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3 countries publish draft EU Mandatory Disclosure Rules

Luxembourg, The Netherlands and Estonia have all recently published draft legislation that will implement the EU Mandatory Disclosure Rules Directive (DAC6). Member States have until 31 December 2019 to implement the directive into national legislation.

All three countries have drafted the implementing legislation broadly in line with the Directive, and have not sought to Gold-plate the Directive. However, the Netherlands and Estonia have sought to provide some guidance on the scope and hallmarks of the Directive.

The maximum penalties that may be imposed vary significantly between the draft legislation of the countries, with a maximum penalty amount of 3,300 Euro in the draft Estonian legislation, 250,000 Euro in the Luxembourgish legislation and 830,000 Euro in the Dutch legislation. Further, the draft Estonian legislation provides for the privilege against self-incrimination to be considered in assessing compliance with reporting obligations, and does not require taxpayers to disclose information about their use of the arrangements. The Luxembourgish legislation, on the other hand, does require taxpayers to disclose the use of the arrangement in their tax returns.

According to the Directive, intermediaries who design and/or promote reportable tax planning schemes will be required to disclose information on reportable cross-border arrangements the first step of which was implemented after 25 June 2018. National tax administrations will then automatically exchange the information with other Member States through a centralised database. Penalties will be imposed on intermediaries who do not comply with the new reporting measures. The initial automatic exchange of information between member states should take place on 31 October 2020.

Report from International Association of Financial Executives International (IAFEI).

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