2023-05-19-KPMG_s_EU_Tax_Centre-Euro_Tax_Flash_from_KPMG_s_EU_Tax_Centre_6页_458kb

Summary of Euro Tax Flash: DAC 8 Agreement

Core Content

The European Commission's proposal for the Directive on Administrative Cooperation (DAC 8) has been agreed upon by the ECOFIN Council on May 16, 2023. This directive aims to expand the scope of the EU's automatic exchange of information (AEI) framework to include crypto-assets and cross-border tax rulings for individuals, aligning with the OECD's Crypto-Asset Reporting Framework (CARF) and the Markets in Crypto-Assets (MiCA) Regulation.

Main Points and Key Information

1. Extension of DAC to Cover Crypto-Assets

• Scope: The directive applies to crypto-asset service providers (CASPs) that provide services within the EU, regardless of whether they are regulated under MiCA.
• Due Diligence: RCASPs (reportable crypto-asset service providers) must perform due diligence to identify reportable users.
• Reporting Timeline: The initial reporting deadline of January 31 was removed; reporting can now occur throughout the following calendar year.
• Exemption: Previously, entities authorized under MiCA could be exempt if due diligence was completed in another jurisdiction. This exemption was removed, requiring RCASPs to fulfill obligations in their host Member State.
• Transaction Blocking: If a CASP cannot obtain required information within 60 days and after two chasers, it must block the user from performing exchange transactions.

2. Exchange of Information on Cross-Border Rulings for Individuals

• Scope: Applies to rulings involving individuals where:
  • The transaction value exceeds EUR 1,500,000, or
  • The ruling determines the tax residence of the individual.
• Effective Date: The rules apply to rulings issued, amended, or renewed after January 1, 2026. Rulings valid as of that date but issued before are not in scope.

3. Penalty Regime

• Outcome: The minimum penalty framework proposed by the Commission was not agreed upon by the Council.
• Discretion: Penalties remain at the discretion of Member States, but they must be effective, proportionate, and deterrent.

4. Reporting of Tax Identification Numbers (TINs)

• Requirements: Member States must ensure the reporting and exchange of TINs for certain categories of income and capital, and for various AEI mechanisms.
• Timeline:
  • TIN reporting for income/capital: January 1, 2030.
  • TIN reporting for other exchanges: January 1, 2028.
• Encouragement: The preamble of DAC 8 encourages Member States to timely transpose domestic legal requirements for TIN reporting.

5. DAC 6 Amendments

• Legal Professional Privilege: The requirement for intermediaries under legal professional privilege to notify other intermediaries of their DAC6 reporting obligations was removed.
• Client Notification: These intermediaries are still required to inform their clients about reporting obligations.
• DAC6 Report: The identification of legal professional privilege intermediaries is no longer required in the DAC6 report.

6. Other Amendments

• Effective Use of Data: Member States are required to implement mechanisms to ensure the effective use of the information exchanged, including:
  • Voluntary compliance programs
  • Notifications to generate disclosure
  • Awareness campaigns
  • Prefilling tax returns
  • Risk assessments
  • Audits (limited or general)
  • Tax coding and estimation

7. Next Steps

• Adoption: The directive will be formally adopted once the European Parliament provides a non-binding opinion.
• Timeline:
  • TIN reporting: January 1, 2030 (for income/capital) and January 1, 2028 (for other exchanges).
  • General Transposition: Member States must transpose the directive by December 31, 2025.
  • Effective Date: The rules will apply from January 1, 2026, with some exceptions.

8. EU Tax Centre Comment

• Speed of Approval: DAC 8 was approved six months after the initial proposal, similar to DAC 7.
• Alignment with CARF: The directive aligns with the OECD's CARF and the OECD's amendments to CRS.
• Remaining Differences: Some differences between CARF and DAC 8 remain, as noted in a related KPMG report.
• Penalty Concerns: Member States were reluctant to agree on a minimum penalty floor, and the Commission was not successful in overcoming these objections.
• Belgium's Disappointment: Belgium expressed disappointment with the TIN reporting timeline, suggesting implementation from January 1, 2024 to ensure the functioning of safe harbors in the Minimum Tax Directive.

Relevant Regulations

• MiCA Regulation: Provides definitions and authorization requirements for crypto-asset service providers.
• Transfer of Funds Regulation (TFR): Also relevant for the application of DAC 8.
• Minimum Tax Directive: Influences the safe harbor provisions related to TIN reporting.

Conclusion

DAC 8 marks a significant step in the EU's efforts to enhance tax transparency and international cooperation, particularly in the context of crypto-assets and individual tax rulings. While it aligns with international standards like CARF, it also retains some national flexibility, especially in the area of penalties and TIN reporting timelines. Member States are now tasked with implementing the directive by the end of 2025, with the rules becoming effective from 2026.