DAC8 and DAC6: Reportable Cross-Border Arrangements

DAC6 requires intermediaries and taxpayers to disclose cross-border tax arrangements that meet certain hallmarks. While DAC6 and DAC8 serve different purposes, they can intersect when crypto-assets are involved in cross-border planning structures.

DAC6 Basics

DAC6 targets aggressive tax planning by requiring disclosure of cross-border arrangements that contain at least one of several defined hallmarks. These hallmarks include confidentiality conditions, fee arrangements linked to tax advantages, standardized documentation, and arrangements involving cross-border payments to low-tax jurisdictions.

Where DAC6 and DAC8 Intersect

Crypto-assets may be used in cross-border arrangements that trigger DAC6 reporting. Examples include structures that use crypto-assets to move value between jurisdictions in ways that reduce tax obligations, arrangements that exploit differences in how different jurisdictions classify crypto-assets for tax purposes, and schemes that use crypto-asset transfers to obscure the beneficial ownership of assets.

When a DAC6-reportable arrangement involves crypto-assets, the same transactions may also be reported under DAC8 by the CASPs involved. Tax authorities will be able to cross-reference DAC6 disclosures against DAC8 data to identify inconsistencies.

Implications for CASPs

CASPs are not typically required to file DAC6 reports themselves (this obligation falls primarily on tax advisors and the taxpayers involved). However, CASPs should be aware that their DAC8 data may be used to verify DAC6 disclosures, their clients may be involved in DAC6-reportable arrangements, and tax authorities may request additional information from CASPs in connection with DAC6 investigations.

Conclusion

DAC6 and DAC8 are distinct frameworks that can intersect when crypto-assets are used in cross-border tax planning. CASPs should be aware of this intersection and ensure that their DAC8 data is complete and accurate, as it may be used to support broader tax enforcement activities.