COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE 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

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   EUROPEAN COMMISSION  Brussels, 24.6.2026  SWD(2026) 166 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE 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) 165 final}  
 
 
Executive Summary Sheet 
Impact assessment for an initiative to recast Directive 2011/16/EU on administrative cooperation 
in the field of taxation 

A. Need for action 

Why? What is the problem being addressed?  
The DAC provides a comprehensive framework for administrative cooperation in direct taxation within 
the EU, including reporting of information by certain entities and the subsequent automatic exchange 
of  this  information  by  tax  administrations.  The  DAC  framework  has  evolved  through  successive 
amendments (DAC2–DAC9), resulting in a fragmented and complex legal structure. This has created a 
lack  of  legal  clarity  and  legal  certainty  for  taxpayers,  reporting  entities  and  tax  administrations. 
Moreover,  some  notification  obligations  and  reporting  requirements  generate  large  volumes  of 
information  which  has  limited  tax  relevance,  particularly  in  relation  to  DAC4  (country-by-country 
reporting)/DAC9,  DAC6  (cross-border  arrangements)  and  DAC7  (income  earned  through  digital 
platforms). This had led to disproportionate compliance costs and, in particular, administrative burdens 
for  all  stakeholders.  Furthermore,  weaknesses  in  data  quality,  notably  incomplete  or  inaccurate 
taxpayer identification numbers (TINs), and limitations in  the DAC1 reporting framework reduce the 
effective  use  of  exchanged  information  by  tax  administrations  in  tackling  tax  fraud,  evasion  and 
avoidance 
What is this initiative expected to achieve?  
The  initiative  aims  to  clarify,  simplify  and  improve  the  functioning  of  the  DAC  framework,  while 
preserving its core objective of combating tax fraud, evasion and avoidance. It will reduce complexity 
and  improve  legal  clarity  and  legal  certainty  for  all  stakeholders.  It  will  ensure  that  reporting  and 
notification obligations are proportionate, thereby reducing administrative burdens and contributing to 
the Commission’s political priority of lowering such burdens by at least 25% for businesses and 35% 
for SMEs, to support EU competitiveness. At the same time, it will enhance the relevance and quality 
of reported information and strengthen the effective use of exchanged data by tax authorities. 
What is the value added of action at the EU level?  
EU  action  ensures  a  coherent,  uniform  and  complete  solution  that  cannot  be  achieved  by  Member 
States  acting  individually,  enabling  targeted  reductions  in  reporting  burdens  and  administrative  costs 
for  businesses  across  the  Union.  At  the  same  time,  it  addresses  inefficiencies  in  the  current  DAC 
framework through targeted improvements, enhancing data completeness, quality and the effective use 
of exchanged information.  Overall, this strengthens the capacity of Member States’ tax authorities to 
combat tax fraud, evasion and avoidance and maintains a level playing field in the Internal Market. 

B. Solutions 

What  legislative  and  non-legislative  policy  options  have  been  considered?  Is  there  a  preferred 
choice or not? Why?  
As regards the legislative approach, it is proposed to recast the DAC by: (1) codifying the initial legal 
act (DAC1) and all its subsequent amendments (DAC2-DAC9) into one single legally binding act and 
(2) introducing new substantive changes in line with the preferred policy package stemming from the 
different options assessed. 
The impact assessment considered a baseline scenario (no policy change) and the following targeted 
legislative measures, including different policy options to address identified shortcomings in the DAC 
framework: 
•  Measure  1  –  Ensuring  that  DAC6  reporting  obligations  (cross-border  arrangements)  remain 
proportionate  and  effective  while  promoting  a  more  harmonised  application  of  the  Main  Benefit 
Test (MBT). 

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

DAC7 (income earned through digital platforms). 

•  Measure  3  –  Streamlining  notification  obligations  for  multinational  enterprise  groups  for  the 
purposes  of  DAC4  (country-by-country  reporting)  and  DAC9  (central  filing  of  the  top-up  tax 
information return).  

•  Measure 4 – Improving the accuracy of reported TINs. 
•  Measure  5  –  Improving  the  completeness  of  information  exchanged  under  DAC1  (certain 

categories of income and capital). 

The preferred policy package includes the following options under each measure:  
➢  Excluding all companies within the scope of Pillar 2 Directive from reporting under DAC6; refining 
DAC6 reporting by removing hallmarks with limited added value (category A); issuing guidance on 
the application of the MBT to the remaining hallmarks subject to the test (measure 1). 

➢  Adjusting  DAC7  thresholds  by  removing  the  activity  threshold  and  increasing  the  monetary 

threshold to EUR 3,000 (measure 2). 

➢  Introducing a single notification obligation covering both DAC4 and DAC9, including a harmonised 

filing deadline, a common notification template and central filing (measure 3). 

➢  Introducing  a  centralised  TIN  verification  system,  accessible  to  both  Member  States  tax 

administrations (compulsory) and reporting entities (on a voluntary basis) (measure 4). 

➢  Removing  from  DAC1  the  life  insurance  products  category  and  requiring  Member  States  to 
automatically exchange information available to relevant public authorities at national level on all 
remaining six categories of income and capital (measure 5). 

The preferred option is therefore a combined package of targeted legislative measures accompanied 
by guidance for certain provisions, which ensures simplification, reduces administrative burdens and 
improves  legal  clarity,  while  preserving  the  effectiveness  of  the  framework  in  tackling  tax  fraud, 
evasion and avoidance. It provides the most proportionate and efficient solution by focusing on high-
risk  information  and  eliminating  redundant  or  low-value  reporting,  while  ensuring  consistent 
implementation across Member States and improving the effective use of exchanged information. 

Who supports which option?  

Stakeholders  broadly  support  simplification.  Businesses  and  tax  intermediaries  favour  reducing  low-
value reporting, streamlining notifications and improving clarity. Member States support measures that 
improve efficiency and data quality while maintaining effective tax transparency. Views converge on 
the need for targeted adjustments rather than major structural changes. 
C. Impacts of the preferred option 

What are the benefits of the preferred option (if any, otherwise main ones)? 

The  preferred  policy  package  delivers  significant  simplification  benefits  through  a  set  of  targeted 
measures within the scope of this initiative, reducing compliance costs and administrative burdens for 
both  businesses  and  tax  administrations.  It  removes  low-value  reporting  under  DAC6  and  DAC7, 
where  current  obligations  generate  substantial  costs  for  business,  with  DAC6  compliance  costs 
estimated at up to around EUR 340 million annually and DAC7 costs at around EUR 678 million per 
year.  It  also  streamlines  the  duplicative  notification  obligations  which  support  the  reporting 
requirements  under  DAC4  and  DAC9,  reducing  compliance  costs  that  could  otherwise  reach  up  to 
EUR 264 million annually. In parallel, measures to improve TIN verification enhance data quality and 
increase  automatic  matching  rates,  enabling  more  efficient  and  automated  use  of  exchanged 
information,  have  been  identified.  Improvements  to  the  completeness  of  DAC1  exchanges  further 
strengthen  risk  assessment  and  enforcement.  Overall,  the  preferred  policy  package  improves  the 
efficiency,  effectiveness  and  proportionality  of  the  DAC  framework,  while  supporting  EU 
competitiveness through the reduction of administrative burdens and related costs. 

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What are the costs of the preferred option (if any, otherwise main ones)?  
Limited  adjustment  costs  are  expected  for  businesses  and  administrations  for  most  of  the  measures, 
mainly related to adapting reporting systems and procedures. 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. 
How will businesses, SMEs and micro-enterprises be affected?  
Businesses  will  benefit  from  a  significant  reduction  in  compliance  costs  and  administrative  burdens 
resulting  from  the  simplification  measures  included  in  the  preferred  policy  package,  in  line  with  the 
Commission’s targets of reducing such burdens by at least 25% for businesses and 35% for SMEs. The 
removal of low-value reporting requirements under DAC6 and DAC7, together with the streamlining of 
notification  obligations  related  to  DAC4  and  DAC9,  will  substantially  reduce  unnecessary  reporting 
and  duplication.  SMEs  and  micro-enterprises  are  expected  to  benefit  in  particular  from  the 
simplification  of  reporting  requirements  under  DAC6  and  DAC7,  where  compliance  costs  are 
proportionally higher, while measures related to  DAC4 and  DAC9 mainly  affect  larger multinational 
groups.  Overall,  the  initiative  supports  a  more  favourable  business  environment  and  enhances  EU 
competitiveness. 
Will there be significant impacts on national budgets and administrations?  
Tax  administrations  may  incur  initial  implementation  costs  for  example  with  respect  to  the  TIN 
validation  measure  but  will  benefit  from  reduced  processing  of  low-value  data  and  improved  data 
matching, leading to overall efficiency gains. 
Will there be other significant impacts?   
The  initiative  strengthens  the  functioning  of  the  internal  market,  supports  competitiveness  and 
contributes  to  improved  governance  and  transparency.  This  initiative  is  also  compatible  with  the 
Charter of Fundamental Rights. 

D. Follow up 

When will the policy be reviewed?  
The  policy  will  be  reviewed  through  a  structured  monitoring  and  evaluation  framework.  Monitoring 
will  be  carried  out  on  an  ongoing  basis  using  indicators  such  as  reporting  volumes,  data  quality, 
matching rates and compliance costs, in cooperation with Member States and business stakeholders. In 
line with Article 27 of the DAC, the Commission will carry out an evaluation of the framework every 
five years. This evaluation will assess the effectiveness, efficiency, relevance, coherence and EU added 
value of the initiative, including its impact on administrative burdens and tax compliance. 

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