Category Archives: Tax Evasion

DAC6 Country Profile: Ireland

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In light of the COVID-19 pandemic, Ireland has taken the decision to defer DAC6 reporting by six months

Each EU Member State had until 31 December 2019 to transpose the Directive into local laws and legislation. A letter of formal notice was issued by the EU Commission to 15 EU Member States detailing the infringements of DAC6 application into local law.

We are publishing a series of guides on how each EU member state is implementing DAC6. Our next guide focusses on Ireland’s implementation of DAC6.

Has Ireland implemented DAC6?

Legislation Details

Ireland’s tax authority, the Irish Tax and Customs, published the Irish DAC6 legislation on 3 January 2020. The legislation is called Finance Act no. 45 / 2019, Chapter 3A – Implementation of 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.

Taxes covered

Irish legislation covers cross-border arrangements. The legislation is in line with the EU Directive and does not include domestic arrangements or any additional hallmarks, however, the DAC6 legislation operates in addition to the domestic mandatory disclosure regime introduced in Ireland in 2011.

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HMRC publishes guidance on how DAC6 will work

HMRC has published its ‘final guidance’ on how DAC6 will operate in the UK. It includes details on the interpretation of the hallmarks, penalties and reasonable excuses.

Click here to download HMRC’s DAC6 guidance

This guidance is an update to the draft that HMRC published in March 2020. Although the guidance is ‘final’, HMRC have noted that “there are still a small number of updates to this guidance which are pending and will be made in the coming weeks”.

If you are familiar with the guidance from March, you can download a comparison between the draft and final DAC6 guidance.

DAC6 Country Profile: Belgium

Belgium flag
In light of the COVID-19 pandemic, Belgium has decided to defer DAC6 reporting by six months

Each EU Member State had until 31 December 2019 to transpose the Directive into local laws and legislation. A letter of formal notice was issued by the EU Commission to 15 EU Member States detailing the infringements of DAC6 application into local law.

We are publishing a series of guides on how each EU member state is implementing DAC6. Our next guide focusses on Belgium’s implementation of DAC6.

Has Belgium implemented DAC6?

Legislation Details

The Federal Public Service FINANCE (Ministry of Finance) published the Belgian DAC6 legislation on 21 December 2019. The legislation is called Loi transposant la Directive (UE) 2018/822 du Conseil du 25 mai 2018 modifiant la Directive 2011/16/UE en ce qui concerne l’échange automatique et obligatoire d’informations dans le domaine fiscal en rapport avec les dispositifs transfrontières devant faire l’objet d’une déclaration.

Taxes covered

Belgian legislation covers cross-border arrangements. The legislation is in line with the EU Directive and does not include domestic arrangements or any additional hallmarks.

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DAC6 training updated to reflect EU Commission’s reporting delay

DAC6 is a European regulation aimed at tackling tax avoidance and tax evasion, strengthening tax transparency and improving information sharing between EU Member States. The Directive requires lawyers, accountants, tax advisers, bankers and other “intermediaries” to report certain aggressive cross-border arrangements. 

VinciWorks’ DAC6 training is recommended in order to understand the intricacies of these hallmarks and to determine which transactions must be reported.

Due to the Covid-19 pandemic, the European Commission has confirmed an optional deferral of the implementation of DAC6 by six months. Each member state will now decide whether they will avail themselves of the optional deferral. Most countries are set to defer reporting, with several, including the UK, Ireland and France already having announced their intentions to defer reporting. We will continue to update this blog as more countries decide on whether and how to implement the new timeline.

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EU allows delay of up to six months for DAC6 reporting

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Updated 1 July 2020

On 3 June, 2020, Member State representatives reached an agreement to allow an optional six-month deferral of reporting deadlines for DAC6.

On 19th June 2020, the European Parliament voted in favour of the EU Commission’s proposed deferral and on 24th June the European Union Council approved the postponement.

What is the next step towards a DAC6 postponement?

It is now up to each EU member state to decide if they will avail themselves of the optional deferral. It seems likely that most member states will defer and many have already announced their intentions.

What is the new DAC6 timeline?

  • Historical arrangements where first steps were implemented between 25 June 2018 and 30 June 2020: Optional deferral until 28 February 2021
  • First transfer of information between EU Member States: 30 April 2021
  • New arrangements where the reporting triggers are met between 1 July 2020 and 31 December 2020: The 30 day filing period begins 1 January 2021
  • Marketable Arrangements: First periodic report expected by 30 April 2021

Countries deferring DAC6

The following countries have announced their intentions to avail themselves of this optional extension now that it has been approved by the European Council.

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DAC6 Country Profile: Germany

VinciWorks is publishing a series of guides on how each EU member state is implementing DAC6.

Bundestag

Each EU Member State had until 31 December 2019 to transpose the Directive into local laws and legislation. A letter of formal notice was issued by the EU Commission to 15 EU Member States detailing the infringements of DAC6 application into local law.

Has Germany implemented DAC6?

Legislation Details

The German Ministry of Finance (Bundesministerium der Finanzen) published the German DAC6 legislation on 21 December 2019. The legislation is called Gesetz zur Einführung einer Pflicht zur Mitteilung grenzüberschreitender Steuergestaltungen (Law for the introduction of an obligation to report cross-border tax arrangements).

Taxes covered

German legislation covers cross-border arrangements. The legislation is in line with the EU Directive and does not include domestic arrangements or any additional hallmarks.

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Is DAC6 the next target for HMRC’s Corporate Criminal Offence (CCO) audits?

HMRC has stepped up their Corporate Criminal Offence (CCO) investigations. HMRC recently responded to a Freedom of Information request that showed that on 31 December 2019, HMRC had 9 live investigations and 21 further opportunities under review in various industry sectors. The results of these audits will be made public as soon as appropriate to do so. 

What is a Corporate Criminal Offence (CCO) audit?

The Corporate Criminal Offences (CCO) for the failure to prevent the facilitation of tax evasion were introduced by Part 3 of the Criminal Finances Act 2017. HMRC has made government guidance available. The UK government also plans to create a new Anti-Tax Evasion Unit within HMRC to step up the investigations for Corporate Criminal Offences.

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Automatic workflows for every member state now built into DAC6 reporting tool

Comprehensive intelligence that adapts to the nature and reporting country of the arrangement

Attempting to determine whether an arrangement should be reported under DAC6 is not simply a matter of reading the Directive or the Hallmarks. Each EU member state has transposed DAC6 into local law, many times with slight modifications.

VinciWorks’ DAC6 reporting tool features built-in workflow rules and expert knowledge for every member state. These workflows are available out-of-the-box and require no configuration.

The DAC6 reporting tool:

  • Provides country-specific guidance for every member state in English
  • Includes translated versions of some key government documents
  • Adapts the workflow to each member state’s requirements
  • Prompts the user to add local translations of the arrangement details where needed
  • Detects when domestic transactions should be reported
  • Is ready for automatic reporting in multiple jurisdictions with built-in XML schemas

This automatic intelligence and workflow was built in collaborate with international tax experts and is based on our comprehensive guide to DAC6 implementation across Europe.

To illustrate this, here are a number of examples from the DAC6 reporting tool.

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Law Society publishes guidance on DAC6 and legal professional privilege

DAC6 is an EU directive that requires lawyers (and other intermediaries) to report certain cross border tax arrangements to local tax authorities.

There is a provision within DAC6 that exempts lawyers from reporting, where a report would breach legal professional privilege. In such a case, the lawyer is expected to notify the taxpayer (and in some cases other intermediaries) of their disclosure obligations under the rules, provided that doing so does not itself breach legal professional privilege.

The Law Society of England and Wales has just published its guidance on LPP.

The main points from the Law Society are as follows:

  • Before making a DAC6 report to HMRC, lawyers should ask themselves whether any information in the report would reveal the substance or subject matter of confidential communications that have passed between them and their clients in the context of providing legal advice
  • In most cases, the Law Society expects that LPP will prevent a lawyer who has advised a client about a reportable cross-border arrangement from making a report under DAC6
  • If LPP applies, the lawyer must inform the client about their obligation to report under DAC6
  • If a lawyer makes a report to HMRC under DAC6, HMRC should send them an arrangement reference number. Although it probably does not breach LPP, lawyers should assess LPP before sharing the arrangement number with other intermediaries
  • Clients can waive LPP, but lawyers cannot
  • Privilege can be waived at any time, but it should be waived unambiguously and in writing
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On-demand webinar: DAC6 for multinationals – An overview of VinciWorks’ DAC6 reporting solution

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Any company that undertakes international tax arrangements could be affected by DAC6. Reports may be made by professional advisers, known as “intermediaries”, that advise on the arrangements, but where an arrangement is organised in-house or the intermediary cannot report for another reason, the responsibility falls on the taxpayer to file their own report.

VinciWorks has been in close consultation with HMRC, other tax regulators and over 100 leading international firms to establish the implications of the EU Directive and build a reporting solution to help businesses comply.

In this webinar, we covered the core features of our software and shared guidance on how international businesses can use it to report and track transactions.

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