COMMISSION STAFF WORKING DOCUMENT Subsidiarity Grid 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

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   EUROPEAN COMMISSION  Brussels, 24.6.2026  SWD(2026) 164 final  COMMISSION STAFF WORKING DOCUMENT Subsidiarity Grid 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) 165 final} - {SWD(2026) 166 final}  
 
 
Subsidiarity Grid 

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1.  Can the Union act? What is the legal basis and competence of the Unions’ intended action? 

1.1 Which article(s) of the Treaty are used to support the legislative proposal or policy initiative? 

The legal basis of DAC relies on Articles 113 and 115 of the Treaty on the Functioning of the European 
Union (TFEU). 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. 

1.2 Is the Union competence represented by this Treaty article exclusive, shared or supporting in 
nature? 

In the case of direct tax policy, the Union’s competence is shared.  

Subsidiarity does not apply for policy areas where the Union has exclusive competence as defined 
in Article 3 TFEU1. It is the specific legal basis which determines whether the proposal falls under 
the subsidiarity control mechanism. Article 4 TFEU2 sets out the areas where competence is shared 
between the Union and the Member States. Article 6 TFEU3 sets out the areas for which the Unions 
has competence only to support the actions of the Member States. 

2.  Subsidiarity Principle: Why should the EU act? 

2.1 Does the proposal fulfil the procedural requirements of Protocol No. 24: 

-  Has there been a wide consultation before proposing the act? 
- 

Is there a detailed statement with qualitative and, where possible, quantitative indicators 
allowing an appraisal of whether the action can best be achieved at Union level? 

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

•  2025 Evaluation of the Directive on administrative cooperation.5 
• 
• 
•  Study  by  an  external  contractor:  “Evaluation  of  the  Directive  2011/16  and  its 

2021 Special Report of the European Court of Auditors.6 
2024 Special Report of the European Cour of Auditors.7 

Amendments”8 

•  Study  by  an  external  contractor:  “Study  on  a  possible  EU  Taxpayer  Identification 

Number (TIN) and its verification instruments”9 

1 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12008E003&from=EN  
2 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12008E004&from=EN  
3 https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:12008E006:EN:HTML  
4 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12016E/PRO/02&from=EN  
5 COM(2025) 695 final 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. 
6 Special Report 03/2021: Exchanging tax information in the EU: solid foundation, cracks in the implementation. 
7 Special Report 27/24: Combatting harmful tax regimes and corporate tax avoidance. 
8 Evaluation of the Directive 2011/16 and its Amendments, 11 January 2024. 
9 The final report of the study is scheduled for finalisation by mid-June 2026. 

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

Expert group on direct taxation. 

•  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. 

In addition, the Commission also carried out a public consultation and call for evidence to support 
the initiative. The consultation remained open until 10 February 2026 and received a total of 60 
written responses.  

2.2 Does the explanatory memorandum (and any impact assessment) accompanying the 

Commission’s proposal contain an adequate justification regarding the conformity with the 
principle of subsidiarity? 

The explanatory memorandum as well as the impact assessment contains a section on the principle 
of subsidiarity with relevant qualitative and quantitative indicators that demonstrate the need for 
action at EU level. 
The proposal fully observes the principle of subsidiarity as set out in Article 5(3) of the Treaty on 
European  Union  (TEU).  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  ensure  consistent  implementation,  while  not  undermining  the  policy  objectives  of  the 
legislation.  Given  the  need  to  act  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 2025 DAC evaluation and the Special Reports of the ECA (2021 and 2024) 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. 

2.3 Based on the answers to the questions below, can the objectives of the proposed action be 

achieved sufficiently by the Member States acting alone (necessity for EU action)? 

No  Union wide  administrative  cooperation cannot  be  achieved  by  a  Member State  acting  alone. 
Bilateral or multilateral action that does not provide for a uniform regulation across the EU, would 
result in an unlevel playing field, and obstacles within the Internal Market, which would negatively 
affect the competitiveness of the Union. 

(a)  Are there significant/appreciable transnational/cross-border aspects to the problems 

being tackled? Have these been quantified? 

The  main  purpose  of  the  provisions  in  the  proposal  is  to  regulate  administrative  cooperation 
between Member States’ tax authorities, in particular the exchange of information. This is by nature 
cross-border. 

(b)  Would national action or the absence of the EU level action conflict with core objectives of 

the Treaty10 or significantly damage the interests of other Member States? 

10 https://europa.eu/european-union/about-eu/eu-in-brief_en  

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Yes, If the administrative cooperation were to be set up at Member State level, on a bilateral basis, 
this would result in different solutions across the EU which would result in a fragmentation of the 
rules applicable in the Internal Market and inhibit the competitiveness of EU companies and 
SME’s. 

(c)  To what extent do Member States have the ability or possibility to enact appropriate 

measures? 

Member States could conclude bilateral or multilateral agreements to the extent that they do not 
conflict with existing EU legislation. 

(d)  How does the problem and its causes (e.g. negative externalities, spill-over effects) vary 

across the national, regional and local levels of the EU? 

The  issues  that  necessitate  administrative  cooperation  among  Member  States  are  tax  fraud,  tax 
avoidance and tax evasion. In particular the cross-border dimension of certain activities creates a 
complex environment where it can be challenging to enforce tax rules and ensure tax compliance. 
These issues will appear in different forms in different Member States, depending on the structure 
of the economy of the Member State, its geographic situation and other factors. The concentration 
of certain industries in certain Member States will have an effect on which provisions of the Directive 
are applicable. 

(e)  Is the problem widespread across the EU or limited to a few Member States? 

The problem exists in all Member States. 

(f)  Are Member States overstretched in achieving the objectives of the planned measure? 

The planned measures will require Member States to make limited investments in the adaptations 
of some IT structures and to ensure that tax administrations have secure access to certain databases. 
This will mainly have one-off effects in terms of budget and staffing. In the longer term, the planned 
measures should achieve streamlining of processes and positive efficiency gains at Member States 
level. 

(g)  How do the views/preferred courses of action of national, regional and local authorities 

differ across the EU? 

Overall,  Member  States  agree  on  the  need  to  simplify  the  Directive  in  order  to  support  the 
competitiveness  of  EU  business.  This  assessment  is  supported  by  the  fact  that  Member  States 
unanimously supported simplification in the field of direct taxation and, on 20 March 2025, adopted 
Council Conclusions11 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.  

2.4 Based on the answer to the questions below, can the objectives of the proposed action be 

better achieved at Union level by reason of scale or effects of that action (EU added value)? 

11 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 

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To  fight  tax  fraud,  tax  avoidance  and  tax  evasion  that  are  cross-border  there  is  a  need  for 
administrative cooperation. To ensure a level playing field and to protect the Internal Market, this 
is better achieved at EU level. 

(a)  Are there clear benefits from EU level 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.  Simultaneously,  the  improvements  ensure  that  Member  States  are  better 
equipped to use all information to maximise the benefits of the DAC. 

(b)  Are there economies of scale? Can the objectives be met more efficiently at EU level 

(larger benefits per unit cost)? Will the functioning of the internal market be improved? 

The proposal includes provisions that introduce common IT tools and more proportionate reporting 
obligations which contribute to the economies of scale. 
Common rules and reporting instruments (such as XML schema) in all Member States will contribute 
to the better functioning of the internal market by eliminating the potential obstacles that would 
result from 27 divergent national sets of rules. 

(c)  What are the benefits in replacing different national policies and rules with a more 

homogenous policy approach? 

Administrative cooperation could not be replaced by unilateral rules, but would need to be done 
through bilateral agreements. Such agreements would be burdensome to achieve and they would 
lead  to  a  fragmented  approach  across  the  Internal  Market  and  negative  affect  on  the 
competitiveness of EU companies. 

(d)  Do the benefits of EU-level action outweigh the loss of competence of the Member States 
and the local and regional authorities (beyond the costs and benefits of acting at national, 
regional and local levels)? 

Considering that the Directive regulates administrative cooperation among national administrations 
a common action at EU level outweighs any loss of competence of the Member States. A plethora 
of agreements at national and inter-regional level would lead to serious obstacles in the Internal 
Market. 

(e)  Will there be improved legal clarity for those having to implement the legislation? 

The  proposal  is  a  recast  with  the  inherent  ambition  to  increase  the  clarity  of  the  Directive. 
Furthermore, a number of improvements of the legal text are proposed in order to contribute to 
the improved legal clarity. 

3.  Proportionality: How the EU should act 

3.1  Does the explanatory memorandum (and any impact assessment) accompanying the 

Commission’s proposal contain an adequate justification regarding the proportionality of the 
proposal and a statement allowing appraisal of the compliance of the proposal with the 
principle of proportionality? 

Yes. The proposal codifies, simplifies and improves existing provisions of the DAC. The changes are 
very targeted and do not go beyond what is necessary to achieve the desired objective. In particular, 

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the changes fully preserve the current safeguards offered by the DAC and do not lower the existing 
level of protection against tax fraud, evasion and avoidance. 
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, in line with the political priorities of the Commission. 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. 

3.2 Based on the answers to the questions below and information available from any impact 
assessment, the explanatory memorandum or other sources, is the proposed action an 
appropriate way to achieve the intended objectives? 

Yes, the proposed actions are the most appropriate way to achieve the intended objectives, as more 
proportionate  reporting  requirements  leading  to  a  reduction  of  administrative  costs  requires  an 
amendment of the existing EU acquis. Conversely administrative cooperation is inherently a cross-
border  issue.  Member  States  cannot  achieve  this  on  their  own,  they  would  have  to  engage  in 
bilateral  and/or  multilateral  agreements,  which  would  create  a  series  of  patch-work  solutions. 
Therefore,  an  EU  approach  is  the  only  approach  that  allows  for  a  comprehensive  and  uniform 
solution that does not distort the internal market.  

(a)  Is the initiative limited to those aspects that Member States cannot achieve satisfactorily 

on their own, and where the Union can do better? 

Given the need to act and the nature and extent of the problem, 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  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. 

(b)  Is the form of Union action (choice of instrument) justified, as simple as possible, and 
coherent with the satisfactory achievement of, and ensuring compliance with the 
objectives pursued (e.g. choice between regulation, (framework) directive, 
recommendation, or alternative regulatory methods such as co-legislation, etc.)? 

The proposal is for a Directive, which is the only instrument available under  one of the two legal 
basis (Article 115 TFEU). Furthermore, this Directive represents the recast of the existing DAC, as 
subsequently amended. 

(c)  Does the Union action leave as much scope for national decision as possible while 

achieving satisfactorily the objectives set? (e.g. is it possible to limit the European action to 
minimum standards or use a less stringent policy instrument or approach?) 

Yes, Union action is limited to amendments to the existing EU DAC acquis. The action does not inhibit 
the application of national taxation rules and domestic competencies for example organisation of 
procedures and processes within the tax administration.  
In terms of organisation, the proposal only stipulates the competent authorities, i.e. the part of each 
tax administration that is competent to engage in administrative cooperation. Internal organisation 
of competent authorities is left to Member States to organise as they see fit. 

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(d)  Does the initiative create financial or administrative cost for the Union, national 

governments, regional or local authorities, economic operators or citizens? Are these costs 
commensurate with the objective to be achieved? 

Limited adjustment costs are expected for businesses and administrations for most of the measures, 
mainly related to adapting reporting systems and procedures, over time, costs should decrease due 
to  streamlined  and  reduced  reporting  leading  to  efficiency  gains.  Tax  administrations  may  incur 
initial  implementation  costs  but  will  benefit  from  reduced  processing  of  low-value  data  and 
improved data matching, leading to efficiency gains. 
The centralised TIN verification system will entail adjustment costs at EU level (approximately EUR 
1.0 to 1.8 million for on-off costs and EUR 1.8 to 2.4 million per year for recurrent costs) and national 
level (approximately EUR 15 to 25 million for on-off costs and EUR 4.5 to 12 million per year for 
recurrent costs). Given the voluntary nature of the measure for the reporting entities, 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.  While  the 
introduction of a TIN validation tool entails upfront and operational costs for all stakeholders, it will 
also  generate  significant  overall  savings  by  reducing  the  need  for  resource-intensive  ex  post 
correction procedures, that can be quantified to up to approximately EUR 70 million per year. 

(e)  While respecting the Union law, have special circumstances applying in individual Member 

States been taken into account? 

N/A 

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