The Directive for Administrative Cooperation in Direct Taxation (DAC) is one of the most powerful tools available to EU Member States’ tax authorities to cooperate and protect their tax bases in respect of cross-border transactions. Since its introduction in 2012, the DAC has considerably expanded in scope, leading to increased complexity for both taxpayers and tax authorities, as well as overlaps in the information automatically exchanged between tax authorities.
This consultation forms part of a broader process led by the European Commission to clarify, simplify and improve the functioning of the DAC. The objective is to reduce the administrative burden for relevant stakeholders while supporting growth and competitiveness across the EU.
In our response, we confirm that the DAC remains essential for Member States’ fiscal control. However, we stress that an assessment should be carried out to determine which information is actually used by tax authorities. This assessment should serve as the starting point for any adjustment of the DAC framework.
While the DAC framework contains inherent complexities, overlaps in reporting and inconsistencies, we also highlight that a significant share of the administrative burden on taxpayers stems from divergent interpretation and implementation by Member States. We therefore call for greater harmonisation at EU level.
Representing professional accountants working in tax, we draw particular attention to DAC 6, which is widely considered to be uncertain and complex and to impose a disproportionate burden on taxpayers and their advisers relative to its usefulness for tax authorities.
Although not yet fully operational, we also highlight the significant compliance burden on businesses arising from their reporting obligations under DAC and Pillar Two (DAC 9).
