In the recent years, numerous tax transparency measures have been introduced across the globe. Responding to action 12 of the OECD Base Erosion and Profit Shifting (BESP) project, the European Union enacted Directive 2018/822 (commonly referred to as DAC 6 as it is the sixth directive to amend the Directive 2011/16 on Administrative Cooperation in the field of taxation), which seeks to combat aggressive tax planning.
DAC 6 introduces an obligation for intermediaries (tax advisors, banks, accountants) and taxpayers to disclose information on certain cross-border tax arrangements (that might constitute aggressive tax planning) to the tax authorities. It also regulates the subsequent exchange of the information among tax administrations of EU member states. The information exchanged under DAC 6 will allow tax administrations and legislators to react more rapidly to potentially aggressive tax arrangements by closing legal loopholes or carrying out tax audits. In terms of reporting deadlines, the reporting of historical arrangements was initially to take place no later than 31 August 2020 and the regular reporting was supposed to start on 1 July 2020. However, the EU Council gave the Member States the option to delay the deadlines for filing information on reportable cross-border arrangements by six months. As from 1 January 2021, intermediaries and taxpayers will be required to report tax arrangements within 30 days of their occurrence.
DAC 6 explicitly excludes from its scope “VAT, customs duties and excise duties”. This would mean that indirect tax professionals do not need to care about the new rules. However, this may not always be the case.
The majority of EU countries implemented mandatory disclosure obligations closely following the text of DAC 6: they used the same definitions and retained the same scope in terms of the cross-border nature of tax arrangements and taxes covered. Some countries however took a step further. For example, the Polish mandatory disclosure rules go well beyond the scope of DAC 6 requirements. The Polish legislation provides for the obligation to report domestic, and not only cross-border, schemes and extends the scope of taxes covered to VAT.
As failure to report a tax arrangement may constitute a criminal offence and will be penalized with huge fines (up to approx. PLN 25 million = EUR 5.7 million), indirect tax professionals involved in indirect tax planning in Poland should carefully examine the mandatory disclosure rules and assess potential risks stemming from the reporting requirements. In many cases (for example, tax structures designed in-house), it will be the taxpayers and not the tax advisors that will be obliged to report the arrangements.