article banner
Mandatory Disclosure Requirements (MDRs)

Directive on Administrative Cooperation – DAC 6

The Directive on Administrative Cooperation (Directive (EU) 2018/822) known as DAC 6 is an EU directive that relates to mandatory automatic exchange of information in the field of taxation, with regards to reportable cross-border arrangements.

More specifically, it introduces a reporting obligation on Intermediaries and Taxpayers (in certain cases), to disclose potentially aggressive tax planning arrangements.

DAC 6 captures all kind of taxes with the exception of VAT, customs duties, excise duties and compulsory social contributions.

Purpose of the new MDRs

To enhance transparency and prevent aggressive cross-border tax planning, in line with the objectives of BEPS Action Plan (Action 12).

Who are obliged to report

Intermediaries or Taxpayers (in certain cases) are obliged to report to their respective national Tax Authority.

The definition of Intermediary includes:

  • any EU – established or resident person that designs, markets, organises or makes available the implementation of a reportable cross-border arrangement or
  • a person that based on the information in his possession and his relevant expertise and understanding required to provide such services, knows or could be reasonably expected to know that such persons have undertaken aid or advice with regards to the aforementioned services of a reportable cross-border arrangement.

In order to be an intermediary, a person shall meet at least one of the following additional conditions*:

  1. be resident for tax purposes in a Member State
  2. have a Permanent Establishment (PE) on a Member state through which the services are provided
  3. Be incorporated in, or governed by the laws of a Member State
  4. Be registered with a professional association related to legal, taxation or consultancy services in a Member State.

*The above list is also relevant for cases were an intermediary has a multiple reporting obligations (in more than one-member state), in which case disclosure will only be made in the member state that features first in the list.

Taxpayers have a direct reporting obligation, in cases where the intermediary is not required to comply due to the fact that the intermediary is outside of the scope (located outside EU or arrangement is developed in-house) or bound by the requirements of professional secrecy.


The intermediary will be exempted from the reporting obligation in any other member state if:

  • there is subject to proof that the information has been filed in another member state
  • it is covered by legal professional privilege.

Reportable Cross-Border Arrangements (RCBA’s)

A scheme or arrangement is reportable if it is a cross-border arrangement which:

  • has at least one of the designated “Hallmarks”
  • in some cases, satisfies a “Main Benefit Test ” (“MBT”).


An arrangement concerning either more than one EU Member State, or a Member State and a third party/country and at least one of the following conditions are met:

  • not all participants in the arrangement are tax resident in the same jurisdiction
  • one or more of the participants is a dual tax resident
  • one or more of the participants carries on a business in another jurisdiction through a PE
  • one or more of the participants carries on a business in another jurisdiction without a PE
  • the arrangement has a possible impact on the automatic exchange of information or the identification of the beneficial ownership.

“Hallmarks” and Main Benefit Test (“MBT”) - explanations

Hallmarks: A characteristic or feature of a cross-border arrangement that presents an indication of a potential risk of tax avoidance.

In certain cases, the hallmarks have to satisfy MBT to be reportable.

MBT: This test means that one of the main objectives of the arrangement is to obtain a tax advantage.

Category A: General hallmarks linked to the MBT

It includes:

  1. arrangements where the taxpayer or other involved parties, are requested to sign confidentiality agreements to avoid disclosing tax advantage
  2. arrangements that give rise to performance/success fees
  3. arrangements that involve mass-marketed schemes.

Category B: Specific hallmarks linked to the MBT

It includes the below tax planning arrangements:

  1. buying a loss-making company to exploit its losses in order to reduce tax liability.
  2. converting income into capital in order to obtain a tax benefit i.e. capitalization of a loan receivable given to a subsidiary company - instead of receiving income in the form of “interest income” that is taxable, the company will receive “dividend income” that is tax free or is taxed at a lower rate. Another example would be arrangements aimed at receiving back funds in a different form i.e. that provides tax advantage - instead of the company to pay dividend income to the s/h, the money can be returned via capital reduction.
  3. circular transactions resulting in the round-tripping of funds with no primary commercial function.

Category C: Specific hallmarks related to cross-border transactions; some of these hallmarks are also subject to the MBT:

Category C1 applies to cases where there is a Deductible cross-border payment between associated persons and:

a. the recipient is not a tax resident in any jurisdiction

b. the recipient is a tax resident in one jurisdiction BUT:

(i)  that jurisdiction has no tax, essentially zero or almost zero tax

(ii) the jurisdiction is included in a black-listed country

c. the payment is entitled to a full exemption from tax in the jurisdiction where the recipient is a tax resident

d. the payment benefits from a preferential tax regime in the jurisdiction where the recipient is a tax resident.

The arrangements covered by points b) (i), c) and d) are subject to the MBT.

Category C2: deductions for depreciation on an asset claimed in more than one jurisdiction

Category C3: double tax relief claimed in more than one jurisdiction in respect of the same income.

Category C4: transfer of assets where the amount treated as payable is materially different between jurisdictions.

Category D: Specific hallmarks concerning the automatic exchange of information and beneficial ownership:

  • an arrangement is reportable if it has the effect of undermining the rules for automatic exchange of information (that under normal circumstances the information would have been exchanged) or the arrangement can provide protection from the disclosure of the Ultimate Beneficial Owner.

Category E: Specific hallmarks concerning transfer pricing:

It includes the following:

  • use of unilateral safe harbours
  • the transfer of hard-to-value intangible assets where the projection of future cash flows or income are highly uncertain
  • cross-border transfer of functions/risks/assets causing a more than 50% decrease (using projections) in Earnings Before Interest and Tax (EBIT) during the next 3 years.

What should be reported

Through a standardized form, the following details shall be reported:

  • identification of intermediaries and taxpayers
  • applicable Hallmarks
  • summary of the cross-border reportable arrangements
  • date of implementation
  • applicable Domestic law
  • value of the reportable cross-border arrangement
  • other EU Member States involved in the transaction under review
  • persons in other EU Member states that may be affected.

Reporting Deadlines

  • 01 January 2021: Start of 30-day period for reporting cross-border arrangements
  • 01 January 2021: Start of 30-day period for reporting historic cross-border arrangements held between 01 July 2020 and 31 December 2020
  • 28 February 2021: Reporting of historic cross-border arrangements held between 25 June 2018 and 30 June 2020
  • 30 April 2021: First periodic report on marketable arrangements
  • 30 April 2021: First Exchange of Information on reportable cross-border arrangements between EU Tax Authorities.


Penalties will be imposed depending on the type of non-compliance:

  • complete omission
  • incomplete / inaccurate reporting
  • delayed reporting.

Penalties will be capped to €20.000 per reportable arrangement depending on the type and extend of violation.

How we can help

  • raising awareness of the compliance requirements
  • assess the impact of the provisions of the EU directive to your business
  • identification of any reportable transactions or structures
  • technical advice regarding Hallmark analysis
  • advice and assistance on the transition phase (internal processes and software integration)
  • selecting a solution or tool that aligns with local requirements.

For any discussion on how the provisions of DAC6 may affect your business, feel free to contact our Tax Partner, George Karavis at or our Tax Senior Manager, Savvas Georgiou at