🇪🇺DAC6: Mandatory Disclosure of Cross-Border Arrangements in the EU and Hallmarks

DAC6 is the EU's mandatory disclosure regime for cross-border tax arrangements. An adviser, bank, lawyer or the taxpayer itself tells the tax authority about an arrangement that carries at least one marker of potentially aggressive planning (a hallmark), and EU Member States exchange those reports automatically. For private wealth the regime matters because its hallmarks read like a description of standard family-ownership structures: a holding company with intra-group payments, a trust whose beneficial owners cannot be identified, an account moved to where CRS does not reach.

Concept

Formally, DAC6 is the sixth amendment to the Directive on Administrative Cooperation, 2011/16/EU, made by Council Directive (EU) 2018/822 of 25 May 2018. It inserted Article 8ab (the reporting obligation) and Annex IV with the list of hallmarks, and extended the Article 25a penalties rule to the new obligation. A cross-border arrangement is reportable if it carries at least one hallmark; for some hallmarks the main benefit test must also be met — obtaining a tax advantage must be the main benefit, or one of the main benefits, reasonably expected.

Disclosure prohibits nothing in itself. Under Article 8ab(15), a tax administration's failure to react does not imply acceptance of the arrangement or of its tax treatment, and the arrangement may be entirely lawful. The point of the regime is early visibility: administrations learn of a scheme before it produces its effect and can audit selectively, change the law or apply GAAR and the principal purpose test. The regime covers all taxes except VAT, customs duties and excise duties; in Case C-623/22 the Court of Justice confirmed that this broad scope does not breach the principle of equal treatment.

Key parameters of the regime:

Where the regime came from

The idea of mandatory disclosure came from the OECD. The BEPS Action 12 Final Report (October 2015) recommended that countries adopt mandatory disclosure rules but set no minimum standard — each country could choose its own hallmarks and deadlines. For the EU, the trigger was the Panama Papers: the Commission proposal COM(2017) 335 of 21 June 2017 states openly that certain intermediaries appear to have actively helped their clients use aggressive tax planning arrangements. The Commission originally proposed a deadline of five working days; the adopted text settled on 30 days.

In parallel, the OECD developed a narrower instrument aimed at the same problem — the Model Mandatory Disclosure Rules for CRS Avoidance Arrangements and Opaque Offshore Structures, approved on 8 March 2018. Category D of the directive follows the same logic, and the UK's post-Brexit regime implements the OECD model directly.

The launch timetable was drawn out:

1. 25 May 2018 — adoption of the directive; 25 June 2018 — entry into force.
2. 31 December 2019 — transposition deadline; application from 1 July 2020.
3. Arrangements whose first step was implemented between 25 June 2018 and 1 July 2020 had to be reported retrospectively, originally by 31 August 2020 (Art. 8ab(12)).
4. Because of the pandemic, Directive 2020/876 allowed Member States to defer: the 30-day periods begin by 1 January 2021 at the latest, historical reports by 28 February 2021, first exchange by 30 April 2021. The deferral was optional: each Member State decided whether to use it.

The look-back was the most painful part of the launch: advisers and family offices had to reopen files two years old and decide which 2018–2020 restructurings fell within the hallmarks, before national guidance existed.

What a cross-border arrangement is

The directive does not define "arrangement", and in Case C-623/22 the Court of Justice found this acceptable: the term is understood as a mechanism, operation, structure or set-up for tax planning and is sufficiently clear. An arrangement is cross-border where it concerns more than one Member State, or a Member State and a third country, and at least one of the conditions in Article 3(18) is met:

1. not all participants are resident for tax purposes in the same jurisdiction;
2. at least one participant is resident in more than one jurisdiction at once;
3. a participant carries on business in another jurisdiction through a permanent establishment and the arrangement forms part of that business;
4. a participant carries on an activity in another jurisdiction without being resident or having a permanent establishment there;
5. the arrangement may affect the automatic exchange of information or the identification of beneficial ownership.

The fifth condition makes the perimeter almost unlimited for private structures: any arrangement that touches CRS reporting or ownership transparency becomes cross-border wherever its participants are resident. Purely domestic schemes fall outside the directive, but some countries have extended their national regimes to them — Poland is the best-known example.

Who counts as an intermediary

The directive distinguishes two kinds of intermediary (Art. 3(21)). The first is what the OECD calls a promoter: a person who designs, markets, organises, makes available for implementation or manages the implementation of an arrangement. The second is a service provider: a person who provides aid, assistance or advice on those activities and knows, or could reasonably be expected to know, that it is involved in a reportable arrangement. In Case C-623/22 the Court held the "knows or could reasonably be expected to know" formula sufficiently precise: it combines objective conduct with a knowledge test, and the intermediary may prove that it did not know and could not reasonably have known.

In practice, intermediaries include tax advisers, lawyers, auditors, banks, trust and corporate service providers and asset managers. A family office that designs a restructuring for the family may also be an intermediary. The obligation arises only where the intermediary has an EU nexus: it is tax resident in a Member State, has a permanent establishment there through which the services are provided, is incorporated in or governed by the laws of a Member State, or is registered with a professional association for legal, taxation or consultancy services in a Member State.

An intermediary with links to several Member States files once — in the first on the Article 8ab(3) list: state of tax residence, then state of the permanent establishment, then state of incorporation, then state of professional registration. Where there are several intermediaries, each must report but is exempt if it has proof that the same information has already been filed by another (Art. 8ab(9)). Hence market practice: the lead adviser files and circulates the arrangement number to everyone else involved.

When the obligation shifts to the taxpayer

Under Article 8ab(6), the obligation falls on the relevant taxpayer — the person to whom the arrangement is made available for implementation, or who implements it — in three situations:

1. there is no intermediary at all: the scheme was built by an in-house lawyer or by the owner;
2. all intermediaries are outside the EU and have no nexus with it — the typical case for structures designed in Switzerland, the UK, Singapore or the US;
3. the intermediary is exempt on legal professional privilege grounds and has notified the taxpayer that the obligation has passed.

The taxpayer files within the same 30 days, counted from the day after the arrangement is made available to it or ready for implementation, or from the day the first step is taken (Art. 8ab(7)). A Member State may also require the taxpayer to report its use of the arrangement in each year it is used (Art. 8ab(11)); Germany and Ireland, among others, require the arrangement number to be stated in the tax return.

Legal professional privilege and the Court of Justice

Article 8ab(5) lets Member States exempt intermediaries bound by legal professional privilege, provided they notify, without delay, any other intermediary or, if there is none, the taxpayer. That mechanism was the subject of two Court of Justice rulings on references from the Belgian Constitutional Court.

C-694/20 Orde van Vlaamse Balies, Grand Chamber, 8 December 2022. The Court held Article 8ab(5) invalid in the light of Article 7 of the EU Charter of Fundamental Rights (respect for private life and communications) in so far as it requires a lawyer to notify other intermediaries who are not the lawyer's clients. Such a notification reveals to third parties the fact of the consultation, the lawyer's identity and the lawyer's assessment that the arrangement is reportable. The Court found that interference not strictly necessary: other intermediaries have their own reporting duty in any case, the client can inform them, and the tax authority receives the information from non-privileged participants. The lawyer's duty to notify their own client remains.

C-623/22 Belgian Association of Tax Lawyers and Others, 29 July 2024. The Belgian court asked five questions on the directive's validity: the all-taxes scope; the clarity of "arrangement", "intermediary", the hallmarks and the main benefit test; the certainty of when the 30-day period starts; notification of the taxpayer by a privileged intermediary; and the proportionality of the disclosure obligation. On every point the Court found nothing affecting validity. It also indicated that the protection of professional secrecy in this mechanism is designed for lawyers and other professionals who, like lawyers, are authorised under national law to ensure legal representation (paragraphs 104–105). Tax advisers and auditors without that status cannot automatically claim it.

The practical result of the two rulings: a lawyer may decline to file and need not notify the other advisers on the transaction, but must tell their client that the reporting duty now lies with the client. National solutions still differ. Germany, for example, splits the report: a privileged intermediary still files the anonymised part describing the arrangement, while the taxpayer's personal data are reported by the taxpayer unless it releases the adviser from secrecy (§ 138f(6) AO as introduced by the act on reporting cross-border tax arrangements).

Hallmarks: the five categories

The hallmarks are listed in Part II of Annex IV. They are framed as objective features of an arrangement, and some of them only bite together with the main benefit test.

Category A — generic hallmarks

A.1 — the taxpayer or a participant undertakes to keep confidential, from other intermediaries or the tax authorities, how the arrangement secures a tax advantage. A.2 — the intermediary's fee is fixed by reference to the amount of the tax advantage or depends on whether it is obtained, including an obligation to refund the fee if the advantage is not achieved. A.3 — substantially standardised documentation or structure available to more than one taxpayer without substantial customisation. In private wealth, A.3 catches off-the-shelf products: standard insurance wrappers, replicated fund structures, packaged relocation offerings with a tax component. Category A applies only with the main benefit test.

Category B — specific hallmarks

B.1 — acquiring a loss-making company, discontinuing its main activity and using its losses, including by transferring them to another jurisdiction or accelerating their use. B.2 — converting income into capital, gifts or other categories of revenue taxed at a lower level or exempt. B.3 — circular transactions round-tripping funds through interposed entities with no other primary commercial function, or transactions that offset or cancel each other. For family wealth, B.2 is the most sensitive: paying out accumulated profits through a mechanism that turns a dividend into a capital gain or into a trust distribution taxed on a favourable basis. Category B also applies only with the main benefit test.

Category C — cross-border payments and assets

C.1 covers deductible cross-border payments between associated enterprises (more than 25% of voting rights or capital, entitlement to 25% or more of profits, or other forms of control). The hallmark is triggered where the recipient: (a) is not resident for tax purposes in any jurisdiction; (b)(i) is resident in a jurisdiction with no corporate tax or a rate of zero or almost zero; (b)(ii) is resident in a jurisdiction on a list of non-cooperative jurisdictions assessed by Member States collectively or within the OECD; (c) benefits from a full exemption on the payment; (d) benefits from a preferential regime on the payment.

The key word is "deductible". Dividends are generally not deductible for the payer, so a chain that routes dividends through a low-tax holding company does not, on that basis alone, fall within C.1. What does fall within it are interest on intra-group loans, royalties, service and management fees flowing from the family's operating company to a related zero-rate entity.

C.2 — deductions for the same depreciation on an asset are claimed in more than one jurisdiction. C.3 — relief from double taxation on the same item of income or capital is claimed in more than one jurisdiction. C.4 — a transfer of assets where there is a material difference in the amount treated as consideration in the jurisdictions involved. C.4 arises, for example, when an owner relocates or a holding company migrates and the exit state recognises one value while the arrival state recognises another.

Category D — CRS avoidance and opaque ownership

D.1 covers arrangements that may undermine the reporting obligation under laws on the automatic exchange of financial account information, including agreements with third countries, or that take advantage of the absence of such legislation. The directive lists six forms: (a) use of an account, product or investment that is not, or purports not to be, a Financial Account but has features substantially similar to one; (b) transfer of financial accounts or assets to, or use of, jurisdictions not bound by automatic exchange with the taxpayer's state of residence; (c) reclassification of income and capital into products or payments outside the exchange; (d) transfer or conversion of a financial institution, account or assets into ones not subject to reporting; (e) use of structures that eliminate or purport to eliminate reporting of Account Holders or Controlling Persons; (f) arrangements that undermine or exploit weaknesses in due diligence procedures, including use of jurisdictions with weak AML regimes or weak transparency requirements for legal persons.

D.2 — a non-transparent legal or beneficial ownership chain. All three conditions must be met together: (a) the persons, arrangements or structures do not carry on a substantive economic activity supported by adequate staff, equipment, assets and premises; (b) they are incorporated, managed, resident, controlled or established in a jurisdiction other than that of residence of one or more beneficial owners; (c) the beneficial owners, as defined in AML Directive 2015/849, are made unidentifiable. Category D applies without the main benefit test: motive is irrelevant, the effect on transparency is what counts. For more on CRS mechanics and beneficial ownership, see CRS: automatic exchange of tax information and beneficial ownership.

Category E — transfer pricing

E.1 — use of unilateral safe harbour rules. E.2 — transfer of hard-to-value intangibles between associated enterprises where, at the time of transfer, no reliable comparables exist and projections of future cash flows or income are highly uncertain. E.3 — an intra-group cross-border transfer of functions, risks or assets where the transferor's projected annual EBIT over the three years after the transfer is less than 50% of the projected EBIT had the transfer not been made. Category E also applies without the main benefit test. For private wealth it becomes relevant when a family business moves IP, a brand or key functions to a new jurisdiction along with its owner.

Main benefit test

The test (Part I of Annex IV) is met where it can be established, having regard to all relevant facts and circumstances, that the main benefit, or one of the main benefits, a person may reasonably expect to derive from the arrangement is a tax advantage. It applies only to categories A and B and points C.1(b)(i), (c) and (d). The conditions in C.1(b)(i), (c) or (d) cannot alone be a reason for concluding that the test is met: a low rate at the recipient requires analysis of the arrangement as a whole.

Private-wealth scenarios

Trust. A discretionary trust with a corporate trustee in a third country and beneficiaries in the EU is not in itself a reportable arrangement. It becomes one if the structure makes the beneficial owners unidentifiable without substance (D.2) or takes assets out of CRS reporting (D.1), for example through a trustee in a jurisdiction that does not exchange information with the beneficiaries' state of residence. A trust whose settlor, trustee, protector and beneficiaries are disclosed in beneficial ownership registers and in CRS reporting does not meet condition D.2(c).

Holding company. A family holding company in a low-tax jurisdiction with intra-group loans or brand licences touches C.1(b)(i) — subject to the main benefit test. If the recipient's jurisdiction is on the non-cooperative list, C.1(b)(ii) applies without the test. A letterbox holding company with no staff or premises that separates the owner from the assets and hides them is a D.2 candidate. For choosing jurisdictions, see holding structures.

Relocation. The restructuring around a change of residence is what often becomes a reportable arrangement: migrating a holding company, transferring assets with mismatched values (C.4), moving the functions of a family business (E.3), turning future dividends into capital income (B.2). A separate question is exit tax, whose calculation often creates the value mismatch between the exit and arrival states.

CRS avoidance. Moving a portfolio from a European account to an account in a jurisdiction that does not exchange CRS data with the owner's state of residence is a straightforward D.1(b). Replacing a deposit with an insurance or other product positioned outside CRS but functionally close to an account is D.1(a) or D.1(c). For the exchange perimeter, see tax transparency.

Opaque ownership chain. A multi-tier chain of companies in different jurisdictions, with no real activity, with figurehead directors lacking real authority and no disclosure of the ultimate owner, is a textbook D.2. Here the regime overlaps with AML: a bank sees the same features at onboarding.

Deadlines, report contents and the arrangement number

The main deadline is 30 days from the earliest of three events: the day after the arrangement is made available for implementation, the day after it is ready for implementation, or the day the first step in implementation is taken (Art. 8ab(1)). For an intermediary providing aid, assistance or advice, the 30 days run from the day after that aid was provided. In Case C-623/22 the Court held these moments sufficiently clear.

A marketable arrangement is one designed, marketed, ready or available for implementation without a need for substantial customisation. For these, besides the initial report, the intermediary files an update every 3 months with new information: which taxpayers are using it, the date of the first step, the Member States in which it affects taxpayers and any other persons affected (Art. 8ab(2)). A bespoke arrangement is reported once.

The contents are set by Article 8ab(14): identification of intermediaries and taxpayers, including associated persons; which hallmarks apply; a summary of the arrangement, including the name by which it is commonly known, without disclosing commercial secrets; the date of the first step; the national provisions on which the advantage rests; the value of the arrangement; the Member States likely to be concerned; and any other person in a Member State likely to be affected.

The national tax authority assigns the report an arrangement identifier (internationally, an arrangement reference number, ARN; in Germany, a Registriernummer and Offenlegungsnummer). The number proves to other intermediaries that the report has been filed and in many countries is stated by the taxpayer in its tax return. Member States exchange the reports through the EU central directory within one month of the end of the quarter in which the information was filed (Art. 8ab(18)); the first exchange was originally due by 31 October 2020.

National differences and penalties

The directive sets a minimum standard and leaves penalties to Member States: they must be "effective, proportionate and dissuasive" (Art. 25a). As a result, a single EU regime looks different country by country — in the range of arrangements covered, in privilege and in the size of penalties.

France, the Netherlands, Italy, Spain and Cyprus transposed the directive through their own laws with their own penalty scales, so the size of any penalty is always determined by the law of the country in which the filing obligation arises.

For a family with assets in several countries the practical conclusion is this: the same arrangement may be reportable in Poland because of a domestic element or VAT and fall outside the perimeter in Germany. A privileged adviser in one country will file an anonymised report; in another, it will simply notify the client.

The United Kingdom: from DAC6 to UK MDR

The UK transposed DAC6 through the International Tax Enforcement (Disclosable Arrangements) Regulations 2020 (SI 2020/25). After leaving the EU it narrowed the regime: from 31 December 2020 only arrangements with category D hallmarks had to be disclosed (HMRC IEIM710010).

Since 28 March 2023 the UK has applied its own regime — the International Tax Enforcement (Disclosable Arrangements) Regulations 2023 (SI 2023/38), laid before Parliament on 17 January 2023; the 2020 regulations were revoked. UK MDR implements the OECD model rules directly and requires disclosure of two kinds of arrangement: CRS avoidance arrangements and opaque offshore structures — functional counterparts of D.1 and D.2.

The mechanics are close to DAC6, with their own vocabulary:

1. A promoter reports within 30 days beginning the day after the arrangement is made available for implementation; a service provider within 30 days of providing the relevant services (IEIM740020).
2. A reportable taxpayer files itself within 30 days beginning the day after the first step is implemented, where no intermediary has reported; preparatory steps such as incorporating a subsidiary before the design is agreed do not count as the first step (IEIM740060).
3. Look-back: promoters must report CRS avoidance arrangements made available for implementation on or after 25 June 2018; exceptions are arrangements already reported under DAC6 and those with financial account balances below the equivalent of USD 1 million (IEIM760000).
4. Penalties: up to £5,000 per failure; in exceptional cases HMRC applies to the First-tier Tribunal, which may impose up to £600 a day and up to £1 million in total (IEIM750020, IEIM750030).

For structures with both a UK and an EU element this means two parallel regimes: all five categories apply in the EU, only the category D counterparts in the UK. A report in one does not replace a report in the other, although HMRC shares the information it receives with jurisdictions applying equivalent rules. For the UK side of exchange, see UK tax information exchange.

Outlook: the DAC recast

On 24 June 2026 the Commission published a proposal to recast the DAC, COM(2026) 308 final, alongside the tax omnibus. As of September 2026 it is a proposal: the legal basis is Articles 113 and 115 TFEU, a special legislative procedure requiring unanimity in the Council. For DAC6 it proposes the following:

1. Category A is deleted in full: the Commission considers its generic hallmarks of little value to administrations and a source of disproportionate reporting. The definitions of marketable and bespoke arrangement go with it, and so do the quarterly updates.
2. The intermediary's deadline grows from 30 to 90 days, and the clock is started only by the first step in implementation — a concrete measure such as signing the contracts that enable implementation.
3. A narrow carve-out is introduced for groups within the Pillar Two minimum tax — only where no member of the group is granted benefits that bring taxation below 15%.
4. In hallmark C.1 the reference to OECD work on non-cooperative jurisdictions is replaced by a reference to the EU Code of Conduct Group.
5. Substance criteria for D.2 will be developed in a Council implementing act.
6. Privilege is codified in line with the Court's case law: it covers only lawyers and professionals authorised to ensure legal representation; a lawyer need not notify intermediaries who are not their clients and must notify the client without delay.

The proposal places these changes, except the D.2 implementing act, in its first tranche: transposition by [31 December 2027] and application from [1 January 2028]. The square brackets mark placeholders; the final dates will be set by the Council on adoption. Until adoption and transposition, all five categories, the 30-day deadline and the quarterly updates remain in force. The Commission puts DAC6 compliance costs at up to around €340 million a year. For a detailed analysis of the package, see The EU Tax Omnibus and the DAC Recast.

The client's and adviser's perspective

The first question in any cross-border restructuring is who will file. If a European lawyer, a bank and a trust company are all involved, each is a potential intermediary; the market standard is to agree in the engagement letter who is the lead intermediary, who files and how the others receive proof of filing. If all advisers are outside the EU, or the lead lawyer invokes privilege, the obligation falls on the taxpayer, and the 30 days run from the same moment.

Questions for the adviser at the start of a project: which hallmarks are engaged and on what reasoning; which require the main benefit test and how the commercial purpose is documented; which countries are concerned and where the report will be filed; whether the arrangement will be replicated, i.e. is marketable; what changes if the adviser invokes privilege. A position of "hallmark present, test not met" should be recorded in a memorandum: the test is objective — what could reasonably be expected from the arrangement, having regard to all the circumstances.

On receiving an arrangement number (ARN) from an intermediary or the tax authority, the taxpayer keeps it with a copy of the report, states it in the tax return where national law requires this (Germany, Ireland) and passes it to other intermediaries so they can rely on the exemption from double filing. The number is not an approval: under Article 8ab(15), silence from the tax authority legitimises nothing. The information will in any case reach the administrations of every Member State concerned, so the substantive position should be ready before any audit — as with advance tax rulings for individuals, which DAC8 also brings into the exchange.

A separate line runs through the bank. A structure that engages D.1 or D.2 will almost certainly raise questions at onboarding: the bank examines the same elements (CRS classification, controlling persons, ownership chain, substance), only through an AML lens. Declining to disclose under DAC6 sits badly with trying to clear EDD at a bank that may itself be an intermediary.

The licensee's perspective

For a bank, trust or corporate services company or asset manager, DAC6 is an operational obligation. A bank that opens an account for a pre-designed structure, lends into a scheme or takes part in moving assets may become a service provider if it knows or could reasonably be expected to know about a hallmark. The knowledge test works against the institution: the greater its professional expertise and access to client information, the harder it is to argue that a hallmark was not apparent.

A working minimum for an internal procedure:

1. A hallmark classifier built into product, lending, structuring and corporate and trust client onboarding processes, with a separate flag for D.1 and D.2, where no main benefit test applies.
2. A record of the date the 30-day clock starts for each arrangement and of who is responsible for filing; for marketable products, a calendar of quarterly updates.
3. A protocol for dealing with other intermediaries: requesting the arrangement number, keeping proof of filing, deciding to file itself where no proof is available.
4. Rules on privilege: in which countries it is available to staff (as a rule, only to lawyers) and how the client is notified.
5. A link to AML: D.2 indicators and data from beneficial ownership registers describe the same ownership picture, and any discrepancy between them is a red flag in itself.
6. Retention of "not reportable" decisions with reasoning: these are the decisions a tax authority most often challenges on audit.

Evolution: DAC7, DAC8 and neighbouring regimes

DAC6 is one link in the chain of administrative cooperation directives. DAC7 (Directive 2021/514) has required digital platforms to report on sellers since 2023. DAC8 (Directive 2023/2226) extended exchange from 1 January 2026 to crypto-assets, aligned with the OECD CARF, and to advance rulings concerning high-net-worth individuals. For private wealth this means that, alongside CRS bank-account reporting, beneficial ownership registers, the ATAD rules and Pillar Two, there is early visibility of the schemes themselves and, since 2026, of digital assets.