As written in our previous newsletter, under the DAC 6[1] Directive, if the main advantage or one of the main advantages of a transaction are of a tax nature, consultants who support the structure and are involved in the design or implementation (investment and financial advisers, auditors, accounting and payroll service providers, SSC centres), or the taxpayer is required to report the transaction. As in some cases there may be a reporting obligation between the parent company and the subsidiary or between subsidiaries (even retroactively to 2018), it is worthwhile for our Clients – whether from a service provider or customer perspective – to consider whether it is necessary to file report and how they can control the reporting process.

Special requirements for lawyers

The question arises whether the reporting requirement applies to lawyers. Although the directive itself refers to it, the Ministry of Finance also confirmed in February of 2021 that those law practitioners are obliged to maintain legal professional secrecy, so we have no obligation to report. If, on the other hand, we participate in the consulting, are obliged to draw the attention of both the consultant – who is required to report – and the client to the regulations.

Taxpayer options

According to the provisions of the DAC 6 directive the taxpayer is concerned in any case. Its role depends on whether or not a consultant helps to develop the structure. The taxpayer is expected to be aware of the requirements of the directive (and to expect the same from his advisors), regardless of acting individually or by involving a consultant. It is recommended that the company consciously structures the reporting process and summarizes on how to implement the reporting obligation in order to have an overview of the same.

If the company is involved in a cross-border transaction (even in the context of an intra-group supply of services), it is worth examining the process in the light of the DAC 6 Directive. The review has to take place according to a complex criteria system, along the so-called hallmarks[2]. If one or more service providers are involved in the process, in our opinion, the company has the option and it is recommended to arrange which service provider would file the report. It is advisable to enter into an agreement with the contributors that the service provider having the most insight to the transaction and with experience in reporting, will review and arrange for tasks under the DAC 6 Directive.

Opportunities for contributing consultants

If several consultants are involved in the planning and implementation of the structure, they all have a reporting obligation. However, it may be worthwhile to reach an agreement on who will perform the task (in this case, even a lawyer may act on behalf of the client) and to consult with the taxpayer concerned. A properly worded agreement can be of outstanding significance because the content of the reporting is thus coherent and service providers can pre-determine the reporting tasks and responsibilities (exemption of other service providers from reporting, way and restrictions of communication with tax authorities and between service providers).