D.A.C.6 Implementation in Luxembourg – Risk of Multiple Reporting Obligations

Volume 8 No 2    /    Read Article

By Sonia Belkhiri and Jiar Al-Zawity (Guest Authors)

D.A.C.6 is the latest European Union Directive on Administrative Cooperation. It requires Intermediaries, and in some cases taxpayers, to report a wide range of “potentially aggressive tax planning arrangements” to tax authorities. The Directive became effective on July 1, 2020. It imposes obligations to report transactions entered into from June 25, 2018. It introduced the concept of “Hallmarks” into European tax law, albeit with a sense somewhat different to its more everyday usage.

There are three means of legislating within the European Union: by Directive, by Regulation, and by Decision. In comparison to Regulations and Decisions, Directives must be transposed into national law by each Member State. As a Directive, D.A.C.6 provides for a general legal framework that can be considered as the minimum standard for achieving its stated purposes. However, the reality with respect to Directives has been to move away from the “framework” and towards the issuance of more detailed provisions. This shift leaves the Member States less wriggle room when transposing the Directive into national law.

In their article entitled “D.A.C.6 Implementation in Luxembourg – Risk of Multiple Reporting Obligations Exists,” Sonia Belkhiri and Jiar Al-Zawity of Wilson Associates, International Lawyers, Luxembourg, discuss official guidance to date and caution of the likelihood that exists for double counting reporting mechanisms. Their view is that the limited clarification within the commentaries to the draft law in Luxembourg and the State Council opinion have not been followed by the Luxembourg Government. Practical guidance from the Luxembourg tax authority has not been sufficient.

The article is part of a nine-country survey of D.A.C.6 implementation published in the March edition of Insights, the international tax journal of Ruchelman P.L.L.C.   See more →