EU Directive on Mandatory Disclosure Rules (MDR)/DAC6) Directive implementation

In the Netherlands, the implementation of the EU Directive on Mandatory Disclosure Rules (MDR)/DAC6) will occur on 1 January 2021, and as such is delayed due to the Covid-19 pandemic since the original implemenation date was 1 July 2020.

As of 1 January 2021, cross-border constructions that meet one or more hallmarks must be reported. You will find a list of these hallmarks in the DAC6 directive.

For a number of essential hallmarks, you only need to report the construction when the most important advantage (or 1 of the most important advantages) of the construction is the achievement of a tax advantage.

Who needs to report?
Any intermediary involved in a reportable cross-border arrangement. There are 2 exceptions to this rule. You do not need to report the reportable cross-border arrangement in the following cases:

• another intermediary has already reported the construction. And this intermediary has provided you with a reference number as proof.
• a lawyer, invoking an attorney-client privilege right.

The DAC6 guideline applies to all intermediaries. For example: tax advisers, lawyers, accountants, notaries, financial advisers, banks and trust offices. The taxpayer for whom a reportable cross-border arrangement is intended must report this himself in the following cases:

• Only an intermediary from outside the European Union is involved in the construction.
• The intermediary involved in the construction has a right of non-disclosure and does not have to report the construction.
• There is no intermediary involved in the tax construction at all.
• Not sure if someone else has already reported a potentially tax avoidance arrangement?

When do you need to report?
The DAC6 directive takes effect retroactively. Therefore, between 1 January 2021 and 28 February 2021, you must report the cross-border arrangements in which you are involved from 25 June 2018 to 1 July 2020.

Notifiable cross-border arrangements in which you are involved from 1 July 2020 to 1 January 2021 must be reported between 1 January 2021 and 31 January 2021 (the transition period).

For reportable cross-border arrangements as from 1 January 2021, the reporting period is within 30 days.

Which taxes are reportable?

Corporation tax
income tax
payroll tax
dividend tax
inheritance and gift tax
most other taxes

Excluded are:
VAT (sales tax)
customs duties
excise duties
social Security contributions
fees

Please contact us should you have any further questions.

Jeroen Oostenbink
Partner
(jo@wvant.com)