020 and December 2025, i.e. over a time horizon of roughly six years, were as 
follows: A.1: 19,256, A.2(a): 672, A.2(b): 32, A.3: 33,785 (Source: DAC6 Reporting Statistics). 
81 Estimates are based on disclosures associated with the relevant hallmarks. As DAC6 reports may refer to multiple hallmarks for a single 
arrangement, the removal of a given hallmark does not necessarily eliminate all corresponding reports. However, the generic hallmarks 
concerned are broad in scope and account for a significant share of disclosures, such that their removal is expected to eliminate most 
associated reporting. Any residual reporting under more specific hallmarks is considered limited and not quantifiable. Estimates should 
therefore be interpreted as indicative. 

86 

 
 
9,000 disclosures × 92% × EUR 5,000 = EUR 41.4 million (82) 

Under Policy Option 1c, in addition to excluding companies within the scope of Pillar 2 
from DAC6 reporting (Policy Option 1a), the MBT would be removed from the remaining 
hallmarks  currently  subject  to  it,  notably  those  in  Category  B  and  certain  hallmarks  in 
Category C. 

The impact of this change on disclosure volumes cannot be robustly quantified. There is no 
historical evidence in which identical hallmarks have alternated between being subject to 
and  exempt  from  the  MBT,  which  would  be  necessary  to  isolate  its  effect  on  reporting 
behaviour.  Alternative  attempts  to  approximate  the  impact  using  comparisons  between 
different  hallmarks  are  subject  to  significant  limitations,  as  differences  in  disclosure 
volumes across hallmarks are primarily driven by differences in their scope rather than by 
the presence or absence of the MBT. 

In  the  absence  of  reliable  empirical  evidence  and  given  the  methodological  limitations 
outlined above, no quantitative estimate of the impact on disclosure volumes or compliance 
costs is provided. 

2. DAC7 (Measure 2) 

The quantification of compliance cost  under Measure 2 is  based on  an approximation of 
recurrent reporting costs incurred by platform operators and the estimated reduction in the 
number of reportable sellers under the alternative threshold options. 

According to DAC statistics (83), there were approximately 52,000 platforms operating in 
the EU in 2024, reporting information on around 5 million sellers. Evidence from the Impact 
Assessment on “Tax fraud and evasion – better cooperation between national tax authorities 
on exchanging information” (84), provides an estimate of EUR 50,000 in recurrent annual 
compliance  costs  incurred  by  platform  operators  to  operate  reporting  systems  under  the 
DAC framework (85).  

However,  the  reporting  systems  used  by  platform  operators  typically  also  serve  multiple 
regulatory and tax-related purposes beyond DAC7, including other DAC obligations (where 
applicable) and, in some cases, requirements linked to other tax or regulatory frameworks 
such as digital services taxation. As a result, only a share of the overall system costs can 
reasonably be attributed specifically to DAC7. At the same time, DAC7 often constitutes 
the primary reporting obligation for platform operators, suggesting that its cost share is non-
negligible.  On  this  basis  and  considering  both  multi-purpose  use  and  the  central  role  of 
DAC7 for platforms, a working assumption of 30% of recurrent reporting system costs being 

82  The  DAC  Evaluation  does  not  separately  isolate  costs  for  this  specific  group.  Instead,  it  reports  costs  for  “small-scale  MNEs”  of 
approximately EUR 20 million, while grouping larger non-Pillar 2 MNEs together with the largest MNE categories (Evaluation of the 
Directive 2011/16 and its amendments, Final Report, Table 32, p. 149). Given that compliance costs for larger firms are substantially 
higher than for small-scale MNEs, the implied costs for all non-Pillar 2 firms combined would likely exceed EUR 20 million and move 
closer to the EUR 40 million estimated in the present impact assessment. 
83 DAC7 Statistical Reporting – EU Statistics 2025. 
84 European Commission, Impact Assessment – Tax fraud and evasion – better cooperation between national tax authorities on exchanging 
information, 2020. 
85 Available evidence from Eurostat indicates that prices in the relevant category “Information and communication (equipment)” have 
remained  broadly  stable, if not  slightly  declining,  over  the period 2018–2025.  This  suggests  that the  EUR 50,000  estimate  remains a 
reasonable proxy in current prices. The report will include a reference to this evidence to justify the continued use of this figure. 

87 

 
 
attributable to DAC7 is applied. This results in estimated annual DAC7-related compliance 
costs of 52,000 × EUR 50,000 × 30% = EUR 780 million. 

With regard to the overall number of sellers active on platforms, no harmonised EU-wide 
data are  currently available. The analysis therefore relies on survey-based evidence from 
Sweden as a benchmark. A representative household survey indicates that approximately 
one in four individuals aged 16 and above sold goods or services via an online platform in 
2024 (86). When extended to the total population, this corresponds to roughly 20% of the 
population, or approximately 2.1 million individuals. This estimate is particularly relevant 
for the present analysis, as the Swedish platform economy is predominantly goods-based, 
with major platforms such as Blocket, Tradera and eBay focusing on the  sale of second-
hand goods. 

At the same time, the Swedish Tax Agency estimates that approximately 400,000 sellers 
were reportable under DAC7 in 2024. This implies that around 19% of all platform sellers 
fall within the current DAC7 reporting scope in Sweden. 

This evidence is used as a basis to approximate the total number of platform sellers in the 
EU  through  extrapolation.  To  account  for  differences  in  digital  uptake  across  Member 
States, countries are grouped into three terciles based on internet usage. For the tercile with 
the  highest  level  of  internet  usage  (87),  it  is  assumed  that  20%  of  the  overall  population 
engages in platform selling, consistent with the Swedish benchmark. For the middle tercile 
(88), a share of 16% is assumed, and for the lowest tercile (89), 12%. 

Applying  these  shares  to  the  2024  EU  population  results  in  an  estimated  total  of 
approximately 71 million individuals selling goods or services via platforms. Assuming that 
the proportion of reportable sellers among all sellers is broadly comparable to the Swedish 
case  (19%),  this  implies  that  approximately  13.5  million  sellers  are  currently  reportable 
under DAC7, while around 57.5 million sellers (81% of all sellers) fall below the current 
reporting thresholds. 

Dividing the estimated total DAC7-related compliance costs by the number of reportable 
sellers yields an indicative per-seller compliance cost of approximately EUR 780 million ÷ 
13.5 million ≈ EUR 60 per reported seller. 

To reflect uncertainty in both the allocation of system costs to DAC7 and the estimation of 
the reportable seller base, a sensitivity range is applied, resulting in a per-seller cost of EUR 
40 (low scenario), EUR 60 (central scenario) and EUR 80 (high scenario). 

Note  that  DAC7  covers  several  categories  of  reportable  activities,  including  immovable 
property, transport, personal services and the sale of goods. Due to limited data availability, 
the analysis does not distinguish between these categories, and in particular does not allow 
for  an  identification  of  the  share  of  sellers  engaged  in  the  sale  of  goods,  to  which  the 
reporting threshold applies. Empirical evidence from France, a relatively service-oriented 
market (e.g. short-term accommodation platforms), suggests that the split between goods 

86 Befolkningens it-användning 2024, E-handel, Statistics Sweden.  
87  The  first  tercile  (highest  internet  usage)  comprises  the  following  Member  States:  Austria,  Belgium,  Spain,  Finland,  Sweden, 
Luxembourg, Ireland, the Netherlands and Denmark. 
88 The second tercile (medium level of internet usage) comprises the following Member States: Estonia, Malta, Latvia, Romania, Hungary, 
Czechia, Germany, Cyprus and France. 
89 The third tercile (lowest level of internet usage) comprises the following Member States: Croatia, Greece, Bulgaria, Portugal, Lithuania, 
Poland, Italy, Slovenia and Slovakia. 

88 

 
 
and services is broadly balanced (around 50/50 in value terms) (90). In other Member States, 
such  as  Sweden,  the  composition  is  expected  to  be  more  skewed  towards  goods-based 
activities. Accordingly, the estimates should be interpreted as indicative and may represent 
an upper-bound approximation. 

Policy option 2a – Removal of the activity threshold 

Under  the  current  rules,  sellers  must  be  reported  if  they  either  exceed  30  transactions  or 
receive more than EUR 2,000 in annual consideration (see illustration below). Option  2a 
removes the activity threshold while maintaining the monetary threshold. 

According to information collected from some mayor platforms in the EU, approximately 
79%  of  the  reportable  sellers  are  reported  solely  due  to  exceeding  the  30-transaction 
threshold while remaining below the EUR 2,000 monetary threshold. 

Applying this share to the population of reported sellers of 13.5 million sellers implies that 
approximately 10.7 million sellers per year (13.5 million sellers × 79%) would fall out of 
scope under Policy option 2a. 

The associated compliance cost savings are estimated as follows: 

Low-cost scenario: 10.7 million sellers × EUR 40 = EUR 428 million 

Central scenario: 10.7 million sellers × EUR 60 = EUR 642 million 

High-cost scenario: 10.7 million sellers × EUR 80 = EUR 856 million 

Policy  option  2b  –  Removal  of  the  activity  threshold  and  increase  of  the  monetary 
threshold to EUR 3,000 

Policy Option 2b removes the activity threshold and increases the monetary threshold from 
EUR 2,000 to EUR 3,000. 

90 Statistique publique de la fiscalité, “Près de 40 Md€ de ventes sur les plateformes en 2022 : une diversité de profils de vendeurs”, DGFIP 
Analyses N° 09. 

89 

 
 
 
Evidence from stakeholders’ consultation 91 suggest that the share of non-reportable sellers 
is estimated to increase from approximately 81% under the current framework to  around 
97% under Option 2b, corresponding to an increase of about 16 percentage points. Applied 
to an estimated seller population of 71 million, this implies that approximately 11.3 million 
sellers (71 million sellers × 16%) would fall out of scope compared to the status quo.  

The associated compliance cost savings are estimated as follows: 

Low-cost scenario: 11.3 million sellers × EUR 40 = EUR 452 million 

Central scenario: 11.3 million sellers × EUR 60 = EUR 678 million 

High-cost scenario: 11.3 million sellers × EUR 80 = EUR 904 million 

Policy  option  2c  –  Removal  of  the  activity  threshold  and  increase  of  the  monetary 
threshold to EUR 5,000 

Policy option 2c removes the activity threshold and increases the monetary threshold from 
EUR 2,000 to EUR 5,000. 

Under this option approximately 98% of sellers would fall below the reporting threshold, 
compared with approximately 81% under the current framework, according to information 
collected  from  affected  platform  companies.  This  implies  an  increase  of  roughly  17 
percentage  points  in  the  share  of  non-reportable  sellers.  This  is  based  on  information 
obtained through stakeholder consultations, in particular from major platform operators in 
the EU. These operators provided detailed simulations on the distribution of sellers across 
different thresholds and the corresponding number of sellers that would fall out of scope 
under alternative policy scenarios. This evidence was used to calibrate the estimates. 

Applying this change to the seller population of 71 million sellers results in an estimated 
reduction of approximately 12.1 million reported sellers per year (71 million sellers × 17%). 

The associated compliance cost savings are estimated as follows: 

Low-cost scenario: 12.1 million sellers × EUR 40 = EUR 484 million 

Central scenario: 12.1 million sellers × EUR 60 = EUR 726 million 

High-cost scenario: 12.1 million sellers × EUR 80 = EUR 968 million 

3. DAC4 and DAC9 (Measure 3) 

The current framework gives rise to a clear duplication of compliance costs for MNE groups, 
stemming from overlapping notification requirements under DAC4 and DAC9. In practice, 
constituent  entities  within  an  MNE  group  are  required  to  submit  separate  notifications 
identifying  the  reporting  entity  responsible  for  filing  group-level  information  under  each 
framework,  despite  the  fact  that  these  notifications  largely  concern  the  same  underlying 
information.  Differences  in  scope,  timing  and  national  implementation  mean  that  these 
notifications  cannot  be  consolidated,  requiring  companies  to  establish  parallel  internal 

91 Data are available for thresholds at EUR 2,000, EUR 5,000 and EUR 10,000. These were used to approximate the intermediate value 
by applying a non-linear interpolation, reflecting the fact that the share of exempted sellers increases at a decreasing rate and gradually 
converges towards 100% at higher thresholds. 

90 

 
 
processes  for  data  collection  and  submission.  As  a  result,  MNE  groups  must  devote 
additional  administrative  resources  to  monitor  multiple  reporting  obligations  across 
jurisdictions, often involving repeated coordination across the group structure for essentially 
identical information. This duplication increases compliance costs and creates unnecessary 
complexity, without generating corresponding additional benefits for tax administrations. 

Policy  Option  3a  introduces  a  single  harmonised  notification  requirement  covering  both 
DAC4 and DAC9. The estimation is based on the number of MNE entities currently required 
to submit such notifications and on assumptions regarding the staff time required to prepare 
them. 

Under  the  current  framework,  each  constituent  entity  is  required  to  submit  a  DAC4 
notification identifying the reporting entity within the group and the jurisdiction where the 
Country-by-Country report will be filed. This requires internal coordination to gather the 
relevant  information, communicate across the group structure  and prepare  and  report the 
notification;  according  to  information  from  stakeholders,  it  can  be  assumed  that  these 
activities require approximately 28 hours per entity per year. 

Applying average EU labour costs for the sector “Accounting, bookkeeping and auditing 
activities; tax consultancy”, the estimated labour cost of preparing a notification corresponds 
to approximately EUR 1,270 per entity. 

Available information from the company level database ORBIS indicates that approximately 
4,700 MNE groups worldwide meet the relevant DAC4 and DAC9 reporting thresholds, i.e. 
are within the scope of Pillar 2, and have operations within the EU. These groups collectively 
account for approximately 109,000 constituent entities (subsidiaries) located in the EU as of 
2024. 

The annual compliance cost burden for DAC4 notifications can therefore be approximated 
as 109,000 entities × EUR 1,270 ≈ EUR 135 million per year (92). 

Assuming a similar notification obligation for DAC9 and that no operational synergies arise 
between  DAC4  and  DAC9  notifications,  the  combined  compliance  burden  for  both 
notifications could reach approximately EUR 135 million × 2 = EUR 270 million per year. 

Under Policy Option 3b, a single harmonised notification covering both DAC4 and DAC9 
would be introduced. Instead of each constituent entity submitting a separate notification, a 
single notification would be prepared and submitted for the entire MNE group. 

Assuming that the internal coordination effort required to prepare this notification remains 
approximately 28 hours per MNE group per year, the associated compliance costs can be 
approximated as 4,700 groups × EUR 1,270 ≈ EUR 6 million per year. 

92 The DAC Evaluation reports total recurrent compliance costs of approximately EUR 56 million in 2022, with estimated firm-level costs 
ranging from around EUR 8,000 for smaller MNE groups to approximately EUR 45,000 for larger groups (Evaluation of the Directive 
2011/16  and  its  amendments,  Final  Report,  Table  27,  p.  145).  In  the  present  impact  assessment,  DAC4-related  compliance  costs  are 
estimated at around EUR 135 million for approximately 4,700 MNE groups, corresponding to average annual costs of around EUR 29,000 
per group. Importantly, this average lies well within the range identified in the DAC Evaluation. The difference in aggregate estimates 
mainly reflects different assumptions regarding the distribution of firms across cost categories. While the DAC Evaluation assumes that 
only around 10% of MNE groups incur higher compliance costs, stakeholder evidence collected for the present impact assessment suggests 
a more balanced distribution between lower- and higher-cost firms, resulting in a higher aggregate estimate. 

91 

 
 
The resulting reduction in compliance costs is therefore estimated as EUR 270 million − 
EUR 6 million ≈ EUR 264 million per year. 

These estimates  are intended to  illustrate the order of magnitude of the potential savings 
associated with eliminating duplicative notification requirements. They rely on simplifying 
assumptions regarding the time required for internal coordination and the average labour 
costs involved in preparing notifications. 

4. Improving the verification of TINs (Measure 4)93 

Policy  option  4a  –  Centralised  TIN  verification  system  (access  limited  to  tax 
administrations) 

The cost estimates for the introduction of a centralised TIN verification system accessible 
only  to  Member  States’  tax  administrations  are  based  on  benchmark  comparisons  with 
existing  EU  IT  systems  (notably  VIES  and  DAC  infrastructures),  complemented  by 
available evidence from the DAC evaluation and limited stakeholder input. Estimates are 
presented separately for EU-level (central component) and national-level (Member State) 
costs. 

At EU level, one-off development costs for the central component are estimated in the range 
of EUR 300,000 to EUR 700,000. This range is derived from two benchmarks. The lower 
bound  reflects  the  cost  of  the  modernisation  of  the  VIES-on-the-web  application 
(approximately EUR 300,000), while the upper bound is informed by the development of 
the  central  component  for  DAC3  exchanges  (approximately  EUR  715,000,  based  on  the 
DAC evaluation). Given that the TIN validation tool would require additional functionalities 
compared to VIES (notably bulk request splitting, routing and reassembly) but remains less 
complex than a full central repository such as DAC3, these two benchmarks are considered 
appropriate lower and upper bounds. 

In addition, the development of common specifications and validation rules is estimated at 
EUR 150,000, based on the cost of developing a comparable “call-off stock” module within 
VIES. Training costs for tax administrations are estimated at EUR 20,000, based on average 
costs for in-person IT training under the Fiscalis programme. This results in total EU-level 
one-off costs in the range of EUR 470,000 to EUR 870,000. 

Recurrent  EU-level  costs,  including  infrastructure, operations, maintenance and technical 
assistance, are estimated at EUR 600,000 per year. This estimate is based on two consistent 
benchmarks:  the  operational  costs  of  VIES-on-the-web  (approximately  EUR  600,000 
annually)  and  the  recurrent  costs  associated  with  DAC6  central  systems,  which  are  of  a 
similar magnitude. 

At  national  level,  one-off  implementation  costs  are  estimated  at  approximately  EUR  11 
million  across  the  EU,  corresponding  to  roughly  EUR  265,000  per  Member  State  on 
average. This estimate is based on observed public procurement data for the implementation 
of  the  BRIS,  which  provides  a  relevant  benchmark  for  interoperability  projects  between 

93 For the purpose of the cost assessment under Policy Options 4a and 4b, it is assumed that the TIN verification system would provide 
only a binary yes/no response indicating whether the taxpayer identifiers match the information held in the relevant national register. An 
alternative  design  would  be  to  provide  “close  match”  feedback  for  individual  queries,  indicating  that  the  information  submitted  is 
sufficiently close to the correct taxpayer identifiers and signalling the degree of proximity to the correct information. Such a functionality 
could improve error resolution but would also imply additional technical and operational complexity. 

92 

 
 
national systems and EU-level infrastructure. A multiplier of 1.5 has been applied to account 
for  additional  complexity  in  cases  where  TIN  data  are  held  by  multiple  authorities  (e.g. 
separate  registries  for  natural  and  legal  persons),  including  the  need  for  coordination 
arrangements and system integration. The resulting estimate reflects an average cost across 
Member  States,  with  potentially  significant  variation  depending  on  national  institutional 
setups. 

Recurrent  national  costs  consist  of  both  maintenance  costs  and  administrative  costs 
associated with TIN validation. Maintenance costs are estimated at 12% to 18% of initial 
development costs, corresponding to EUR 1.4 to 2 million annually at EU level, in line with 
standard industry benchmarks for IT systems. 

The administrative burden for TIN validation is estimated not to exceed EUR 10 million per 
year  across  the  EU.  This  estimate  is  derived  by  benchmarking  against  overall  recurring 
administrative costs for the AEOI under the DAC framework, which are estimated at EUR 
20 to 40 million annually at EU level. Given that TIN validation represents a more narrowly 
defined and highly automatable task within this broader framework, the associated costs are 
assumed  to  be  significantly  lower.  This  assumption  is  further  supported  by  limited 
stakeholder  input,  which  indicates  substantial  variation  across  Member  States.  Reported 
estimates range from approximately EUR 40,000 per year in low-cost cases to up to EUR 
0.5 million per year (corresponding to around 10 FTEs) in higher-cost scenarios. Even the 
upper bound of these estimates would imply aggregate EU-level costs in the order of EUR 
13–14 million annually, which supports the use of EUR 10 million as a conservative upper-
bound estimate. 

No additional costs are expected for reporting entities under this option, as the validation 
process would be carried out exclusively by tax administrations. 

Policy option 4b – Centralised TIN verification system  (optional access to reporting 
entities) 

This option assumes a centralised TIN validation tool providing binary (yes/no) feedback 
and  accessible  to  reporting  entities.  Costs  are  assessed  at  EU  level,  national  level  (tax 
authorities), and for reporting entities. 

At EU level,  one-off development  costs for the  central  component  are  estimated at  EUR 
600,000  to  EUR  1.4  million,  reflecting  the  need  to  scale  the  system  to  accommodate 
potential access by reporting entities. This estimate builds on the cost range identified for 
the  tax-administration-only  system  (EUR  300,000–700,000)  and  applies  an  approximate 
doubling  factor  to  reflect  higher  system  capacity  requirements,  including  increased 
concurrency,  authentication  and  bulk  processing  functionalities.  The  development  of 
common specifications and access management rules is estimated at EUR 350,000, based 
on benchmarks from VIES developments  and the expected need for  coordination among 
Member States (comparable to the cost of an expert team under Fiscalis). Training costs for 
tax administrations are estimated at EUR 20,000. Overall, total EU-level one-off costs are 
estimated at EUR 970,000 to EUR 1.77 million. 

Recurrent EU-level costs, including infrastructure, maintenance, and technical support, are 
estimated  at  EUR  1.8  to  2.4  million  per  year.  This  estimate  reflects  a  three-  to  fourfold 
increase compared to systems limited to tax authority access (e.g., DAC6), driven by higher 

93 

 
 
expected system load, authentication requirements and fragmented user access patterns. The 
resulting  range  is  broadly  consistent  with  observed  costs  for  systems  with  private-sector 
access, such as VIES-on-the-web. 

At national level, one-off costs for tax administrations are estimated at EUR 15 to 25 million 
across the EU. These costs include the development of national access points (estimated at 
EUR 14–20 million), based on public procurement benchmarks for interoperability systems 
such as BRIS, and additional costs for implementing authorisation and access management 
systems (estimated at EUR 1–5 million). The increase compared to the tax-authority-only 
scenario reflects  the need to  accommodate higher volumes of concurrent requests  and to 
implement secure access for reporting entities. 

Recurrent national IT costs are estimated at EUR 4.5 to 12 million per year across the EU, 
comprising maintenance of national access points (EUR 3–7 million annually) and technical 
assistance and troubleshooting (EUR 1.5–5 million annually). These estimates are based on 
standard  industry  benchmarks  for  maintenance  (20–28%  of  development  costs)  and  on 
expected increases in user support needs resulting from a broader and more heterogeneous 
user base. 

The administrative burden for tax authorities associated with TIN validation is expected to 
be significantly reduced compared to a tax-administration-only validation model. Reporting 
entities would perform a share of validations voluntarily, reducing the volume of TINs to be 
processed  by  tax  authorities.  Residual  administrative  costs  are  estimated  at  EUR  1  to  6 
million per year at EU level, corresponding to validation of approximately 5% to 60% of 
TINs not pre-validated by reporting entities. 

Under  this  option,  reporting  entities  would  be  granted  access  to  the  validation  tool  on  a 
voluntary basis and would not be subject to any legal obligation to use it. As a result, no 
mandatory compliance costs arise for businesses. Reporting entities that choose to make use 
of the tool may incur certain implementation and operational costs, including IT integration 
and  adjustments  to  existing  processes.  However,  these  costs  are  expected  to  be  at  least 
partially offset by reductions in other data collection and verification requirements, such as 
the need to obtain and report supplementary identifiers (e.g. date of birth or address) in cases 
of  missing  or  inaccurate  TINs.  Given  the  voluntary  nature  of  the  instrument  and  the 
offsetting effects between additional costs and potential savings, it is not possible to provide 
a robust ex ante quantification of the net cost impact for reporting entities under this PO. 

94 

 
 
ANNEX 5: COMPETITIVENESS CHECK 

1. Overview of impacts on competitiveness  

Dimensions of 
Competitiveness 

Impact of the initiative 
(++ / + / 0 / - / -- / n.a.) 

Cost and price competitiveness 

International competitiveness  

Capacity to innovate 

SME competitiveness 

++ 

+ 

++ 

+ 

References to sub-
sections of the main 
report or annexes 

Chapters 5, 6, 7 

Chapters 5, 6, 7 

Chapters 5, 6, 7 

Chapters 5, 6, 7 

2. Synthetic assessment  

The preferred options are expected to have a positive overall impact on competitiveness. By 
simplifying  and  streamlining  reporting  and  notification  obligations  across  several  DAC 
instruments,  the initiative reduces  administrative burdens and recurring  compliance costs 
for  businesses  operating  within  the  Internal  Market.  The  removal  of  certain  reporting 
requirements,  the  clarification  of  legal  concepts,  and  the  reduction  of  duplication  in 
reporting  and  notification  processes  are  expected  to  improve  legal  certainty  and  reduce 
operational complexity. 

These  changes  are  likely  to  strengthen  business’  cost  competitiveness  by  lowering  fixed 
compliance costs and reducing the need for external advisory services. In addition, greater 
consistency in the application of rules across Member States is expected to facilitate cross-
border business activities and reduce frictions associated with divergent national practices 
as well as regulatory arbitrage. This is expected to contribute to a more efficient functioning 
of the Internal Market and improve the overall business environment for EU businesses. 

While the initiative does not directly target innovation, the reduction in compliance costs 
will  free  up  financial  and  administrative  resources  that  can  be  dedicated  to  support 
investment  and  growth.  These  resources  may  be  reallocated  to  productive  activities, 
including  digitalisation,  expansion  or  innovation-related  investments,  depending  on 
company-specific decisions. 

3. Competitive position of the most affected sectors 

The initiative is horizontal in nature and does not target specific sectors. It applies broadly 
to  businesses  subject  to  reporting  obligations  under  the  DAC  framework.  However,  the 
impact is expected to be more pronounced in sectors with a higher exposure to cross-border 
transactions, complex organisational structures or platform-based business models. 

In  particular,  MNE  groups  engaged  in  cross-border  activities  may  benefit  from  reduced 
duplication in notification and reporting requirements (notably under DAC4 and DAC9) and 
from  increased legal  clarity under DAC6. Similarly, digital platform operators subject  to 
DAC7 reporting obligations are expected to benefit from simplified thresholds and reduced 

95 

 
 
reporting scope, particularly where large volumes of low-value transactions are currently 
captured. 

It should be noted that SMEs and smaller businesses are generally less engaged in cross-
border  activities  and  are  therefore,  both  in  absolute  and  relative  terms,  less  frequently 
captured by DAC reporting obligations compared to large MNEs. As a result, they are, to 
some extent, in a more favourable starting position under the baseline. At the same time, 
while the initiative does not include SME-specific measures, SMEs and smaller businesses 
are still expected to benefit from the proposed simplifications alongside larger businesses. 
In addition, SMEs are likely to benefit disproportionately in relative terms, as compliance 
costs tend to represent a higher share of their operating costs. The reduction in administrative 
burdens  may  therefore  improve  their  ability  to  participate  in  cross-border  economic 
activities within the Internal Market. 

96 

 
ANNEX 6: SME CHECK  

Overview of impacts on SMEs 

Relevance for SMEs  

The  initiative  is  relevant  for  SMEs  as  tax  compliance  costs  generally  impose  a 
proportionally higher burden on smaller businesses compared to large enterprises. While 
the DAC Recast does not introduce SME-specific exemptions, it aims at simplifying and 
streamlining reporting and notification obligations under several DAC instruments. These 
simplifications are expected to reduce administrative complexity, legal uncertainty and 
recurring compliance costs for all businesses, including SMEs. 

Evidence from DAC6 reporting suggests that, among taxpayer-filed reports, only a limited 
share  (approximately  7–9%)  is  attributable  to  large  MNE  groups  within  the  scope  of 
Pillar 2. This implies that the majority of reporting companies are outside this group and 
include a significant number of SMEs. For example, the share of SMEs, i.e. those with less 
than 50 employees, in all European MNEs accounts to as much as two thirds of the total. 
Thus, they are directly affected by the compliance burden and are expected to benefit from 
its reduction. In addition, evidence collected through the call for evidence indicates that 
more  than  three  quarters  of  responding  companies  filing  DAC6  reports  identified 
themselves  as  small  or  medium-sized  enterprises.  This  further  illustrates  that  SMEs 
potentially account for a substantial share of DAC6 reporting activity and are therefore 
expected to benefit significantly from the reduction in compliance burdens resulting from 
the proposed simplifications. A similar  pattern  can be  expected for  platform  operators 
under DAC7, where a substantial proportion are SMEs, which are likely to benefit directly 
from the simplification of reporting obligations. 

Given that compliance costs tend to be relatively higher for SMEs in proportion to their 
size, any reduction in reporting obligations is expected to have a comparatively stronger 
positive  effect  on  SMEs.  In  addition,  greater  legal  clarity  and  reduced  fragmentation 
across Member States may facilitate SMEs’ participation in cross-border activities within 
the Internal Market. 

(1) 

IDENTIFICATION OF AFFECTED BUSINESSES AND ASSESSMENT OF RELEVANCE 

Are SMEs directly affected? (Yes/No) In which sectors? 

Yes, SMEs are directly affected across all sectors to the extent that they are subject to 
DAC reporting obligations (notably under DAC6 and DAC7). 

Estimated number of directly affected SMEs 

Not  available.  DAC  reporting  data  do  not  provide  a  comprehensive  breakdown  of 
reporting entities by company size at EU level. 

Estimated number of employees in directly affected SMEs 

97 

 
 
Not available. 

Are  SMEs  indirectly  affected?  (Yes/No)  In  which  sectors?  What  is  the  estimated 
number of indirectly affected SMEs and employees? 

SMEs  are  primarily  directly  affected.  Indirect  effects  may  arise  through  improved 
functioning of the Internal Market and reduced administrative complexity, but these are 
not quantifiable. 

(2) CONSULTATION OF SME STAKEHOLDERS 

How has the input from the SME community been taken into consideration? 

Stakeholder  input  was  gathered  through  consultations  with  business  representatives, 
including platforms and industry associations, which reflect the views of a broad range of 
businesses, including SMEs. These consultations highlighted the importance of reducing 
administrative burdens and simplifying reporting obligations, particularly for businesses 
with limited administrative capacity. 

Are SMEs’ views different from those of large businesses? (Yes/No) 

Partially.  While  both  SMEs  and  large  businesses  support  simplification,  SMEs  tend  to 
emphasise more strongly the burden of compliance costs and administrative complexity, 
which can represent a larger relative cost burden. 

(3) ASSESSMENT OF IMPACTS ON SMES94 

What are the estimated direct costs for SMEs of the preferred policy option? 

Qualitative assessment 

No  significant  additional  direct  costs  are  expected  for  SMEs.  The  initiative  primarily 
introduces  simplifications  and  reductions  in  existing  reporting  and  notification 
requirements. 

Quantitative assessment 

Not applicable. 

What are the estimated direct benefits/cost savings for SMEs of the preferred policy 
option95? 

Qualitative assessment 

SMEs  are  expected  to  benefit  from  reduced  compliance  costs  associated  with  DAC 
reporting obligations, particularly under DAC6 and DAC7. As SMEs typically face higher 
compliance costs relative to their size, these savings are likely to be proportionally more 

94 The costs and benefits data in this annex are consistent with the data in annex 3. The preferred option includes the mitigating measures 
listed in section 4.  
95 The direct benefits for SMEs can also be cost savings. 

98 

 
 
 
 
significant for smaller businesses. Simplified rules and reduced reporting obligations may 
also lower the need for external advisory services and internal administrative resources. 

Quantitative assessment 

While overall compliance cost savings have been estimated at aggregate level, it is not 
possible  to  isolate  the  share  accruing  specifically  to  SMEs  due  to  data  limitations 
regarding the size distribution of reporting entities. 

What are the indirect impacts of this initiative on SMEs? 

The  initiative  may  indirectly  benefit  SMEs  by  improving  legal  clarity,  reducing 
fragmentation  across  Member  States,  and  lowering  barriers  to  cross-border  activity. 
These effects may support SME growth and participation in the Internal Market, although 
they cannot be quantified. 

(4) MINIMISING NEGATIVE IMPACTS ON SMES 

Are SMEs disproportionately affected compared to large companies? (Yes/No) 

If yes, are there any specific subgroups of SMEs more exposed than others? 

No 

Have mitigating measures been included in the preferred option/proposal? (Yes/No)  

No 

CONTRIBUTION TO THE 35% BURDEN REDUCTION TARGET FOR SMES 

Are  there  any  administrative  cost  savings  relevant  for  the  35%  burden  reduction 
target for SMEs? 

Yes. The initiative is expected to generate compliance cost savings for businesses subject 
to  DAC  reporting  obligations.  Given  that  SMEs  represent  a  large  share  of  reporting 
entities and face relatively higher compliance costs, a substantial portion of these savings 
is expected to accrue to SMEs. However, due to data limitations, the exact contribution to 
the 35% burden reduction target cannot be quantified. 

ADDITIONAL INFORMATION  
None 

99 

 
 
 
 
ANNEX 7: OVERVIEW OF SELECTED REPORTING AND EXCHANGE 
MECHANISMS IN THE DIRECTIVE ON ADMINISTRATIVE 
COOPERATION (DAC) 

Council Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC) 
establishes  the  framework  for  administrative  cooperation  and  exchange  of  information 
between  Member  States’  tax  authorities.  The  Directive  provides  for  different  forms  of 
cooperation,  including  exchange  of  information  on  request,  spontaneous  exchange  of 
information and automatic exchange of information. 

Since its adoption, the Directive has been amended several times in order to extend the scope 
of information exchanged between tax authorities and to address emerging risks related to 
tax evasion, tax avoidance and aggressive tax planning. 

This annex provides a brief overview of the rationale for not amending DAC2, DAC3 and 
DAC8 and conversely details the amendments which are relevant for this impact assessment, 
namely DAC1, DAC4, DAC6, and DAC7 and DAC9. 

DAC2 – Automatic exchange of financial account information 

DAC2 implements into EU law the Common Reporting Standard (CRS) developed by the 
OECD. This is an international standard which is in force since 2014 and has already been 
subject  to  revision  in  2022  to  reflect  global  developments  (the  changes  have  been 
incorporated into EU law through DAC8). No further issues  have  emerged in  relation  to 
DAC2, and this directive has not been identified by stakeholders as an area where there is 
potential for simplification. 

DAC3 – Exchange of cross-border rulings and advance pricing agreements 

In  2015,  the  DAC  was  amended  by Council  Directive  (EU)  2015/2376  (DAC3).  DAC3 
extends  the  scope  of  the  existing  provisions  in  relation  to  AEOI  and  administrative 
cooperation between EU Member States. DAC3 obliges tax administrations to automatically 
exchange information on advance cross-border tax rulings and advance pricing agreements 
with other Member States. No potential for simplification of this reporting framework has 
been identified by the Commission services or stakeholders.  

DAC8 – Automatic exchange of crypto-assets information 

DAC8 implements into EU law the OECD Crypto-Asset Reporting Framework (CARF). As 
the  directive  only  applies  from  1  January  2026  and  no  reporting  has  yet  taken  place,  no 
potential  for  simplification  of  this  reporting  framework  has  been  identified  so  far  by  the 
OECD, the Commission services or stakeholders.  

100 

 
 
 
 
 
 
 
 
 
 
 
 
 
DAC1 – Automatic exchange of information on certain categories of income and assets 

DAC1 introduced the automatic exchange of information (AEOI) between Member States 
(MS) on certain categories of income received and assets held by taxpayers in another MS 
than their MS of residence. 

The  main  goal  of  DAC1  AEOI  is  to  ensure  tax  fairness  between  the  taxation  of  income 
received and wealth held nationally by EU taxpayers and income received and wealth held 
in other MS. MS can also use the information received to check if taxes have been levied in 
the other MS to avoid double taxation of the taxpayer. 

The categories of information covered include: 

•  Employment income 
•  Directors’ fees 
•  Pensions 
•  Ownership of and income from immovable property 
•  Life insurance products 
•  Royalties (added via later amendments, e.g., DAC7/DAC8 context) 
•  Non-custodial dividends (added as from 2026 via DAC8-related expansions) 

MS have reported substantial revenue gains. For instance, in tax year 2022, DAC1-related 
exchanges  on  employment  and  pension  income  alone  contributed  to  approximately  EUR 
117 million in additional tax revenues, primarily through enhanced risk assessments, audits, 
and voluntary disclosures. 

DAC4 – Automatic exchange of Country-by-Country reports 

DAC4 (Council Directive (EU) 2016/881) introduced the automatic exchange of Country-
by-Country (CbC) reports for large MNE groups, implementing the OECD BEPS (Base 
Erosion and Profit Shifting) Action 13 standard within the EU legal framework. 

Multinational  groups  with  consolidated  annual  revenues  exceeding  EUR  750  million  are 
required to file a Country-by-Country report with the tax authority of the jurisdiction of the 
ultimate parent entity of the group. The report shall contain aggregated information for each 
tax jurisdiction in which the group operates, including: 

•  Revenues 
•  Profit or loss before income tax 
Income tax paid and accrued 
• 
•  Number of employees 
•  Stated capital, accumulated earnings, and tangible assets 
•  Other economic activity indicators  

Key mechanisms: 

•  Filing deadline: 12 months after the last day of the reporting fiscal year. 

101 

 
 
 
 
•  Automatic exchange to all MS where the group has resident constituent entities or 

permanent establishments subject to tax. 

•  Used  for  high-level  transfer  pricing  risk  assessment  and  BEPS  detection  (not  as 

direct audit evidence). 

The information is intended to support high-level transfer pricing risk assessments and the 
identification of potential BEPS risks. Since first exchanges in 2018 (for 2016 data), DAC4 
has  significantly  improved  tax  authorities'  ability  to  identify  profit-shifting  risks, 
contributing to global efforts against aggressive tax planning. 

DAC6 – Mandatory disclosure of cross-border arrangements 

DAC6 (Council Directive (EU) 2018/822) introduced mandatory disclosure rules (MDR) 
for certain cross-border arrangements that may present a risk of tax avoidance. It reflects a 
fundamental  shift  in  tax  transparency  from  reactive  enforcement  towards  proactive 
information gathering, enabling tax administrations to detect emerging risks before they 
fully materialise. 

The reporting obligation primarily applies to intermediaries, meaning professionals who 
help design or implement tax-related structures. The notion of intermediary is intentionally 
broad and function-based, capturing both primary actors (e.g. designers and promoters) and 
secondary actors (e.g. service providers assisting with implementation), such as tax advisors, 
lawyers, accountants, and sometimes financial institutions. In practice, this broad scope has 
ensured extensive coverage of the advisory ecosystem, although it has also raised issues of 
overlap and duplication in reporting obligations.  

Where no intermediary is involved, or where reporting is prevented (notably due to legal 
professional privilege), the obligation shifts to the taxpayer, creating a cascade mechanism 
to  safeguard  reporting  completeness.  This  mechanism  determines  who  must  report  the 
arrangement. It works like a chain of responsibility, ensuring that at least one party reports 
the information: 

1. 
- 

2. 
- 

3. 
- 

First level: intermediary (primary responsibility) 
The obligation normally falls on the intermediary who designed or promoted the 
arrangement. Example: A tax advisor creates a cross-border structure for a client 
→ the advisor must report it. 
Second level: other intermediaries (if applicable) 
If there are multiple intermediaries involved (e.g. a lawyer and a bank), any of them 
may  have  a  reporting  obligation.  In  practice,  they  may  agree  that  one  of  them 
reports, but all remain potentially responsible. 
Third level: taxpayer (fallback) 
The  obligation  shifts  to  the  taxpayer  if:  there  is  no  intermediary  (e.g.  the 
arrangement is designed in-house), or the intermediary is exempt from reporting 
(e.g. due to legal professional privilege), or the intermediary is located outside the 
EU and therefore not subject to DAC6. 

Arrangements are reportable if they meet one hallmark (certain predefined characteristics). 
Some hallmarks are subject to the main benefit test (MBT). This test asks whether it is 
reasonable to  conclude that  obtaining a tax advantage is  one of the main reasons for the 

102 

 
arrangement. In simpler terms, if the main purpose of a structure is to save taxes, it is more 
likely  to  be  reportable.  The  hallmarks  are  designed  as  risk  indicators  rather  than  legal 
definitions of avoidance, and their breadth allows the framework to capture both known and 
novel tax planning strategies: 

•  Category  A  (Generic  hallmarks-  MBT):  These  cover  common  features  of 
marketed tax schemes, such as confidentiality clauses (where clients are not allowed 
to disclose how the scheme works) or fee structures linked to tax savings. These are 
often standardized solutions sold to multiple clients. 

1.  An  arrangement  where  the  relevant  taxpayer  or  a  participant  in  the  arrangement 
undertakes  to  comply  with  a  condition  of  confidentiality  which  may  require  them  not  to 
disclose how the arrangement could secure a tax advantage vis-à-vis other intermediaries 
or the tax authorities. 
2.  An  arrangement  where  the  intermediary  is  entitled  to  receive  a  fee  (or  interest, 
remuneration for finance costs and other charges) for the arrangement and that fee is fixed 
by reference to: 

(a) the amount of the tax advantage derived from the arrangement; or 

(b) whether or not a tax advantage is actually derived from the arrangement. This would 
include an obligation on the intermediary to partially or fully refund the fees where the 
intended tax advantage derived from the arrangement was not partially or fully achieved. 
3. An arrangement that has substantially standardised documentation and/or structure and 
is available to more than one relevant taxpayer without a need to be substantially customised 
for implementation. 

•  Category B (Specific hallmarks – MBT): These refers to concrete strategies, such 
as buying a company mainly to use its tax losses to reduce taxable profits, even if 
there is little real economic activity behind the transaction. 

1. An arrangement whereby a participant in the arrangement takes contrived steps which 
consist in acquiring a lossmaking company, discontinuing the main activity of such company 
and using its losses in order to reduce its tax liability, including through a transfer of those 
losses to another jurisdiction or by the acceleration of the use of those losses. 
2.  An  arrangement  that  has  the  effect  of  converting  income  into  capital,  gifts  or  other 
categories of revenue which are taxed at a lower level or exempt from tax. 
3. An arrangement which includes circular transactions resulting in the round-tripping of 
funds,  namely  through  involving  interposed  entities  without  other  primary  commercial 
function or transactions that offset or cancel each other or that have other similar features. 

•  Category  C  (Specific  hallmarks  -  Cross-border  payments):  These  focus  on 
payments  between  countries  that  may  reduce  tax,  for  example  when  a  company 
makes payments to another entity located in a country with very low or no taxation. 
This  category  captures  many  common  international  tax  planning  structures.  (e.g., 
deductible payments to low-tax jurisdictions, misaligned tax treatments). 
1. An arrangement that involves deductible cross-border payments made between two or 
more associated 
enterprises where at least one of the following conditions occurs: 

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(a) the recipient is not resident for tax purposes in any tax jurisdiction; 
(b) although the recipient is resident for tax purposes in a jurisdiction, that jurisdiction 
either: 

(i) does not impose any corporate tax or imposes corporate tax at the rate of zero 
or almost zero; or 
(ii) is included in a list of third-country jurisdictions which have been assessed by 
MS collectively or within the framework of the OECD as being non-cooperative; 

(c)  the  payment  benefits  from  a  full  exemption  from  tax  in  the  jurisdiction  where  the 
recipient is resident for tax purposes; 
(d)  the  payment  benefits  from  a  preferential  tax  regime  in  the  jurisdiction  where  the 
recipient is resident for tax purposes; 

2.  Deductions  for  the  same  depreciation  on  the  asset  are  claimed  in  more  than  one 
jurisdiction. 
3. Relief from double taxation in respect of the same item of income or capital is claimed in 
more than one jurisdiction. 
4. There is an arrangement that includes transfers of assets and where there is a material 
difference in the amount being treated as payable in consideration for the assets in those 
jurisdictions involved. 

•  Category  D  (Transparency  hallmarks  -automatic  exchange/  beneficial 
ownership):  These  aim  at  arrangements  that  try  to  hide  information  from  tax 
authorities, for example by obscuring who really owns assets or by circumventing 
international information exchange systems. (e.g., undermining CRS/DAC rules). 

1. An arrangement which may have the effect of undermining the reporting obligation under 
the  laws  implementing  Union  legislation  or  any  equivalent  agreements  on  the  automatic 
exchange of Financial Account information, including agreements with third countries, or 
which takes advantage of the absence of such legislation or agreements. Such arrangements 
include at least the following: 

(a)  the  use  of  an  account,  product  or  investment  that  is  not,  or  purports  not  to  be,  a 
Financial Account, but has features that are substantially similar to those of a Financial 
Account; 
(b) the transfer of Financial Accounts or assets to, or the use of jurisdictions that are not 
bound  by  the  automatic  exchange  of  Financial  Account  information  with  the  State  of 
residence of the relevant taxpayer; 
(c)  the  reclassification  of  income  and  capital  into  products  or  payments  that  are  not 
subject to the automatic exchange of Financial Account information; 
(d) the transfer or conversion of a Financial Institution or a Financial Account or the 
assets therein into a Financial Institution or a Financial Account or assets not subject to 
reporting under the automatic exchange of Financial Account information; 
(e)  the  use  of  legal  entities,  arrangements  or  structures  that  eliminate  or  purport  to 
eliminate reporting of one or more Account Holders or Controlling Persons under the 
automatic exchange of Financial Account information; 
(f) arrangements that undermine, or exploit weaknesses in, the due diligence procedures 
used  by  Financial  Institutions  to  comply  with  their  obligations  to  report  Financial 
Account information, including the use of jurisdictions with inadequate or weak regimes 

104 

 
 
 
of  enforcement  of  anti-money-laundering  legislation  or  with  weak  transparency 
requirements for legal persons or legal arrangements. 

2. An arrangement involving a non-transparent legal or beneficial ownership chain with the 
use of persons, legal arrangements or structures: 

(a)  that  do  not  carry  on  a  substantive  economic  activity  supported  by  adequate  staff, 
equipment, assets and premises; and 
(b) that are incorporated, managed, resident, controlled or established in any jurisdiction 
other than the jurisdiction of residence of one or more of the beneficial owners of the 
assets held by such persons, legal arrangements or structures; and 
(c) where the beneficial owners of such persons, legal arrangements or structures, as 
defined in Directive (EU) 2015/849, are made unidentifiable. 

•  Category  E  (Transfer  Pricing  hallmarks):  These  relate  to  how  MNEs  price 
transactions  within  their  group,  such  as  transferring  intellectual  property  between 
subsidiaries in different countries to shift profits, (e.g., unilateral safe harbours, hard-
to-value intangibles). 

1. An arrangement which involves the use of unilateral safe harbour rules. 
2. An arrangement involving the transfer of hard-to-value intangibles. The term “hard-to-
value intangibles” covers intangibles or rights in intangibles for which, at the time of their 
transfer between associated enterprises: 

(a) no reliable comparables exist; and 
(b) at the time the transaction was entered into, the projections of future cash flows or 
income expected to be derived from the transferred intangible, or the assumptions used 
in valuing the intangible are highly uncertain, making it difficult to predict the level of 
ultimate success of the intangible at the time of the transfer. 

3. An arrangement involving an intragroup cross-border transfer of functions and/or risks 
and/or assets, if the projected annual earnings before interest and taxes (EBIT), during the 
three-year period after the transfer, of the transferor or transferors, are less than 50 % of 
the  projected  annual  EBIT  of  such transferor  or  transferors if the transfer  had not  been 
made.’ 

Information reported to national tax authorities is subsequently exchanged automatically 
between MS within a month. This exchange is made by standardized XML schema for 
data  via  a  central  depository  provided  by  the  Commission  services  and  accessible  by 
Member States The data shared includes who is involved, what the arrangement looks like, 
which  hallmarks  apply,  and  when  it  was  implemented.  The  system  enables  all  Member 
States  to  access  the  information,  creating  a  shared  repository  of  intelligence  on  cross-
border tax arrangements. 

The reporting framework aims to provide tax administrations with early information on 
potentially  aggressive  tax  planning  arrangements,  thereby  supporting  risk  assessment 
and enforcement activities.  

Figure  2  on  the  following  page  includes  an  explanatory  chart  on  the  functioning  of  the 
hallmarks and the Main Benefit Test. 

105 

 
 
 
 
 
Figure 2- DAC6 explanatory chart 

Focusing on the distribution of reported arrangements across the different hallmarks under 
DAC6. The total number of hallmark disclosures (Figure 3) does not equal 79,000 reports 
because a single report may include multiple hallmarks. As a result, the same arrangement 

106 

 
 
can be counted under more than one hallmark category, leading to a higher cumulative total 
when aggregating across hallmarks than the number of individual reports submitted. 

Figure 3- Number of Disclosures affected by hallmarks 

Figure  4-  Total  number  of  reported  cross-border  arrangements  under  the  DAC6 
Directive across MS from 2020 to 2025.  

107 

 
 
 
 
 
DAC7 – Reporting obligations for digital platform operators 

DAC7  (Council  Directive  (EU)  2021/514  amending  Directive  2011/16/EU)  introduced 
reporting obligations  for  digital  platform operators facilitating certain  activities carried 
out by sellers through digital platforms. 

Platform  operators  are  required  to  collect  and  report  information  on  sellers  generating 
income through their platforms. More concretely: 

•  Relevant activities: Rental of immovable property, personal services, sale of goods, 

rental of means of transport. 

•  Reporting platform operators: EU-resident/established operators; non-EU operators 

if facilitating EU sellers or EU immovable property rentals. 

•  Reportable  sellers:  Active  sellers  (≥30  transactions  or  >EUR  2,000  consideration 
annually for goods,  with  exemptions  applicable to all activities for listed  entities, 
government bodies, etc.). 

The information reported includes, among other elements: 

• 

• 

• 

• 

identification details of the seller (individuals: name, address, TIN, DOB; entities: 
name, address, TIN, incorporation details) 
the total consideration paid or credited to the seller 
fees or commissions charged by the platform 
the number of relevant transactions carried out 

The information is reported to the tax authority of the MS where the platform operator is 
registered and subsequently exchanged with the MS of residence of the seller. 

The  objective  of  this  framework  is  to  improve  tax  transparency  in  MS  and  facilitate  the 
taxation of income generated through the platform economy. 

DAC9 - Automatic exchange for the purposes of the Pillar 2 Directive 

DAC9 operationalises the implementation in the EU of the Pillar 2 Directive by enabling in 
scope MNEs to file, at central level, the information to be reported and requiring Member 
States  tax  authorities  to  subsequently  exchange  this  information.    As  the  directive  only 
applies  from  1  January  2026  and  no  reporting  has  yet  taken  place,  no  potential  for 
simplification  of  this  reporting  framework  has  been  identified  so  far  by  the  OECD,  the 
Commission services or stakeholders. 

108 

 
 
 
 
 
 
 
 
ANNEX 8: PRACTICAL EXAMPLES OF NATIONAL 
TAXATION RULES FOR THE SALE OF GOODS (DAC7) 

As  detailed  earlier  in  this  report,  26  Member  States  reached  a  provisional  agreement  at 
technical  level  at the OECD, to  remove the  activity threshold and increase the monetary 
threshold  to  EUR  3,000.  in  relation  to  the  Model  Rules  for  Digital  Platform  Operators 
(MRDP), which are implemented in the EU through DAC7.  

This provisional technical agreement is reflective of the fact that Member States do not view 
an increase of the threshold as negatively impacting on their ability to effectively apply their 
national  taxation  rules.  While  the  application  of  national  taxation  rules  is  dependent  on 
specific  personal  circumstances  e.g.  entitlement  to  tax  credits  and  allowances  based  on 
marital and parental status etc, general practical examples of certain national taxation rules 
applicable to personal income are included below. 

Tax free amount annual 
€0–€13,539 at 0% 

€0–€19,500 at 0% 
€12,096 
€4,000 credits 
€0–€13,230 at 0% 
€0–€12,000 at 0% 
30,000 PLN 
Approx €7,000 
If  the  taxpayer's  tax  base  in 
2025  is  equal  to  or  less  than 
EUR  25,426.27, 
the  non-
taxable  part  is  the  amount  of 
EUR 5,753.79 
€0–€9,210.26 at 0% 
€5,500 per annum 

SEK 50,000 
Approx €4,600 

Member State  Nature of tax-free amount 
Austria  
Croatia 
Cyprus 
Germany 
Ireland 
Luxembourg 
Malta 
Poland 

Statutory % band 
Personal allowance (deduction)  €7,200  
Statutory % band 
Statutory basic allowance 
Tax Credit System 
Statutory % band 
Statutory % band 
Statutory 0% band 

Slovakia 

Likely exempt based on details 
on website. 

Slovenia 
Spain 

Sweden 

Statutory % band 
Personal  allowance  to  reduce 
taxable income 
Profit dependent 

109 

 
 
 
 
ANNEX 9: RATIONALE FOR DIVERGING AUTOMATIC 
MATCHING RATES 

The  differences  in  the  automatic  matching  rates  across  the  individual  DAC’s  can  be 
explained by the fact that there is a direct correlation between the legislative requirements 
to  collect  and  verify  identification  information  and  automatic  matching  rates.  A  detailed 
explanation of the divergent legislative requirements under each DAC is included below. 
While this represents the ‘as is’ position it is important to note that Article 27c of Council 
Directive (EU) 2023/2226 ‘DAC8’ introduce new and improved requirements for reporting 
entities and tax administrations to report the taxpayer identification number (TIN). However, 
these  new  requirements  do  not  apply  until  the  commencement  of  the  taxable  period  1 
January 2028 for DAC3, DAC4 and DAC6 and the taxable period 1 January 2030 for DAC1. 
Irrespective of these new requirements in the absence of a centralised tool to verify the TIN 
an automatic matching rate of 100% cannot be achieved.  

For  DAC1  there  are  no  third-party  due  diligence  and  reporting  requirements.  The  tax 
authorities of Member States are only required to report and exchange information that is 
available in their tax files. Consequentially, the tax authorities of Member States routinely 
collect only the TIN relevant to their own Member State and do not routinely collect any 
other  TIN.  Therefore,  receiving  Member  States  receive  a  very  limited  subset  of 
identification information i.e. name, date of birth and non-resident address to the extent that 
this  information  is  routinely  collected  by  the  tax  administration  of  the  sending  Member 
State.  Also,  the  directive  does  not  require  tax  administrations  to  verify  this  information. 
Consequentially,  the  automatic  matching  rates  of  39.3%  (Employment  Income),  41.6% 
(Directors Fees), 46.9% (Pensions) and 24.2% (Life Insurance Products) are reflective of 
the  current  ‘availability’  limitations  of  the  legislative  framework  and  absence  of  a 
centralised tool to verify the TIN. 

For  DAC2,  Financial  Institutions  are  required  to  collect  and  report  the  name,  address, 
Member State of residence, TIN, and date and place of birth of each reportable person. These 
reporting requirements are supplemented by due diligence requirements whereby Financial 
Institutions  are  required  to  attain  a  self-certification  from  every  account  holder  of  a  new 
account, including  any documentation collected  pursuant  to  anti-money laundering/know 
your customer procedures. A new account is any account opened on or after 1 January 2016. 
A pre-existing account is any account opened prior to 1 January 2016. Financial Institutions 
are subject to less onerous due diligence requirements for pre-existing accounts as they are 
only required to rely upon their existing records. Consequentially, the associated accuracy 
and completeness of identification information that is reported and exchanged is lower for 
pre-existing  accounts  than  for  new  accounts.  Therefore,  the  automatic  matching  rate  of 
67.9% is reflective of the higher collection and validation requirements for new accounts 
and more limited requirements for pre-existing accounts. This is also compounded by the 
absence of a centralised tool to verify the TIN. 

Under DAC3, tax administrations that issue, amend or renew an advance cross-border ruling 
or  an  advance  pricing  arrangement  are  required  to  automatically  exchange  certain 
information to all other Member States. The information that is required to be automatically 

110 

 
 
exchanged includes the identification of the person, other than a natural person, and where 
appropriate  the  group  of  persons  to  which  it  belongs.  However,  the  directive  is  not 
prescriptive on the type of identification information that must be provided for example the 
directive does not require that the TIN of the Member State of residence must be provided. 
Also,  the  directive  does  not  require  tax  administrations  to  verify  this  information. 
Consequentially, the significantly lower automatic matching rate of 27.3% is reflective of 
the  absence  of  the  legislative  requirement  to  collect  and  verify  the  TIN.  This  is  also 
compounded by the absence of a centralised tool to verify the TIN. 

For DAC4, MNE groups are required to report specified information on their constituent 
entities. The directive requires that in circumstances where the relevant constituent entity 
has a TIN this must be mandatorily provided, and where the constituent entity does not have 
a  TIN,  this  information  is  not  required.  Consequentially,  the  automatic  matching  rate  of 
81.5% is reflective of these legislative requirements yet remains limited due to the absence 
dedicated verification requirements and the absence of a centralised tool to verify the TIN. 

For DAC6, intermediaries and relevant taxpayers are required to report their name, date and 
place of birth (in the case of an individual), residence for tax purposes and the TIN. While 
the legislation supports the reporting of the TIN there is no requirement for intermediaries 
to verify the reported information. Consequentially, the automatic matching rate of 56.8% 
is  reflective  of  the  absence  of  a  requirement  to  verify  the  reported  information  and  a 
centralised tool to verify the TIN. 

For DAC7, reporting platform operators are required to collect and report the name, address, 
TIN and in the absence of a TIN, the place of birth, the VAT identification number (where 
available) and the date of birth of the individual seller. Where the seller is an entity seller 
the business registration number is also required to be collected and reported. The directive 
requires reporting platform operators to also verify the collected information. The automatic 
matching rate of 69.7% is reflective of the fact that there is no centralised system to verify 
the TIN. 

111