The European DAC 6 directive was translated in France at the end of October, strengthening European and national legislation to combat tax evasion and fraud.
What are the challenges of this directive? Tax optimization is in danger.. Décryptage.
What is CAD 6?
DAC 6 is the sixth version of a European Union directive corresponding to administrative cooperation between member states. Dated May 25, 2018, its purpose is to create a fair tax environment within the union.The directive plans to simplify the transmission of information allowing Member States to react quickly to potentially aggressive tax planning schemes. It also allows the establishment of a reporting mechanism for cross-border arrangements. DAC 6 entered into force on June 25, 2018 within the EU and will take effect on July 1, 2020. On October 22, Ordinance 2019-1068 of October 21, 2019 was published in the Official Journal. This text translates into French law the provisions provided for by the DAC 6 directive.
What are at stakes and the parties involved?
The primary goal of this directive is to curb the most dangerous optimization schemes in order to intensify the fight tax fraud and tax evasion. The obligation weighs on many players: bankers, tax advisors, and their clients involved in all types of financial operations such as disposals, mergers and acquisitions, or even internal reorganizations.
The Directive allows the European Union to implement Action 12 of the OECD's Action Plan on the Erosion of the Tax Base and the Transfer of Profits (or "BEPS project") relating to "the definition of a mandatory disclosure regime applicable to transactions, schemes or structures of an aggressive or abusive nature". This obligation should enable tax administrations to have access to complete information relating to corporate tax planning operations.
What are the sanctions ?
The provisions of the ordinance will come into force on July 1, 2020. However, its application is retroactive, so it will apply to operations implemented as early as 2018. The various actors indicated in the directive must therefore now identify the operations concerned and prepare their various declarations.
The texts provide for a fine of 5,000 euros per device in the event of failure to declare. This sanction can be increased to 10,000 euros in case of repetition up to a limit of 100,000 euros. According to a study by the Economic Analysis Council, which reports to the Prime Minister’s office, published on November 19, tax optimization represents a 4.6 billion euros loss in tax revenue in France.