COVID-19 update and Guidelines published on the Dutch implementation of DAC6

NL Law
The EU Mandatory Disclosure Directive (“DAC6”), introducing a reporting requirement for intermediaries and/or taxpayers of certain cross-border arrangements that are perceived to be aggressive, is effective as of 1 July in the Netherlands. By his letter of 26 June 2020, the Dutch State Secretary of Finance granted deferral of the Dutch reporting deadlines until 1 January 2021.

The same week, the Dutch State Secretary of Finance published its Guidelines on reportable cross-border arrangements by a Decree dated 24 June 2020, no. 2020-11382 (the “Guidelines”), which provide further guidance on the reporting obligation.

I. COVID-19 update

Travel restrictions should not affect meeting the (Dutch) substance requirements

In our Short Read of 31 March 2020 where we discussed meeting the (Dutch) substance requirements during the COVID-19 pandemic. The Dutch State Secretary of Finance has recently answered various questions on this topic. In his letter of 15 June 2020, the State Secretary of Finance confirms that the Netherlands shall take the travel restrictions taken by various jurisdictions due to COVID-19 into account when enforcing its substance requirements in line with the OECD’s guidelines on the impact of COVID-19 published on 3 April 2020. This implies that the COVID-19 travel restrictions (whereby board members are not able to travel to the Netherlands) should not necessarily lead to having a (management) permanent establishment in another jurisdiction or no longer meeting the substance requirements because no physical board meetings can be held.

Deferral of DAC6 reporting deadlines until 1 January 2021

Due to COVID-19, the EU Member States have reached agreement to allow an optional six-month deferral of DAC6’s reporting deadlines (see our Tax Alert of 10 June 2020). By his letter of 16 June 2020, the Dutch State Secretary of Finance clarified that the Netherlands will grant, in line with the EU decision, deferral of the reporting deadlines until 1 January 2021, in order to create a level playing field for intermediaries and taxpayers of EU Member States. DAC6 is still retroactively effective from 25 June 2018. As a result of such retroactive effect and the granted deferral, reportable cross-border arrangements of which the first step of the implementation was taken between 25 June 2018 and 1 July 2020, must be reported ultimately on 28 February 2021. Reportable cross-border arrangements of which the first step of implementation was taken on or after 1 July 2020, must be reported ultimately within 30 days from 1 January 2021.

II. DAC6 Guidelines on reportable cross-border arrangements

Whether a cross-border arrangement is reportable depends on whether such arrangement meets certain “hallmarks” and, in some cases, in addition meets the “main benefit test”. The hallmarks are (intentionally) worded very broadly, which has raised many questions and uncertainty as to the scope of DAC6. On 30 June 2020, the Dutch State Secretary of Finance published its previously announced Guidelines, which provide further guidance and practical examples on reportable cross-border arrangements.

Cross-border arrangements

According to the Guidelines, the term “arrangement” should be considered neutrally and can exist of one or multiple transactions, acts, arrangements, loans or a combination thereof.  An arrangement that contains a cross-border aspect can have multiple appearances. In this respect, they specify that a domestic merger of two Dutch companies whose shareholder is located in a foreign jurisdiction, is also considered a cross-border arrangement.

Intermediary / relevant taxpayer

Under DAC6, intermediaries are in principle obliged to report reportable cross-border arrangements to the tax authorities. This also includes any person that, based on available information and the relevant expertise and understanding required to provide such services, knows or could be reasonably expected to know that they have undertaken to provide, directly or by means of other persons, aid, assistance or advice with respect to designing, marketing, organising, making available for implementation or managing the implementation of a reportable cross-border arrangement (referred to as an “auxiliary intermediary”). The Guidelines clarify that such auxiliary intermediary has in principle no obligation to investigate and is not held to collect more information than necessary to perform its services. According to the example provided, a lawyer who receives a complete file in order to advise on one certain aspect, cannot be held to review the complete file to assess whether it includes any reportable cross-border arrangement, as this is not necessary for the advice.

If there is no intermediary involved with the reportable cross-border arrangement or the intermediary is exempt from its reporting obligation (e.g. because of its legal privilege), the reporting obligation shifts to the relevant taxpayer. In such case, the reporting deadline for the relevant taxpayer commences once the intermediary has notified the relevant taxpayer hereof.

Main benefit test

In addition to the hallmarks, certain cross-border arrangements would only be reportable if they also meet the main benefit test. This test will be satisfied if it can be established that the main benefit or one of the main benefits which is reasonably expected to derive from the arrangement is obtaining a tax advantage, whether within the EU or in a third country. According to the Guidelines, objective facts and circumstances should be reviewed to determine whether the test is met, and not subjective intentions. In this respect, the Guidelines refer to the UK’s DAC6 consultation document, which indicate that arrangements that are entirely in line with the policy intent of the legislation upon which the arrangement relies, shall not meet the main benefit test. However, such arrangements could still be part of wider arrangement designed to generate a tax outcome outside that intended by the legislation.

The Guidelines state that there will be roughly two situations in which the main benefit test will be met: (i) if the arrangement would not be implemented without the expected tax benefit and such tax benefit is decisive; and (ii) if the arrangement consists of elements that have been added to obtain a tax benefit and such tax benefit is (one of) the most important benefit(s) of the arrangement. To determine the foregoing, a comparison should be made between the scenario with the application of the advantageous tax legislation vs. the scenario without the application of such legislation. If the arrangement would not have been set up in the latter scenario, the tax benefit could be considered the main benefit and thus the test would be met. The Guidelines provide an example in which a multinational group decides to relocate its R&D department to another jurisdiction because of the latter country’s more beneficial R&D regime.


The Guidelines contain a list of examples of certain hallmarks. With respect to hallmark B.2, which is perceived to have a broad scope in practice, the Guidelines clarify that applying the 30%-regime (a Dutch wage tax exemption to attract highly-skilled foreign employees), would not fall within its scope. However, an arrangement where a company decides to redeem shares (considered as a capital gain which right to tax is assigned to the shareholder under certain tax treaties) instead of making a dividend distribution (that would have been subject to Dutch dividend withholding tax), does fall within the scope of hallmark B.2.

The Guidelines also clarify that imputing a deductible interest in the Netherlands, without an actual interest pick-up in another jurisdiction would fall within the scope of hallmark C.1. The fact that there is no pick-up in the recipient’s jurisdiction, but the income is effectively captured in its shareholders’ income base under applicable CFC-rules, would not change this and would still lead to meeting hallmark C.1. It is furthermore clarified with respect to hallmark E.3, which is expected to be broadly applied in practice, that a cross-border merger would fall within its scope because the dissolving entity’s EBIT is expected to be zero after the merger.


It should be noted that the Guidelines are indicative only and no rights can be derived from it. In case of uncertainty it is possible to ask questions relating to a specific situation on a no-names basis to the especially appointed MDR-team of the Dutch tax authorities, that will act as a helpdesk.