DAC 6 implementation in Luxembourg: What's Important?

On 21 March 2020, the Luxembourg Parliament (Chambre des Députés) approved the bill n°7465 (the "DAC 6 Bill"), implementing the EU Directive 2018/822 of 25 May 2018 also commonly known as "DAC 6" into domestic law (the "DAC 6 Law")*.

DAC 6 aims to exchange at EU level information on arrangements, which could be considered as aggressive operations from a tax perspective. 

In this context, the DAC 6 Law will require certain persons to report specific arrangements, which may be considered as harmful in the context of a fair taxation.

Whilst the DAC 6 Law will be applicable as of 1 July 2020, its consequences will have a retroactive effect as some arrangements, which took place as of 25 June 2018, may need to be reported by 31 August 2020 at the latest.

A more detailed summary of the main topics enumerated below regarding the DAC 6 Law may be found on our Hogan Lovells blog:

    1. What are the origins of DAC 6?
    2. Who needs to report?
    3. To whom needs to be reported?
    4. What kind of arrangements need to be reported?
    5. What information needs to be communicated?
    6. When has the reporting to be made?
    7. What penalties are foreseen?
    8. Concluding remarks

What are the origins of DAC 6?

DAC 6 is an extension of the EU measures dealing with tax transparency and is inspired by the BEPS Action 12 project on mandatory disclosure rules. 

Since Council Directive 2011/16 of 15 February 2011 on administrative cooperation in the field of taxation ("DAC") which covered only automatic exchange of information on limited types of income, the EU has progressively extended the scope of DAC with: 

  • DAC 2 which extended the field of automatic exchange of information among others to other types of income and introduced the common reporting standard rules; 
  • DAC 3 which introduced rules regarding the automatic exchange of advance agreements with tax authorities; 
  • DAC 4 which introduced the country-by-country reporting rules; and
  • DAC 5 which introduced rules for tax authorities to have access to beneficial ownership information.
DAC 6 is the continuity of these rules regarding tax transparency by introducing a procedure at EU level on the exchange of information on arrangements, which could be considered as harmful schemes from a tax perspective.

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