DAC6 reporting: Ten steps to streamlined compliance

DAC6 regulations are complex. There are varying inconsistencies between EU countries, and regulations evolve over time. The sixth version of the European Union’s Directive on Administrative Cooperation is already impacting multinational companies that have cross-border tax arrangements in the EU by requiring stricter disclosure of activities. Mandatory reporting is soon expected to spread globally and affect more organizations worldwide.

There are big changes to previous rules – and compliance is nuanced. DAC6 experts Gratian Joseph, CEO of Orbitax, and David Gassman, director of tax operations at Cowen, Inc., break down and analyze challenges that arise. Potential difficulties for following DAC6 include understanding the latest language used in regulations, knowing when and what to report, and creating a concise team workflow for clear documentation. Failure to comply with new DAC6 reporting can cause reputational and monetary damage for companies. This makes keeping logical records and documentation of cross-border tax, whether they may require reporting or not, and creating a strong organizational system for reporting key as the mandatory disclosure regime (MDR) is updated and redefined. Joseph and Gassman provide clear and helpful guidance for any company striving to get ahead of every DAC6 pressure-point.

Details from new DAC6 regulations

• Companies will be expected to keep track of any potential for reporting arrangements within 30 days. Clear reasons for not reporting are also crucial in case of inquiry.
• Definitions of suspect transactions are now called “hallmarks,” wide ranging characteristics that require companies to be diligent in their understanding and documentation of every cross-border transaction.
• EU countries differ in their implementation of DAC6 requirements and call for routinely updated clarifications.

In this whitepaper, we explore:

• DAC6 details and compliance
• Hallmark categories and subcategories
• A case study experience with early adopter Cowen, Inc.
• The scope of reporting and recording transactions
• A single, global, scalable tool for managing DAC6