Cross-border tax planning arrangements: who is concerned?

By Laurence Clot, Sophie Dorin, Alexandre Polak, Thibaut Hubert


The transposition of Directive (EU) 2018/822, known as DAC 6 entered into force on June 25, 2018, must be adopted and published by 31 December 2019 at the latest. Its application will begin on the 1st July, 2020 but will target the reportable structures which first step was implemented between June 25, 2018 and July 1, 2020 and which will have to be declared between July 1, 2020 and August 31, 2020. This directive amends Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements.

The purpose of this directive is to ensure cooperation between the administrations of the Member States to create an environment of fair taxation in the internal market. Thus, the Directive requires the obligation to report information on potentially aggressive cross-border tax planning arrangements. A cross-border arrangement involves either more than one Member State or a Member State and a third country provided that certain specific conditions are met.

The obligation to inform the tax authorities of these arrangements is addressed to intermediaries having a territorial link with the EU. The Directive proposes a very broad notion of intermediary, which includes bankers, accountants, lawyers, notaries from the moment they satisfy the extensive definition it provides

The text of the Directive recognizes that the obligation to declare must not be enforceable upon an intermediary due to a legal professional privilege. So, in order to avoid the tax authorities losing the opportunity to receive information about tax-related arrangements that are potentially linked to aggressive tax planning, the intermediary covered by the professional privilege must notify the reporting obligation to any other intermediary involved in the operation. If there is no another intermediary, the reporting obligation is shifted to the taxpayer who benefits from the arrangement.

To identify the aggressive tax-planning arrangements, the Directive provides a list of "hallmarks" which, coupled with other indicators, make it possible to apprehend transactions that present a strong indication of tax avoidance or abuse practices.

Member States shall lay down the rules on penalties applicable to infringements of national provisions adopted, penalties which must be effective, proportionate and dissuasive.