Tax Evasion Archives | Page 15 of 17

DAC6 Events Tax Evasion Thought Leadership
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On-demand webinar: DAC6 — Understanding tax disclosure requirements

The Economic and Financial Affairs Council of the European Union (ECONFIN) has adopted the 6^th Directive on Administrative Cooperation (“DAC6”), requiring tax intermediaries to report certain cross border arrangements. Under DAC6, intermediaries may be required to submit all cross-border transactions and backdate them when member states publicise their requirements.

In this webinar, Legal and Research Executive Ruth Cohen and Director of Best Practice Gary Yantin helped dissect the new regulation and gave guidance on reporting and training requirements under DAC6.

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DAC6 Core Group roundtable meeting summary

Ruth Cohen, VinciWorks' Legal and Research Executive — Ruth Cohen, VinciWorks’ Legal and Research Executive

“DAC6 is one of the most difficult pieces of regulation that a firm has to implement”

VinciWorks hosted a roundtable meeting with representatives from over 20 firms to discuss DAC6 and its implementation. Here are the key takeaways from the conversation.

1. Who is responsible for submitting initial DAC6 data if a transaction may be reportable?

In the pre-meeting survey, the responses showed that the main people who would potentially submit initial data would be partners, associates, or nominated jurisdiction representatives. A staggering 50% of the respondents noted that they were unsure who would submit the initial information at this stage. During the discussion it was mentioned by some firms that fee earners would be the ones who would decide if this transaction was reportable, then there would be a second level of quality check to confirm if it was a reportable transaction.

DAC6 compliance – Category C: Specific hallmarks relating to cross-border transactions – which transactions should you be aware of?

On 25 May 2018, the Economic and Financial Affairs Council of the European Union (ECOFIN) adopted the 6th Directive on Administrative Cooperation (the “DAC6”), requiring so-called tax intermediaries to report certain cross-border arrangements that contain at least one of the hallmarks as defined in DAC6.

Within DAC6, there are five different hallmark categories that represent an indication that a transaction may have a potential risk of tax avoidance.

This blog will focus on the category C hallmarks which are classified as generic hallmarks, and may include one of the following:

1. Cross Border Payments – Deductible cross border payments in certain cases where one of the following occurs:

a. The recipient is not a tax resident in any jurisdiction.

b. The recipient is a tax resident in a jurisdiction with zero or near zero corporate tax rate.

c. The recipient is included in a list of third-country states considered non-cooperative by EU Member states or the OECD.

d. The payment has a full tax exemption in the jurisdiction of the resident.

e. The payment benefits from a preferential tax regime where the recipient is resident.

DAC6 compliance – Category B: Specific hallmarks – which transactions should you be aware of?

Within DAC6, there are five different hallmark categories that represent an indication that a transaction may have a potential risk of tax avoidance.

This blog will focus on the category B hallmarks which are classified as specific hallmarks, and may include one of the following:

Acquiring loss-making companies: Trading in loss-making companies to reduce tax liability.
Income conversion: Conversion of income into lower-taxed revenue streams.
Circular transactions: An artificial transaction between companies in a group, or under single control, the purpose of which is to inflate the turnover of one or more of the companies.

Course & Product Updates DAC6 Tax Evasion Thought Leadership
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3 min read

DAC6 training and reporting tools

DAC6 training flowchart screenshot — The DAC6 interactive flowchart allows users to gain a clear understanding of which hallmarks and categories they are required to report on

The Economic and Financial Affairs Council of the European Union (ECONFIN) adopted the 6th Directive on Administrative Cooperation (“DAC6”) requiring tax intermediaries to report certain cross border arrangements.

The new EU rules which aim to clamp down on aggressive tax planning are set to impose a huge compliance burden on taxpayers and their advisers, potentially even in circumstances where there is no tax benefit at all.

VinciWorks’ DAC6 course, DAC6: Fundamentals, will help all entities who may be considered tax intermediaries develop an understanding of DAC6. The course follows a flow-chart navigation and includes example scenarios to help users understand DAC6. VinciWorks also offers a DAC6 reporting tool to help intermediaries easily keep track of and report cross-border transactions.

Poland becomes first country to incorporate DAC6 into local legislation

Polish Parliament — Poland has brought DAC6 into national law well ahead of schedule, meaning some businesses will already have to comply with DAC6

The deadline for each EU Member State to transpose the Directive into national law and legislation is 31 December 2019.

On 31 January 2019, Poland’s Finance Ministry (MOF) published a 102-page guidance document on the country’s new tax reporting requirements which apply retroactively from 1 January 2019, and these included the implementation of DAC6. This is earlier than the 1 July 2020 obligation as stipulated in DAC6, therefore anyone dealing with Polish transactions should ensure they have DAC6 reporting measures in place already.

Free download: DAC6 guide to compliance

DAC6: Will you need to report?

The EU has introduced a new law that imposes mandatory disclosure requirements for certain cross-border transactions. Known as DAC6, the law requires intermediaries to report cross-border tax planning arrangements which involve at least one EU Member State, where the transaction falls into a number of hallmarks. This means businesses will be required to:

Monitor cross-border arrangements
Assess reportability of arrangements
Identify correct tax authority
Report arrangements to local tax authority

As the August 2020 reporting deadline approaches, we’re seeing varying degrees of awareness and compliance among firms and intermediaries.

Since most cross-border arrangements have potential tax implications, how are you assessing which ones will require reporting? Are you proactively documenting every single cross-border deal just to be safe? Some firms are requiring lawyers to indicate DAC6 relevant transactions when they open a case file. Others are wondering which deals are relevant, while some are just learning about the reporting requirements.

VinciWorks has designed a DAC6 risk assessment to help intermediaries understand the risk exposure of their cross-border transactions.

Take the DAC6 risk assessment

GDPR Money Laundering News Tax Evasion Thought Leadership
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4 min read

GDPR and Section 11 of the Criminal Finances Act 2017

Judge sitting at his desk

Section 11 of the Criminal Finances Act 2017 amends the Proceeds of Crime Act (POCA) and affects the regulated sector. The new data sharing regime enables regulated persons to request and share information with their regulated peers, free in most respects from contravening the EU’s General Data Protection Regulations (GDPR). Any disclosure “made in good faith” that does not breach any duties of confidence or “any other restriction on the disclosure of information”.

The purpose is to encourage the sharing of information from different entities in the regulated sector and better enable the collation of multiple reports of potential money laundering into a single Suspicious Activity Report (SAR).
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Money Laundering News Tax Evasion Thought Leadership
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6 min read

What is the Unexplained Wealth Order?

Harrods, Central London — Zamira Hajiyeva spent an average of £4,000 a day in Harrods over 10 years

A woman who spent nearly £16m over a decade in Harrods and once spent £150,000 in a single day became the first target of the recently-introduced Unexplained Wealth Order (UWO). Under this provision of the Criminal Finances Act, which came into force on 31 January 2018, the Azerbaijan international, Zamira Hajiyeva, must give proof of how she and her husband can afford their luxury lifestyle. This includes a £15m home in Central London, an average spend of £4,000 a day at Harrods over ten years and a £10m golf course near Ascot. Should she not have an adequate explanation, she would be the first to be brought to account for unexplained wealth.

Anti-bribery GDPR Money Laundering News Risk Tax Evasion Thought Leadership
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1 min read

The guide to risk based third party due diligence

When your organisation is using third parties, it is essential to complete your own due diligence equal to the risk faced from the said relationship. With businesses and partnerships around the world growing, it is essential to make sure all your relationships and third parties are legal and legitimate. VinciWorks’ guide to risk based third party due diligence will give you a clearer understanding of how to conduct a detailed and genuine risk assessment.

Download guide

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