DAC6 Is Getting Lighter. Its Enforcement Is Not.
Brussels wants fewer, better cross-border tax reports, and harsher consequences for the ones that go missing. What the DAC recast means for lawyers and accountants advising across EU borders.
Within a few weeks of each other, the European Commission has sent two messages about DAC6 that seem, at first glance, to point in opposite directions.
The first is simplification. The recast of the Directive on Administrative Cooperation, proposed on 24 June and now open for stakeholder feedback until 1 December, would cut the number of mandatory disclosures on cross-border tax arrangements and give intermediaries more time to file them.
The second is enforcement. In its October infringement package, the Commission told Germany, Estonia, Latvia, Lithuania and Hungary that their penalties for breaching DAC rules are too low to deter non-compliance. The five countries have two months to respond.
Read together, the two moves are consistent. Brussels is not retreating from mandatory disclosure. It wants the regime to produce less noise and more signal, and it wants the reports that remain to be filed everywhere, not only where sanctions bite.
For lawyers, notaries and accountants who act as intermediaries on cross-border work, that combination matters more than either headline on its own.
What the recast would change
Five elements of the Commission's proposal stand out for advisers:
More time. The reporting deadline for intermediaries would move from 30 to 90 days.
Fewer generic reports. The Category A hallmarks (confidentiality conditions, fees linked to the tax advantage, standardised documentation) would disappear. According to an analysis by DLA Piper, they account for roughly 35% of all DAC6 disclosures.
A carve-out for large groups. Arrangements involving multinational groups within the scope of the Pillar Two minimum tax rules would be exempt, provided no group member is taken below the 15% minimum rate.
Privilege, rewritten. Following the Court of Justice's 2022 ruling in Orde van Vlaamse Balies, lawyers practising under recognised professional titles who are exempt from reporting on privilege grounds would no longer have to notify other intermediaries of their obligations.
Substance tests, later. What survives of the abandoned “Unshell” proposal does not become a new hallmark. Instead, the Council would have five years after entry into force to adopt economic-substance criteria.
Where the negotiation stands
The text is still moving. The Irish Presidency's September compromise keeps the 90-day deadline and the removal of Category A, but would defer the Pillar Two carve-out to 1 January 2031, pending a Commission review. It also revisits the privilege provisions to bring them closer to the Court's case law.
In the European Parliament, rapporteur Francisco Assis supports the simplification agenda overall but opposes the Pillar Two carve-out, arguing it would leave tax authorities with information gaps. Parliament's opinion is non-binding but required; the plenary vote is scheduled for 15 February 2027.
Member states are aiming for agreement in mid-December. Even on the Commission's own timetable, the DAC6 simplifications would not apply before 1 January 2028.
What this means in practice
Keep the current process running. Until the recast is adopted, transposed and in force, today's rules apply, including the 30-day clock and the Category A hallmarks. Relaxing internal DAC6 procedures on the strength of a proposal is a risk clients have not signed up for.
Expect penalties to converge. Sanctions for missed reports have varied widely across the Union. The infringement procedures suggest that variation will shrink, and that low-penalty jurisdictions will not stay that way.
Coordination becomes the hard part. If privileged lawyers no longer notify other intermediaries, the burden shifts. Accountants, tax advisers and in-house teams need their own way of knowing who files, where and when, particularly when the advisers on a file sit in different countries.
Do not plan around the Pillar Two carve-out yet. Its start date is still under negotiation, and Parliament's rapporteur would prefer it gone.
There is still time to be heard. Feedback on the DAC recast closes on 1 December, and on the direct tax Omnibus on 5 November. Firms that handle DAC6 day to day are well placed to say which simplifications would actually help.
Why this is a network question
A single reportable arrangement can involve a holding company in one member state, a financing entity in a second and advisers in a third, each working under its own transposition of the directive, its own reading of privilege and its own penalties. Getting it right depends less on knowing the directive than on knowing how it operates in each country involved, and on reaching someone there who does.
That is what IGAL is built for: independent law and accounting firms that know their own jurisdictions and know each other well enough to pick up the phone. This week, members of the network meet in Bucharest for our Annual General Meeting. Cross-border questions like this one are exactly what brings them to the same table.
Over to you: which of the proposed changes would make the biggest difference to your practice: the 90-day deadline, the end of Category A, or the clarification on privilege?
Looking for a law or accounting firm in another jurisdiction? Find an IGAL member firm at igal-network.com. Independent firm interested in joining the network? Write to contact@igal-network.com.
This article is provided for general information only and does not constitute legal, tax or accounting advice. IGAL member firms are independent and separately responsible for the services they provide.
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