DAC6: EU Mandatory Disclosure Regime
New tax transparency initiative increases reporting requirements
The EU is introducing a new regime to increase the level of transparency surrounding potential loopholes and harmful tax practices. With stricter disclosure applicable from June 2018 and entering into force for certain EU countries by mid-2020 (subject to an optional 6 month deferral), this represents one of the most significant changes for tax advisors, service providers and taxpayers in recent years.
Let’s make this work.
The sixth version of the EU Directive on administrative cooperation (DAC6) aims to provide Member States tax authorities with additional information in order to assist them to more rapidly close perceived loopholes in tax legislation and harmful tax practices. Taxpayers and intermediaries entering into or advising on cross border arrangements involving EU jurisdictions will need to monitor where reporting will be required and disclose as necessary.
Who does it affect?
DAC6 requires EU intermediaries to file information on RCBAs to their home tax authorities. Where no EU intermediary is involved or the intermediary asserts legal professional privilege, the reporting obligation will fall instead to the EU taxpayer. Failure to comply will result in penalties.
The definition of an intermediary is broad, capturing lawyers and advisers, and is expected to apply to banks, trustees, insurance companies, asset managers and other service providers.
Such intermediaries will be required to report on RCBAs that involve at least one EU Member State, where certain ‘hallmarks’ are met.
Timeline
The directive initially provided a one-off reporting deadline in August 2020 for arrangements implemented between 25 June 2018 and 1 July 2020, with a 30-day rolling window for reporting new arrangements from then onwards. In June 2020, the European Council announced an optional six-month delay to reporting deadlines and exchange of information until the beginning of 2021. Certain member states have opted to implement this delay into domestic law whereas others are maintaining the initial deadline, resulting in differing reporting timelines across the EU.
Failure to meet these requirements and deadlines may result in financial penalties and reputational damage.
MDR Reporter
We’ve designed our MDR Reporter tool to provide you with one place to go to address all of your compliance needs to help you meet the DAC6 regulations. MDR Reporter can act as a repository to track all potentially relevant arrangements, allow users to apply local rules to help determine whether reporting will be required and provide a simple process for seamless and efficient reporting. With the decision making process being documented in real time, MDR Reporter will also provide you with the audit trail you need for any subsequent investigation.
How can we help?
Deloitte is working closely with tax authorities and industry bodies to track implementation of DAC6 across the EU. While additional clarifications will be needed in order to implement the rules, there are certain steps that businesses should be planning for now:
Strategy: Mobilising your business’ response to the requirements, discussing policy and raising awareness at board level and establishing a plan for efficient compliance.
Impact assessment: Identifying transactions or structures potentially affected by the hallmarks and considering where reporting responsibility will reside.
Technology: Selecting a solution for capturing arrangements that aligns with local requirements, and integrates with reporting.
Training: Raising awareness within the business though eLearning modules as well as bespoke training programmes.
Monitoring: Tracking regulatory changes and to make the relevant source information accessible to affected intermediaries and taxpayers.
To discuss the implications of DAC6 on your business in more detail please contact us.
Mandatory Disclosure Regime (MDR)
Countries are implementing mandatory disclosure rules aimed at increasing transparency to detect what is perceived by tax authorities to be potentially aggressive cross-border tax planning. We can work with you to identify and help manage cross-border reporting obligations by leveraging our global network and up-to-date tools.
The team
What EY can do for you
MDR will lead to extensive reporting obligations for a relatively wide range of transactions being classified as reportable arrangements. No jurisdiction other than Mexico has introduced any de minimis rules. Taxpayers and intermediaries (e.g. advisors, banks etc.) must implement policies, procedures and processes to identify and capture details of transactions that they may need to disclose. Penalties can be significant.
EY teams across the world can help taxpayers and intermediaries (e.g., advisors, banks etc.) identify and manage their obligations under the MDR.
Do you have a process to manage your MDR obligations?
Why is this relevant?
Have you appointed a person as the process owner for MDR compliance and are the responsibilities for MDR reporting defined within your organization? Why is this relevant?
Have you conducted an MDR impact assessment? If so, what was the outcome for the countries where you have a footprint?
Why is this relevant?
Other stakeholders may request this information (e.g., internal audit, external auditors, tax authorities, etc).
Do you have a process to understand what has been reported by your intermediaries (e.g. advisors, banks etc.)?
Why is this relevant?
Do you have a process to meet the 30-day deadline in the EU, Mexico and the UK or 10- day deadline in Argentina?
Why is this relevant?
EY teams can assist you with the reporting of your arrangements in the format as requested by the local tax authorities.
Why choose MDR Web
MDR Web — the EY cross-border assessment tool, described in the video above — is designed to evaluate, log and report cross-border arrangements.
MDR Web functionality
Challenges for taxpayers
Taxpayers will need to take appropriate measures to put in place policies, procedures and processes to identify and capture details of transactions that they will need to disclose themselves.
The taxpayer’s advisors will disclose using information available to them. The tight reporting deadlines may result in inconsistent reporting which may lead to unwarranted tax audits. On complex arrangements, taxpayers will need to identify and consult with their advisors to achieve coordinated and consistent reporting.
Challenge for intermediaries
Certain organizations will meet the criteria to be regarded as an intermediary, for example financial institutions and other providers of tax advice. Intermediaries will need to develop systems and governance processes to report the qualifying arrangements that they have advised clients on, or assisted clients with. For example:
To learn more, explore our guidance for taxpayers and intermediaries
DAC 6 updates
This newsletter and table provides insight and technical information leading up to DAC 6 implementation on 1 July 2020.
Alerts about MDR
Are you staying up-to-date on timely analysis related to MDR? Check out the latest developments and country-specific updates
Understanding the elements of MDR compliance and how to prepare (Financial Services)
Discover more on the potential impact of MDR on your business.
Webcast: EU DAC6 Mandatory Disclosure Regime (MDR)
Panelists discuss the latest in country developments, practical reporting considerations and navigating the COVID-19 impact.
Webcast: EU MDR update and practical insights
Panelists discuss what taxpayers should do to implement internal controls and procedures to manage their MDR obligations.
MDR webcast replays
The team
Join the conversation
Our latest thinking
Contact us
Like what you’ve seen? Get in touch to learn more.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
EY | Assurance | Consulting | Strategy and Transactions | Tax
About EY
EY is a global leader in assurance, consulting, strategy and transactions, and tax services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.
© 2020 EYGM Limited. All Rights Reserved.
This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.
Welcome to EY.com
We have detected that you have enabled the Do Not Track setting in your browser; as a result, Advertising/Targeting cookies are automatically disabled.
You may withdraw your consent to cookies at any time once you have entered the website through a link in the privacy policy, which you can find at the bottom of each page on the website.
Review our cookie policy for more information.
Mandatory Disclosure Regime (MDR)
Countries are implementing mandatory disclosure rules aimed at increasing transparency to detect what is perceived by tax authorities to be potentially aggressive cross-border tax planning. We can work with you to identify and help manage cross-border reporting obligations by leveraging our global network and up-to-date tools.
The team
What EY can do for you
MDR will lead to extensive reporting obligations for a relatively wide range of transactions being classified as reportable arrangements. No jurisdiction other than Mexico has introduced any de minimis rules. Taxpayers and intermediaries (e.g. advisors, banks etc.) must implement policies, procedures and processes to identify and capture details of transactions that they may need to disclose. Penalties can be significant.
EY teams across the world can help taxpayers and intermediaries (e.g., advisors, banks etc.) identify and manage their obligations under the MDR.
Do you have a process to manage your MDR obligations?
Why is this relevant?
Have you appointed a person as the process owner for MDR compliance and are the responsibilities for MDR reporting defined within your organization? Why is this relevant?
Have you conducted an MDR impact assessment? If so, what was the outcome for the countries where you have a footprint?
Why is this relevant?
Other stakeholders may request this information (e.g., internal audit, external auditors, tax authorities, etc).
Do you have a process to understand what has been reported by your intermediaries (e.g. advisors, banks etc.)?
Why is this relevant?
Do you have a process to meet the 30-day deadline in the EU, Mexico and the UK or 10- day deadline in Argentina?
Why is this relevant?
EY teams can assist you with the reporting of your arrangements in the format as requested by the local tax authorities.
Why choose MDR Web
MDR Web — the EY cross-border assessment tool, described in the video above — is designed to evaluate, log and report cross-border arrangements.
MDR Web functionality
Challenges for taxpayers
Taxpayers will need to take appropriate measures to put in place policies, procedures and processes to identify and capture details of transactions that they will need to disclose themselves.
The taxpayer’s advisors will disclose using information available to them. The tight reporting deadlines may result in inconsistent reporting which may lead to unwarranted tax audits. On complex arrangements, taxpayers will need to identify and consult with their advisors to achieve coordinated and consistent reporting.
Challenge for intermediaries
Certain organizations will meet the criteria to be regarded as an intermediary, for example financial institutions and other providers of tax advice. Intermediaries will need to develop systems and governance processes to report the qualifying arrangements that they have advised clients on, or assisted clients with. For example:
To learn more, explore our guidance for taxpayers and intermediaries
DAC 6 updates
This newsletter and table provides insight and technical information leading up to DAC 6 implementation on 1 July 2020.
Alerts about MDR
Are you staying up-to-date on timely analysis related to MDR? Check out the latest developments and country-specific updates
Understanding the elements of MDR compliance and how to prepare (Financial Services)
Discover more on the potential impact of MDR on your business.
Webcast: EU DAC6 Mandatory Disclosure Regime (MDR)
Panelists discuss the latest in country developments, practical reporting considerations and navigating the COVID-19 impact.
Webcast: EU MDR update and practical insights
Panelists discuss what taxpayers should do to implement internal controls and procedures to manage their MDR obligations.
MDR webcast replays
The team
Join the conversation
Our latest thinking
Contact us
Like what you’ve seen? Get in touch to learn more.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
EY | Assurance | Tax | Transactions | Advisory
About EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.
© 2019 EYGM Limited. All Rights Reserved.
This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.
Welcome to EY.com
We have detected that you have enabled the Do Not Track setting in your browser; as a result, Advertising/Targeting cookies are automatically disabled.
You may withdraw your consent to cookies at any time once you have entered the website through a link in the privacy policy, which you can find at the bottom of each page on the website.
Review our cookie policy for more information.
Mandatory Disclosure Regime (MDR)
Countries are implementing mandatory disclosure rules aimed at increasing transparency to detect what is perceived by tax authorities to be potentially aggressive cross-border tax planning. We can work with you to identify and help manage cross-border reporting obligations by leveraging our global network and up-to-date tools.
The team
What EY can do for you
MDR will lead to extensive reporting obligations for a relatively wide range of transactions being classified as reportable arrangements. No jurisdiction other than Mexico has introduced any de minimis rules. Taxpayers and intermediaries (e.g. advisors, banks etc.) must implement policies, procedures and processes to identify and capture details of transactions that they may need to disclose. Penalties can be significant.
EY teams across the world can help taxpayers and intermediaries (e.g., advisors, banks etc.) identify and manage their obligations under the MDR.
Do you have a process to manage your MDR obligations?
Why is this relevant?
Have you appointed a person as the process owner for MDR compliance and are the responsibilities for MDR reporting defined within your organization? Why is this relevant?
Have you conducted an MDR impact assessment? If so, what was the outcome for the countries where you have a footprint?
Why is this relevant?
Other stakeholders may request this information (e.g., internal audit, external auditors, tax authorities, etc).
Do you have a process to understand what has been reported by your intermediaries (e.g. advisors, banks etc.)?
Why is this relevant?
Do you have a process to meet the 30-day deadline in the EU, Mexico and the UK or 10- day deadline in Argentina?
Why is this relevant?
EY teams can assist you with the reporting of your arrangements in the format as requested by the local tax authorities.
Why choose MDR Web
MDR Web — the EY cross-border assessment tool, described in the video above — is designed to evaluate, log and report cross-border arrangements.
MDR Web functionality
Challenges for taxpayers
Taxpayers will need to take appropriate measures to put in place policies, procedures and processes to identify and capture details of transactions that they will need to disclose themselves.
The taxpayer’s advisors will disclose using information available to them. The tight reporting deadlines may result in inconsistent reporting which may lead to unwarranted tax audits. On complex arrangements, taxpayers will need to identify and consult with their advisors to achieve coordinated and consistent reporting.
Challenge for intermediaries
Certain organizations will meet the criteria to be regarded as an intermediary, for example financial institutions and other providers of tax advice. Intermediaries will need to develop systems and governance processes to report the qualifying arrangements that they have advised clients on, or assisted clients with. For example:
To learn more, explore our guidance for taxpayers and intermediaries
DAC 6 updates
This newsletter and table provides insight and technical information leading up to DAC 6 implementation on 1 July 2020.
Alerts about MDR
Are you staying up-to-date on timely analysis related to MDR? Check out the latest developments and country-specific updates
Understanding the elements of MDR compliance and how to prepare (Financial Services)
Discover more on the potential impact of MDR on your business.
Webcast: EU DAC6 Mandatory Disclosure Regime (MDR)
Panelists discuss the latest in country developments, practical reporting considerations and navigating the COVID-19 impact.
Webcast: EU MDR update and practical insights
Panelists discuss what taxpayers should do to implement internal controls and procedures to manage their MDR obligations.
MDR webcast replays
The team
Join the conversation
Our latest thinking
Like what you’ve seen? Get in touch to learn more.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
EY | Assurance | Consulting | Strategy and Transactions | Tax
About EY
EY is a global leader in assurance, consulting, strategy and transactions, and tax services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.
© 2020 EYGM Limited. All Rights Reserved.
This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.
Welcome to EY.com
We have detected that you have enabled the Do Not Track setting in your browser; as a result, Advertising/Targeting cookies are automatically disabled.
You may withdraw your consent to cookies at any time once you have entered the website through a link in the privacy policy, which you can find at the bottom of each page on the website.
Review our cookie policy for more information.
Mandatory Disclosure Regime (MDR)
The EU introduced a directive on mandatory disclosure rules aimed at increasing transparency to detect potentially aggressive cross-border tax planning. We can work with you to identify and manage cross-border reporting obligations by leveraging our global network and up-to-date tools.
The team
What EY can do for you
The European Union (EU) Mandatory Disclosure Regime (MDR) will lead to extensive reporting obligations for a relatively wide range of tax arrangements, and there are no minimum threshold exceptions. Taxpayers and intermediaries must implement policies, procedures and processes to identify and capture details of transactions that they will need to disclose. On complex arrangements, taxpayers will need consult with their advisors. Penalties can be significant.
EY teams across the world can help taxpayers and intermediaries identify and manage their obligations under the MDR by:
Understanding the elements of MDR compliance and how to prepare (Financial Services)
Discover more on the potential impact of MDR on your business.
Also, MDR Web — the EY cross-border assessment tool, described in the video above — is designed to evaluate, log and report cross-border arrangements. Through it, you can also access our technical guidance on the interpretation of Directive on Administrative Cooperation 6 (DAC 6) and country legislation.
Start your discussion on MDR compliance today — and, through careful planning, position yourself for readiness on Day One.
Legislative overview
To increase fiscal transparency across the EU, the DAC 6 entered into force on 25 June 2018, requiring intermediaries — such as EU-based tax consultants, banks and lawyers — to report cross-border transactions and tax arrangements that the EU considers potentially aggressive, featuring certain hallmarks (such as deductible payments exempt of taxation at recipient level). If there are no intermediaries that can report, the obligation will shift to the taxpayers.
Under the MDR, cross-border arrangements where the first step is taken after 25 June 2018 and before 1 July 2020 must be reported no later than 31 August 2020, and Member States will automatically exchange this information. After 1 July 2020, intermediaries and taxpayers will be required to report within 30 days of a triggering event in respect of any tax arrangements.
Member States must adopt and publish domestic legislation to comply with DAC 6 by 31 December 2019. Some Member States may require earlier reporting and extend the scope of domestic legislation beyond the requirements of the Directive — for instance, to cover VAT, domestic arrangements or introduce additional hallmarks.
Challenges for taxpayers
Taxpayers undertaking activities in the EU covered by the Directive will have an obligation to disclose in situations where:
The taxpayer will need to take appropriate measures to put in place policies, procedures and processes to identify and capture details of transactions that they will need to disclose themselves.
The taxpayer’s advisors will disclose using information available to them. The tight reporting deadlines imposed by the MDR may result in inconsistent reporting which may lead to unwarranted tax audits. On complex arrangements, taxpayers will need to identify and consult with their advisors to achieve coordinated consistent reporting.
The EU Member States have until 31 December 2019 to implement DAC 6. Current indications are that certain countries will or have extended their legislation to widen the scope to cover VAT, domestic arrangements, other hallmarks or bring the timing of reporting forward. It is worth noting that the additional information beyond the scope of the minimum standards as set out by DAC 6 should not be subject to exchange between Member States. Clients will need to keep abreast of country developments to meet local reporting requirements as some countries have chosen to apply significant penalties for non-compliance.
Challenge for intermediaries
Certain organizations will meet the criteria to be regarded as an intermediary, for example financial institutions and other providers of tax advice. Intermediaries will need to develop systems and governance processes to report the qualifying arrangements that they have advised clients on, or assisted clients with. For example:
