Legal entity management

DAC 6 – valuable insights to consider when you set up your process

28 May, 2020


DAC 6 filing will likely be postponed until October 2020. This may give you some more time to fine tune your process to manage DAC 6 and make sure your group is compliant and to avoid heavy fines. The number of arrangements that will be filed may vary a lot from group to group but nevertheless, it is likely that you still have to review quite a few arrangements per year to pick out the ones that needs to be filed.

This work requires a robust process to meet the tight 30-day rolling deadline. The following points will give you some insights of what to think about when you set up your process.

  • A process to manage DAC 6 could be handled centrally or rolled out to people or functions locally. However, the complexity of the reporting makes it risky to leave the review of the arrangements to local people who may not have deep tax knowledge and have few arrangements to assess in a year. A prudent approach is to always have an internal expert review arrangements before filing. Read more here
  • A simple and tailored process is key to success. This means that questionnaires will be a difficult route to choose to handle the process from collection to assessment and filing, read why here
  • A solution will benefit from supporting both a tailored approach and include support for building up an internal knowledge database that further strengthens the process and help both local people and the tax department
  • You need to set up a process with internal people since arrangements need to be caught quickly and filed within 30 days. This makes it difficult to rely on external experts for identification unless you frequently have them review transactions which have taken place in each jurisdiction on a weekly or bi-weekly basis. In addition, it is most likely your internal people who know what transactions have taken place and will be able to dig up information on them which is needed to complete the filing
  • A solution to support assessments is secondary to a solution which handles the process efficiently, this as you build up your own knowledge database making the need for assessment support decrease over time. But more importantly, the Directive is difficult to interpret and there are grey areas which makes it difficult to trust a solution for help with assessments. In complex cases an expert is most likely needed. Read more about a robust process here
  • Many jurisdictions will support XML filing of arrangements. It is quite complex to know what information to collect in order to have all the data needed to convert it to the required format quickly
  • You may have to file in multiple jurisdictions making it important to have a solution which could handle that, at least in the jurisdictions where you file most of your arrangements
  • Mandatory disclosure reporting may be introduced in jurisdictions outside of the EU making it important to choose a solution which is future proof

Blika would be able to provide you with a solution which address the points mentioned above to support your organisation with implementing an efficient process. If you would like to know more about our practical, robust and yet simple process, please do not hesitate to register for a demo here.