The European Commission has announced it adopted a proposal to amend the Directive on administrative cooperation in the field of taxation (Directive 2011/16/EU – DAC) on 28 October 2024.
The goal is to make it easier for companies to fulfil their filing obligations under the Pillar Two Directive (Directive (EU) 2022/2523) (DAC9).
DAC lays down the rules and procedures for EU countries’ tax authorities to closely cooperate with each other in direct taxation. It sets up a harmonised framework allowing EU countries to help each other by sharing information and through other forms of advanced cooperation.
What does DAC9 do?
The DAC9 proposal is closely linked with the 2022 Pillar Two Directive, which aims to ensure a global minimum level of taxation for multinational enterprise groups (MNEs) and large-scale domestic groups (LSDGs) in the EU.
The DAC9 proposal supports the Pillar Two Directive by making it easier for MNEs to comply with their filing obligations under that Directive. Without the DAC9 proposal, each company that forms part of an MNE would have to file a top-up tax information return in the country where it is based, which can be time consuming and complicated.
Now, under DAC9, MNEs only have to file one top-up tax information return, at central level, for the entire group. This will significantly simplify the filing process and reduce the administrative burden for MNEs.
To achieve this, the proposal:
- sets up a system for tax authorities to exchange information with each other;
- introduces a standard form, in line with that developed by the Inclusive Framework of the OECD and the G20, which MNEs and LSDGs will have to use to report certain tax-related information.
The form will also help ensure that MNEs and LSDGs provide the same information in the same format, making it easier for them to fulfil their filing obligations and for tax authorities to assess and exchange it. The Commission will also be enabled to update the form in line with any changes brought to the form agreed at international level so as to ensure swift alignment.
This is in line with the EU’s goal of simplifying and rationalising reporting requirements, making it easier for businesses to comply with the rules.
Once adopted by the EU Council, EU governments will have until 31 December 2025 to put DAC9 into practice. For countries that have chosen to delay implementing the Pillar Two Directive, the same deadline will apply to them for implementing DAC9.
MNEs are expected to file their first top-up tax information return by 30 June 2026, as required under the Pillar Two Directive. The relevant tax authorities must exchange this information with each other by 31 December 2026 at the latest.
