Netherlands: Consultation on directive for disclosure of cross-border tax arrangements

The Dutch government on 19 December 2018 launched an internet consultation concerning a bill to transpose into Dutch law the EU Directive on Mandatory Disclosure (Directive (EU) 2018/822, DAC6)—the directive that provides for the mandatory automatic exchange of information on reportable cross-border arrangements.

DAC6, in principle, requires intermediaries (including so-called “auxiliary intermediaries”) to report potentially aggressive cross-border tax planning arrangements. The disclosure would allow for the information to be exchanged between the tax authorities of the EU Member States. The broad definition of intermediary means that the directive would apply to tax advisors and potentially also to lawyers, accountants, notaries, financial advisors, banks, and trust offices. In certain circumstances the reporting obligation can shift to the taxpayer.

The Annex to DAC6 includes a number of hallmarks that are indicators of an aggressive cross-border tax planning arrangement. If a tax planning arrangement has one of these hallmarks, the arrangement must, in principle, be reported to the tax authorities of the relevant EU Member State. However, a number of these hallmarks will only trigger a reporting obligation if a “main benefit test” is also met. The main benefit test is met if it can be convincingly demonstrated that the most important benefit or one of the most important benefits that, given all the relevant facts and circumstances, can reasonably be expected from an arrangement is obtaining a tax benefit.

The Netherlands must implement DAC6 into national law. During the parliamentary debates that will follow on the actual implementing legislation, more clarity will be expected about how the Netherlands interprets the obligations and terms in the directive.

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