Reading time: 6 minutes | February 2, 2021 | by Patrick van Ankum

As the primary reporting obligation of DAC6 lies with intermediaries, it is important to have a compliance process in place that will help such organizations to identify its arrangements at an early stage and consistently manage data in the light of potential reporting obligations.

We will discuss four practical steps to consider when preparing an internal monitoring system for the standardization of your DAC6 compliance process. In short, the following steps will help an organization identify a reportable cross-border arrangement (β€˜RCBA’) at an early stage and optimize its compliance workflows throughout:

  1. Create awareness and develop an internal policy
    (raise awareness and prepare to adopt a structured reporting process)
  1. Establish a standardized reporting process
    (coordinate the different departments from a central point and document the process)
  1. Manage workflows and monitor the arrangements
    (take control of your compliance process to guarantee consistency)
  1. Train your staff and track regulatory changes
    (make the relevant sources accessible, both internally and externally)

1. Create awareness and develop an internal policy

First, it is important to learn how the DAC6 / MDR obligations may affect your organization, and to understand your internal and external accountable responsibilities. It is advisable to start by raising general awareness among the key personnel across your different service lines, as well as informing other general and supporting staff. Depending on the size of your firm, it may be advisable to explore software solutions that will automate your workflows and minimize the administrative burden.

Actions to consider:

  • Understand how your organization may be affected by DAC6 / MDR
  • Raise general awareness about the mandatory disclosure regime
  • Identify resources and how technology can aid your compliance process
  • Create a roadmap for implementing the compliance process

2. Establish a standardized reporting process

Depending on the size of your company and your range of services, you should define an end-to-end reporting process. The tax authorities will, first of all, investigate your DAC6 compliance processes in general. The different steps can be structured, ranging from gathering data at the beginning to setting clear roles throughout the entire reporting process and for how the responsibilities are determined. Ultimately, you will want to ensure there are no missed or late disclosures, the potential RCBAs are identified in an early stage, and the disclosures are filed accurately and are complete. Regardless of who prepares the arrangements, each potential RCBA should consistently follow the same steps, ultimately leading to an accepted report.

Actions to consider:

  • Standardize how the required information is collected and processed
  • Coordinate the compliance process from a central point
  • Implement checks and balances
  • Set clear roles and responsibilities to clarify the workflows for:
    • data collection and storage
    • hallmark assessments
    • reviews of data and disclosure decisions
    • filing to local tax authorities

3. Manage workflows and monitor the arrangement

It is important to minimize the administrative burden where possible, meaning that key personnel should ideally spend the minimal amount of time on preparatory activities, and should primarily fulfil roles covering reviews and decision-making on disclosure responsibilities. Ideally, you can then monitor all the different steps in preparing your arrangements and carry out any necessary adjustments in due time, to avoid cases of under-reporting or over-reporting. Subsequently, you can easily manage all (external) stakeholders, including clients, tax inspectors (tax audits) and other intermediaries that may have assisted. This also means establishing a secure information system that is ideally based on need-to-know / least-privilege principles.

Actions to consider:

  • Collect the required information efficiently and store the arrangements for each client
  • Centralize your (digital) data repository and secure the information systems
  • Implement a two-tier, four-eyes principle-based hallmark assessment
  • Discuss any gray areas and substantiate defendable standpoints (audit trails)

4. Train your staff and track regulatory changes

Raise awareness within your organization and ensure red flags canΒ  be identified by your personnel at an early stage. When training your staff, the use of typical case studies will help them learn more effectively. In addition, it is advisable to create instruction manuals or guidelines to help enshrine the best practices. It is also crucial to identify the relevant resources and provide easy access for your personnel, to continuously track the regulatory changes and monitor developments.

Actions to consider:

  • Establish internal guidelines or instruction manuals and train your staff by using case studies
  • Identify legislation and make the relevant information resources easily accessible to your staff
  • Track the regulatory changes and other developments in each relevant jurisdiction
  • Update your staff and clients with news about notable developments in a timely manner

Pragmatic flowchart illustrating how you can prepare your DAC6 compliance process as a whole


Patrick van AnkumTax Technology Specialist

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