DAC6 Reporting in Practice: Hallmarks, Reporting Parties and the Proposed Recast

DAC6, established by Directive (EU) 2018/822, requires intermediaries and, in certain circumstances, taxpayers to report cross-border arrangements that bear one or more prescribed hallmarks to their national tax authorities, who then exchange that information automatically across the EU. The obligation applies whenever an arrangement could confer a potential tax advantage or otherwise falls within the directive's hallmark categories, regardless of whether the structure is ultimately considered abusive. A proposed recast of the DAC framework, published by the European Commission on 24 June 2026, would significantly revise these rules – but it remains a proposal and is not yet law.

Legal Basis and the Hallmark Framework

DAC6 forms part of the broader Directive on Administrative Cooperation in Taxation. Its mandatory disclosure regime targets cross-border arrangements – those involving more than one EU Member State, or at least one Member State and a third country – where one or more hallmarks are present. Hallmarks are divided into generic categories (A–E), some of which require a main benefit test to be satisfied before disclosure is triggered, and others that apply regardless.

• Category A (generic hallmarks): confidentiality conditions, success-based fees, and standardised documentation – all subject to the main benefit test.
• Category B: loss-utilisation arrangements, conversion of income types, circular transactions – subject to the main benefit test.
• Category C: cross-border payments to associated enterprises in low- or no-tax jurisdictions, and arrangements undermining transfer pricing rules – some require the main benefit test, others do not.
• Category D: arrangements that undermine automatic exchange of information or beneficial ownership transparency requirements – no main benefit test required.
• Category E: transfer pricing structures departing from OECD guidelines, including the use of unilateral safe harbours and hard-to-value intangibles – no main benefit test required.

Assessing whether the main benefit test is met requires an objective analysis of the arrangement's purpose. In practice, this is one of the most contested analytical steps, and decisions made at this stage have implications for tax risk management across the entire structure.

Who Must Report: Identifying the Reporting Party

The primary obligation falls on intermediaries – those who design, market, organise, make available, or manage the implementation of a reportable cross-border arrangement. Intermediaries broadly include lawyers, tax advisers, accountants, financial institutions, and consultants who satisfy the nexus conditions (registered, resident, or professionally regulated in an EU Member State).

Where an intermediary is subject to legal professional privilege, or where no intermediary with an EU nexus exists, the reporting obligation shifts to the relevant taxpayer. This is a scenario that frequently arises for non-EU groups using non-EU advisers: the company itself becomes responsible for filing. Foreign businesses entering the EU market through tax structuring arrangements should assess the reporting chain carefully before any transaction closes.

Multiple intermediaries may be involved in a single arrangement. Each is in principle liable, but reporting by one discharges the obligation of others – provided that discharging intermediary holds the relevant information and notifies the others in writing. This coordination requirement is a common source of error in cross-border transactions.

Step-by-Step Procedure

The following steps outline the standard disclosure process under national implementations of DAC6. Specific procedural details – forms, submission portals, and local languages – are subject to national rules and vary by Member State.

• Step 1 – Identify the arrangement: Determine whether the arrangement is cross-border and falls within the directive's definition.
• Step 2 – Hallmark analysis: Systematically review each hallmark category. Apply the main benefit test where required. Document the reasoning for each conclusion.
• Step 3 – Identify the reporting party: Map all intermediaries involved and establish who holds EU nexus. Confirm privilege positions and notification obligations.
• Step 4 – Gather required information: The disclosure must include identification of the arrangement participants, a summary of the arrangement, the relevant hallmarks, the applicable national provisions, the value of the arrangement, and the Member States concerned.
• Step 5 – File with the competent authority: Submit the disclosure to the tax authority of the relevant Member State within the applicable deadline. Under current rules, the deadline for intermediaries is 30 days from the trigger event (typically the day the arrangement becomes available for implementation or is ready to be implemented).
• Step 6 – Record the reference number: Upon filing, a reference number is assigned. Intermediaries must communicate this to relevant taxpayers, and taxpayers may be required to include it in their tax returns.
• Step 7 – Ongoing monitoring: Marketable arrangements require periodic reporting, typically every 90 days while the arrangement remains available.

If your organisation has cross-border arrangements under active review and you are uncertain about reporting obligations, our team is available to discuss the situation – please reach out at info@ferrazwhitmore.com.

Documents Typically Required

Although the exact form varies by jurisdiction, the following documentation is generally required or strongly advisable when preparing a DAC6 disclosure:

• Identification details of all intermediaries and taxpayers involved (including tax identification numbers and Member States of residence).
• A clear description of the arrangement, including its commercial purpose and the steps through which it operates.
• The hallmark or hallmarks triggered and the supporting analysis, including the main benefit test where applicable.
• References to the national legal provisions of each Member State involved.
• The estimated value of the tax advantage, if applicable.
• Written notifications exchanged between co-intermediaries confirming who has reported and that the obligation has been discharged.

Maintaining a contemporaneous file of this documentation is important not only for the initial disclosure but for any subsequent tax audit. Tax authorities may request the underlying analysis, and an incomplete record can complicate a client's position significantly.

Realistic Timelines and Cost Drivers

The 30-day disclosure deadline is tight, particularly where the arrangement involves multiple jurisdictions or advisers in different Member States. In practice, the analytical phase – hallmark analysis, main benefit test assessment, identification of the reporting party, and coordination between intermediaries – is the most time-consuming element and should begin well before any trigger event.

Cost drivers for DAC6 compliance typically include:

• Complexity of the arrangement and number of jurisdictions involved.
• Whether multiple intermediaries require coordination and written notification.
• Legal privilege reviews, particularly where advisers in more than one Member State are involved.
• The need to prepare disclosures in local languages for submission to national portals.
• Ongoing reporting obligations where the arrangement is a marketable one.

For groups with recurring cross-border structures, embedding a DAC6 review into the broader tax structuring process from the outset is more efficient than treating disclosure as a retrospective exercise.

Common Errors by Foreign Clients

Businesses headquartered outside the EU frequently encounter the same categories of difficulty when navigating DAC6 obligations.

• Assuming no EU nexus means no obligation: Where all intermediaries lack an EU connection, the obligation shifts to the relevant taxpayer. Non-EU groups with EU-resident entities or EU-source income cannot assume the directive does not apply to them.
• Treating DAC6 as a formality rather than an analytical exercise: The hallmark analysis requires genuine legal and commercial assessment. Filing a disclosure without properly working through the main benefit test exposes clients to challenge; failing to file when required exposes them to penalties.
• Underestimating the coordination requirement: In cross-border transactions with multiple advisers, each intermediary may believe another has filed. Without explicit written confirmation, this assumption can leave all parties exposed.
• Overlooking Category E for transfer pricing structures: Arrangements involving hard-to-value intangibles, cross-border transfers of functions, or unilateral safe harbour elections attract Category E hallmarks without any main benefit test – a point that is sometimes overlooked in transfer pricing-focused transactions.
• Conflating DAC6 review with tax treaty analysis: Whether an arrangement benefits from a tax treaty is a separate question from whether it triggers a hallmark. A treaty-protected position can still be reportable.
• Failing to monitor marketable arrangements: A one-off disclosure may not be sufficient. If the arrangement is made available to multiple clients, periodic reporting is required.

If your organisation has identified a potential gap in its DAC6 compliance – or is uncertain whether past arrangements should have been reported – early legal review is preferable to waiting for a tax authority inquiry. Contact us at info@ferrazwhitmore.com or visit our contacts page to discuss next steps.

Anti-Avoidance Rules and the Broader Compliance Context

DAC6 does not operate in isolation. It sits alongside the Anti-Tax Avoidance Directives (ATAD 1 and ATAD 2) and the EU's general anti-avoidance rules, as well as OECD transfer pricing standards and country-by-country reporting obligations under DAC4. A cross-border arrangement that triggers a DAC6 hallmark may simultaneously engage ATAD's controlled foreign company rules, interest limitation provisions, or the general anti-abuse rule.

The CJEU has addressed the scope of taxpayer rights and confidentiality in the context of mandatory disclosure. National implementations have diverged on how legal professional privilege is treated, reflecting both constitutional traditions and the latitude the directive gives Member States. Businesses should not assume that a privilege position valid in one Member State will be recognised in another.

In the context of tax due diligence for acquisitions, understanding the target's DAC6 compliance history – including any unreported arrangements – is an increasingly important element of pre-closing risk assessment. Inherited non-compliance can generate penalty exposure that affects transaction value.

Decision Checklist Before Filing

Before submitting a DAC6 disclosure, it is advisable to work through the following questions:

• Is the arrangement cross-border within the meaning of the directive?
• Does it involve at least one EU Member State?
• Which hallmarks, if any, are present? Has the main benefit test been properly applied where required?
• Who is the reporting party? Have all intermediaries been identified and their EU nexus assessed?
• Has legal professional privilege been considered and documented?
• Have co-intermediaries been notified in writing, and has confirmation of discharge been received?
• Is the arrangement marketable, requiring periodic reporting?
• Are there parallel obligations under ATAD, transfer pricing rules, or other DAC layers?
• Has the disclosure been reviewed by qualified counsel before submission?

The Proposed DAC Recast and Direct Taxation Omnibus: What May Change

On 24 June 2026, the European Commission published two proposals of relevance to this area. The first, COM(2026) 308, proposes a full recast of the DAC framework, consolidating DAC1 through DAC9 into a single instrument. The second, COM(2026) 560, is a Direct Taxation Omnibus addressing multiple directives simultaneously, including the Interest and Royalties Directive, the Tax Merger Directive, the Parent-Subsidiary Directive, ATAD, the Dispute Resolution Directive, and FASTER. It also proposes an EU-wide research and development allowance and tax-neutral treatment for all reorganisations recognised under EU company law.

For DAC6 specifically, the proposed recast would make two significant changes if adopted:

• Removal of arrangement reporting for Pillar Two in-scope groups: Groups that fall within the scope of Pillar Two (the global minimum tax) would no longer be required to report cross-border arrangements under the DAC6 hallmark regime. The rationale is that Pillar Two's own reporting and top-up tax mechanisms address the concerns that DAC6 was designed to capture for large groups.
• Extension of the intermediary deadline: The current 30-day reporting deadline for intermediaries would be extended to 90 days, substantially increasing the time available for analysis and coordination.
• Council implementing act for hallmark D2: The Council would be empowered to set substance criteria for hallmark D2 (arrangements undermining beneficial ownership transparency) by implementing act, allowing the standard to be updated without full legislative revision.

These are proposals only. They require unanimous agreement in the Council, and adoption is targeted for 2027–2028. The rules described elsewhere in this guide reflect the law as it currently stands under Directive (EU) 2018/822 and its national implementations. Businesses should not adjust their compliance programmes on the basis of these proposals unless and until they are enacted.

The Unshell Directive (ATAD 3) – a separate proposal that would have imposed substance requirements on shell entities – was discontinued by ECOFIN in June 2025 and is being withdrawn. It forms no part of the current legal framework.

Further detail on both proposals is available from the European Commission's official announcement of 24 June 2026.

How Ferraz & Whitmore Can Assist

Our tax and corporate law teams advise multinational groups, investment funds, and financial institutions on their obligations under DAC6 and the broader EU mandatory disclosure framework. We assist with hallmark analysis, identification of the reporting party, coordination between intermediaries across jurisdictions, and the preparation and submission of disclosures to competent national authorities.

We also advise on the interaction between DAC6 and other anti-avoidance rules, on privilege questions, and on the implications of the proposed DAC recast for compliance planning. Where clients have identified gaps in historical compliance, we are experienced in advising on how to address those positions constructively with tax authorities.

To discuss a specific arrangement or to request a review of your organisation's DAC6 compliance framework, please contact us at info@ferrazwhitmore.com or through our contacts page.

Sources

• Directive (EU) 2018/822 of the Council of 25 May 2018 (DAC6), amending Directive 2011/16/EU.
• European Commission, European Commission proposes landmark tax simplification package, 24 June 2026 – European Commission (24 June 2026).
• COM(2026) 308 – Proposed DAC Recast.
• COM(2026) 560 – Direct Taxation Omnibus.

Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.