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DAC6/CRS Reporting

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DAC6/CRS Reporting Module - DAC6 and MDR Compliance

What is DAC6 and what are MDRs?
MDR (Mandatory Disclosure Regime) is one of the transparency initiatives of the OECD’s BEPS (Base Erosion & Profits Shifting) Items, i.e. BEPS Action 12 – Mandatory Disclosure Rules. The EU implementation of MDR known as DAC6, Directive on Administrative Cooperation (EU Directive 2018/822), amending Directive 2011/16/EU, imposes mandatory reporting of cross border arrangements. It affects at least one EU Member State that falls within one of several categories or “hallmarks.

Who affects DAC6 and MDR?
DAC6 impacts primary Multinational Enterprises (MNEs) operating in at least one of these twenty nine (29) countries: EU27, UK, and Gibraltar. In addition, countries outside Europe such ad Mexico and Argentina have implemented MDR rules effective from 2021 but retroactive to prior years. Other jurisdictions are likely to follow that are already members of OECD BEPS inclusive framework.

What is the purpose of DAC6?
DAC6 (EU Directive 2018/822) gears mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements, and requires intermediaries such as banks, financial institutions, brokers, accountants, lawyers, financial consultants or taxpayers to mandatory disclosure of cross-border arrangements to the local tax authorities which will automatically exchange this information among the EU Member States tax authorities.
The stated purpose of DAC6 is to enhance transparency, reduce uncertainty over beneficial ownership and discourage intermediaries from designing, marketing and implementing harmful tax structures.

Who would have to report?
The reporting obligation would fall on intermediaries but also, in some specific cases, on relevant taxpayers. An Intermediary for the purposes of this Directive is defined as:
(a) the promoter which is any person that designs, markets, organizes, makes available for implementation or manages the implementation of a reportable cross-border arrangement , and
(b) the service provider which is any person that, having regard to the relevant facts and circumstances and 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 a reportable cross-border arrangement.
Multiple Intermediaries: where there would be more than one intermediary involved in the same reportable cross-border arrangement, the obligation to file information would lie with all the intermediaries simultaneously but an intermediary, if it can prove that the transaction has been already reported, is not obliged to report this transaction.
No Intermediary:  Where no intermediary located in the European Union is involved or if all intermediaries benefit from a legal professional privilege, the reporting obligation falls on the relevant taxpayer.

What must be reported, and when?
The mandatory reporting to the tax authorities is required from 1 July 2020. Any reportable cross-border arrangement implemented after that date is to be reported within 30 days of the reporting trigger. However, the European Commission has released a proposal granting an extension to DAC6 reporting deadlines due to COVID-19. The new deadlines to report cross-border arrangements for intermediaries and relevant taxpayers would be the following:
  • When the first step of a reportable cross-border arrangement was implemented between 25 June 2018 and 30 June 2020 would need to be reported by 28 February 2021.
  • Any reportable cross-border arrangements were initiated between 1 July 2020 and 31 December 2020, and as from 1 January 2021, would need to be reported within 30 days starting from 1 January 2021.

Is non-compliance an option?

There are significant penalties for non-compliance, so it pays to be prepared. The penalties would amount to up to EUR 250,000 but the penalty apply per reporting in the case at hand. A penalty would also apply for failure to report, late reporting, incomplete or inaccurate reporting, as well as a breach of the requirements imposed on intermediaries concerned by the legal professional privilege. Each EU Member State law will define the relevant penalties.

Are you ready for DAC6 and MDR compliance?
DAC6 and MDR rules require continuous company-specific data gathering and reporting, and requires the active participation of multiple company personnel, not just the tax or compliance department. Save time and avoid substantial penalties with the CubeIQ DAC6 Reporting solution. Act now because DAC6 and MDR won’t leave room to take action later.

DAC6/CRS Reporting Application in Relation with Prime® Compliance Suite

DAC6/CRS is primarily a tax law and although it intersects with anti-money laundering (AML) regulations it is not require exchanging data with the AML system in order to operate and generate reports.

Your institution’s Know Your Customer (KYC) and Customer Identification Programs (CIP) may comply with the client management, identification and verification-of-customers portion of DAC6/CRS Reporting.

DAC6/CRS evaluation results might require being included as an additional Rik Item to your institution’s CDD/EDD application in order to update Customer Profiling and recalculate Customer Risk Rating.
CubeIQ's DAC6/CRS Reporting Application Operation

DAC6/CRS Reporting Application provided by CubeIQ is an autonomous web based data management and reporting application. DAC6/CRS is provided as Software as a Service - SaaS installed in Microsoft Azure cloud infrastructure.

DAC6/CRS Reporting Application is an end-to-end cloud solution to support your institurion DAC6 compliance requirement process. The solution allows you to identify, gather, and assess arrangement data and report in line with the receiving authority’s technical requirements.

DAC6/CRS Reporting Application Operation is realized in five steps:
  • User management for defining and registering internal users.
  • Client management for handling all clients’ arrangements.
  • Arrangement management which gives you information to all the arrangements per clients and helps you to gather all required data.
  • Hallmark test to check which hallmarks are applicable to the arrangements for the countries that are in
  • Reporting, easily report processed arrangements to the different country authorities.

DAC6/CRS Reporting Features:
  1. Autonomous web based software application with its own database schema.
  2. Software as a Service with Microsoft Azure Cloud installation
  3. Multiple users support. Uses can reside in different departments within the financial institution.
  4. Capability to review and approve Arrangement with Customers data before report creation.
  5. Capability to search Users, Customers and Arrangements.
  6. Full DAC6 functionality by Analyzing, Assessing and Reporting Arrangements.
  7. Support Users on every step of the process with the right know-how in a guided and funneled way.
  8. Alerts Users about reporting deadlines, dated from the arrangements, in real-time.
  9. Define User roles such as “preparer”, “reviewer”, “viewer”, “authorizer” and “reporter”.
  10. Build robust and compliant documentation per arrangement including integrated audit trailing.
  11. Determine the applicable hallmarks based on the characteristics or features of an arrangement confidently by using the integrated knowledge base functionality.
  12. Build-in communication between involved parties, internal users or customers.
  13. Report creation in XML, PDF and Word formats.
  14. Internal reportable and non-reportable arrangements database with the related documentation and created reports internal file repository.
  15. DAC6enforcer add-on: guide, enforce, and monitor users’ actual compliance behavior

For more information about DAC2/CRS Reporting Application or Prime® Compliance Suite and how it covers DAC2/CRS compliance requirement please use the follwoing links.

For any question or comment please contact our support team at sw.support[at]cubeiq[dot]gr.
For product or services inquiries please email to: sales[at]cubeiq[dot]gr or fill our information request form.

AML On-Line by CubeIQ Ltd. :: www.cubeiq.gr

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