Andy Murray and Theodora Mavromati, Managing Director and Analyst in Duff & Phelps’ Compliance and Regulatory Consulting practice, published an article in Bloomberg Tax, questioning the necessity of the EU Council Directive 2018/822/EU (DAC6) and its implications for the asset management and private equity industry.

“DAC6 has introduced mandatory reporting on external parties; the intermediaries, in attempt to create more transparency in cross-border transactions. Most cross-border transactions tend to involve multiple reporting requirements in which these parties will have equal obligation to report unless they have evidence that another party within the arrangement has fulfilled this obligation.

Banks are under scrutiny for creating increased risks and uncertainty for the taxpayers which may potentially hinder reporting for all cross-border arrangements. However, it is to be seen whether banks will exercise their right not to report and if they do report whether they will disclose this to the taxpayer. It is therefore critical that the relevant taxpayers proactively encourage all parties in the arrangement to discuss obligations and agree on the requirement to disclose or not disclose. Effective communication between the parties will be necessary in order to prevent contestation. 

The successful implementation of DAC6 depends on the commitment of the intermediaries to identify and disclose the reportable arrangements and the taxpayers’ willingness to cooperate and provide the reportable information.”

Read the full article here.

 
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