On July 12, 2019 the Dutch government published its legislative proposal implementing the European Union’s rules on mandatory disclosure. This legislative proposal is the implementation of the Directive of the Council of the European Union, which was adopted on 25 May 2018 regarding the mandatory disclosure and exchange of cross-border tax arrangements (also referred to as 'DAC6')[1]. Under these rules certain intermediaries (such as tax advisors, accountants and lawyers), and under certain conditions the taxpayer itself, may be required to report key information on certain (tax) arrangements to their local tax administration. Such information will then be exchanged with the tax administrations in other EU Member States through a centralized database.

The DAC6 Directive is effective no later than 1 July 2020, but it is important to note that the rules apply retroactively to arrangements implemented as from 25 June 2018. This means that any arrangements that have been worked on or have been implemented since that date may already fall in the scope of the reporting obligation.[2] The retroactive effect creates a lot of uncertainty and concerns for companies and intermediaries since very few EU Member States have published rules implementing the DAC6 Directive in their domestic legislation. Furthermore, different interpretations on key items can be expected in the, currently, 28 EU Member States. Under the Directive, EU Member States are obliged to to implement the rules in their local laws by January 1, 2020.

As the implementation of this Directive will undoubtedly impact all taxpayers that operate within or across EU borders, it is important for your organization to be aware of this, to discuss this proactively with your advisors, and to track potentially reportable cross-border arrangements in order to be in control of information subject to reporting.

Observations on the Dutch legislative proposal implementing the DAC6 Directive

In implementing the DAC6 Directive, the Netherlands closely follows the wording of the directive. We have reported on the Directive before in our alert which can be found here.


The Dutch legislative proposal does not provide a lot of guidance on to the interpretation of the so called “hallmarks”, which are in essence key indicators for a potentially reportable arrangement. It has been announced that further guidelines will be published by the Netherlands government at a later stage, and such guidelines are expected to also include examples of arrangements that will (or will not) be subject to the reporting requirement under the Dutch implementation of the DAC6 Directive.

The main benefit test

Some of the hallmarks require the main benefit test to be fulfilled before an arrangement becomes subject to reporting. The Directive describes the main benefit test as being fulfilled if:

'the main benefit or one of the main benefits which, […],a person may reasonably expect to derive from an arrangement is the obtaining of a tax advantage.'

The Dutch legislative proposal states that this test is considered fulfilled if there is a (series of) arrangement(s) with an -at least partially- artificial character that -at least partially- is aimed at obtaining a tax advantage. If there are business reasons for an arrangement, without artificial aspects having been added thereto, it can be assumed that the construction is not aimed at obtaining a tax advantage for the purposes of this main benefit test. The main benefit test is not a subjective test, but rather an objective test. This means that the facts and circumstances will be decisive and not the intentions of the intermediary and/or taxpayer.

A few comments are made about the term 'tax advantage'. The Dutch legislative proposal states that this includes tax advantages both arising in the EU and outside of the EU. Further, deferral of taxation can also be deemed a tax advantage. The mere prevention of double taxation or the application of a tax facility, however, do not automatically mean that the main benefit test is fulfilled.

Legal privilege

Under the Dutch legislative proposal, the Netherlands has recognized the legal privilege of certain intermediaries such as attorneys-at-law and civil-law notaries. Intermediaries that can rely on legal privilege do not have an obligation to report. In that case the other intermediaries involved are obliged to report or - if no other intermediaries are involved or they also invoke legal privilege - the reporting obligation will shift to the taxpayer.


Under the Dutch legislative proposal, intermediaries and taxpayers who infringe the obligation to report a reportable cross-border arrangement may be subject to penalties up to a maximum of EUR 830,000 or, in certain cases, criminal prosecution. The penalties are in line with the fines that can be imposed in case taxpayers are not compliant with the CbCR obligations. It is noted that that a penalty may be imposed per each reportable cross-border arrangement as a result of which the penalties imposed can increase significantly. We point out that - in line with the comments made by the Council of State in its advisory opinion - it is questionable whether penalties for non-compliance will be upheld by the Dutch courts as long as the terms included in the legislation are not clearly defined.

Next steps

The legislative proposal is currently under consideration by the House of Representatives (Tweede Kamer). Once the House of Representatives has approved the legislative proposal, the legislative proposal will be debated in the Senate (Eerste Kamer). After approval by the Senate the legislative proposal will come into effect.

We will continue to monitor relevant developments in this respect and will be updating you when more guidance becomes available.

Annex - What constitutes a reportable cross-border arrangement under the DAC6 Directive?

For purposes of this transparency rule, a reportable cross-border arrangement consists of the following three elements: (1) an arrangement, (2) which is cross-border and (3) which is covered by a hallmark.

To constitute a reportable cross-border arrangement the arrangement should fulfil one or more of the hallmarks as listed in the DAC6 Directive. The hallmarks are broadly scoped and represent certain typical features of tax planning arrangements which, according to the Directive, potentially indicate tax avoidance or abuse of direct taxes (e.g., income taxes). Some of the hallmarks only apply if the 'main benefit test' is fulfilled, as explained above. This means that certain arrangements (e.g., those that fall within the specific transfer pricing hallmark) will need to be reported even if they do not satisfy the 'main benefit test'. These include arrangements that involve hard-to-value intangibles or an intra-group cross-border transfer of functions, risks or assets. The below flowchart provides further guidance through the various steps of the DAC6 Directive’s reporting obligation.

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[1] Council Directive (EU) 2018/822 of 25 May 2018 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements, and the 6th update of the EU Directive on Administrative Cooperation in the field of taxation (hence often referred to as “DAC6”).

[2] For this "first reporting period" the filings will have to be done ultimately 31 August 2020.

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