EU rules oblige intermediaries – advisers, accountants, banks and lawyers among them – to report certain cross-border arrangements that show defined hallmarks to the tax authorities. These are the EU’s mandatory disclosure rules, generally known as DAC6. This article does not deal with the fiscal merits of any arrangement; our firm does not advise on cross-border tax structuring. It deals with the questions around the obligation itself: who carries it, what happens if it is missed, and how it interacts with professional confidentiality.

What triggers the reporting duty?

A cross-border arrangement becomes reportable when it shows one of the defined hallmarks set out in the rules, for example a structure built around confidentiality, a fee linked to the tax advantage obtained, or the use of a loss-making entity. Whether a specific arrangement qualifies is a legal assessment that should be made, and recorded with reasons, at the time the arrangement is designed or implemented.

Who has to report?

The duty falls in the first place on the intermediary who designs, markets, organises or makes available a reportable arrangement, or who assists in its implementation. Where several intermediaries are involved, each is in principle obliged to report, unless it can show that another intermediary has already filed the same information. That is why evidence of who filed, and when, needs to be kept rather than assumed.

When does the duty shift to the client?

Where no intermediary is obliged to report, or where the intermediary invokes legal professional privilege (verschoningsrecht), the obligation shifts to the taxpayer. That shift is the point at which most disputes between adviser and client begin, because the client often discovers the duty late and the reporting deadline is short.

What if legal professional privilege applies?

Intermediaries covered by legal professional privilege – in the Netherlands, lawyers and civil-law notaries within the scope of their privilege – are relieved of the duty to report, but not of the duty to notify. They must inform the other intermediaries involved, or the taxpayer, that the reporting obligation has passed to them. Getting that notification right, in writing and on time, is what separates a privileged adviser who has complied from one who has not.

What happens if you don’t report?

Non-compliance can lead to administrative penalties, and in serious cases the conduct falls within the scope of fiscal criminal law. Alongside the penalty sits civil exposure: an adviser who failed to report, or failed to notify the client that the duty had shifted, may be liable to the client for the penalty the client then incurs.

That civil exposure is the reason the obligation matters even to advisers who are confident they fall outside it. The assessment of whether an arrangement is reportable is itself an act of professional judgement, and documenting it at the time is the best protection if that judgement is later challenged.

What should you arrange in the engagement letter?

Engagement letters should state expressly who assesses whether an arrangement is reportable, who files, what the client must provide and by when, and what happens if the client refuses to supply information. Where privilege applies, the notification obligation and its timing should be spelled out. These clauses cost nothing to include at the outset and decide liability afterwards.

How we can help

We advise advisers and their clients on the contractual allocation of reporting duties, on the professional liability that can arise from them, and on disputes about who should have filed. For the fiscal assessment of an arrangement itself, we work alongside a tax specialist.

In summary

EU mandatory disclosure rules (DAC6) require intermediaries to report cross-border arrangements with defined hallmarks.
If no intermediary is obliged to report, or one invokes legal professional privilege, the duty shifts to the taxpayer.
A privileged adviser must still notify the other intermediaries or the taxpayer that the duty has passed to them.
Failing to report can trigger administrative penalties, fiscal criminal law exposure, and civil liability toward the client.
Set out who assesses, who files and who notifies whom in the engagement letter, before a dispute arises.

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