This Directive obliges intermediaries to report:

  • potentially aggressive tax planning arrangements with a cross-border dimension; and
  • arrangements designed to circumvent reporting requirements like the Common Reporting Standard (“CRS”) and Ultimate Beneficial Owner (“UBO”) reporting.

EU Member States’ tax authorities will exchange the reported information automatically within the EU through a centralized database.

Who has the obligation to report? Intermediaries / taxpayers

The reporting obligation applies to intermediaries. An intermediary is defined as “any person that designs, markets, organises or makes available for implementation or manages the implementation of a reportable cross-border arrangement”. An intermediary can be a natural or legal person.

The definition of ‘intermediaries’ includes all tax advisers, accountants, lawyers and other professionals that are advising taxpayers on cross-border transactions. It may also include professionals involved in managing the implementation of transactions such as professionals providing trust services and family offices.

This already broad definition is even made more comprehensive by also including “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 reasonably be 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.”

This should include lawyers, civil law notaries, banks and other professionals who assist in the implementation of cross-border transactions such as professionals providing trust services and family offices.

Only intermediaries with a link to an EU Member State will be regarded as intermediary within the meaning of the Directive. The intermediary should:

  1. be resident for tax purposes in a Member State;
  2. have a permanent establishment in a Member State through which the services with respect to the arrangement are provided;
  3. be incorporated in or governed by the laws of a Member State; or
  4. be registered with a professional association related to legal, taxation or consultancy services in a Member State.

All intermediaries are obliged to file, also in case multiple intermediaries are involved in the same transaction. An intermediary can only be exempt from filing if the intermediary has proof (in accordance with national law) that the information has already been filed by another intermediary.

In certain cases, for instance when no intermediary is involved, when the intermediary does not have an EU presence or in the case of client-attorney privilege1, the obligation to report lies with the taxpayer. If a waiver applies to the intermediary because of client-attorney privilege, such intermediary has to notify any other intermediary or, if there is no such intermediary, the taxpayer, of their disclosure obligations under the Directive.

Reportable arrangements

Cross-border arrangements are arrangements concerning either more than one Member State or a Member State and a third country and meeting certain characteristics. Purely domestic situations and situations having no link to any EU Member State do not fall within the scope of the Directive.

Reportable cross border arrangements are defined in the Directive as “any cross-border arrangements that contain at least one of the hallmarks as set out in Annex IV” of the Directive.


A hallmarks is defined as “a characteristic or feature of a cross-border arrangement that presents an indication of a potential risk of tax avoidance”. The hallmarks are divided into generic and specific hallmarks. The so-called generic hallmarks and some of the specific hallmarks only apply if the main benefit test is satisfied. This test is met if it can be established that the main benefit or one of the main benefits which, taking into account all relevant facts and circumstances, a person may reasonably expect to derive from an arrangement is the obtaining of a tax advantage.

I. The generic hallmarks are linked to the engagement with the intermediary and apply if:

  • One of the parties in the arrangement agrees with confidentiality provisions based on which it is not allowed to disclose to other intermediaries or to the tax authorities how the arrangement could secure a tax advantage;
  • The intermediary is entitled to receive a fixed remuneration and this is linked to the amount of the tax advantage derived from the arrangement; or
  • The arrangement has substantially standardised documentation and / or structure and is available to more than one relevant taxpayer without a need to be substantially customised for implementation.

II. The specific hallmarks that are also linked to the application of the main benefit test are:

  • The acquisition of a loss making company, discontinuing its main activities and using the losses to reduce its tax liability, including a transfer of losses or by the acceleration of the use of the losses;
  • The conversion of income into gifts, capital or other categories of revenue which are taxed at a lower level or exempt from tax; or
  • An arrangement which includes circular transactions resulting in the round tripping of funds.

III. Specific hallmarks relating to certain cross border transactions. These hallmarks relate to:

  • An arrangement that involves deductible cross border payments between associated enterprises and at least one of the following conditions is met:
    a) The recipient of the payment is not tax resident in any tax jurisdiction;
    b) The recipient of the payment is tax resident in (i) a jurisdiction that impose a zero or almost zero corporate tax rate or (ii) the jurisdiction is included in a list of noncooperative jurisdictions of the EU or the OECD;
    c) The payment benefits from a full exemption from tax in recipients tax jurisdiction; or
    d) The payment benefits from a preferential tax regime in recipients tax jurisdiction.
    By compromise it is agreed that in respect of categories (b)(i), (c) and (d) also the main benefit test should be met, whereby the mere presence of the conditions set out in the respective category cannot alone be a reason for concluding that the main benefit test is satisfied.
  • Deducting amounts for depreciation on the same asset in various jurisdictions;
  • Claiming relief for double taxation for the same income in various jurisdictions; or
  • Transferring assets whereby there is a material difference in the amount that is considered to be the consideration for the assets transferred in the various jurisdictions involved.

IV. The fourth category of hallmarks relates to the automatic exchange of financial information under the CRS as implemented in the Member States as well as relating to the determination of the ultimate beneficial ownership. The hallmarks include arrangements which may have the effect of undermining the reporting obligation under CRS. These arrangements includes for instance:

  • The use of a product that is not a financial account as defined under CRS but has features that are substantially similar to those of a financial account; or
  • Transferring financial accounts or assets to or using jurisdictions that do not have to exchange information with the jurisdiction where the relevant taxpayer is resident; or
  • The reclassification of income and capital into products that are not subject to CRS; or
  • The use of legal entities or arrangements that eliminate reporting obligations in respect of an account holder or a controlling person; or
  • The use of arrangements that undermine or use weaknesses in due diligence procedures.

Furthermore this category describes arrangements trying to hide beneficial owners. Such arrangements involve a non-transparent legal or beneficial ownership chain with the use of persons, legal arrangements or structures:

  • That do not carry on a substantive economic activity supported by adequate staff, equipment, assets and premises; and
  • That are incorporated, managed or resident in another jurisdiction than the jurisdiction of residence of one or more of the beneficial owners of the assets held by such persons, legal arrangements or structures; and
  • Where the beneficial owners of such persons, legal arrangements or structures are made unidentifiable.

V. The fifth and last category of hallmarks relates to transfer pricing. These include:

  • Arrangements involving the use of unilateral safe harbour rules;
  • Arrangements involving the transfer of hard to value intangibles.
  • Arrangements involving an intra group cross border transfer of functions and/or risks and/or assets if the projected EBIT during the three year period after the transfer, of the transferor(s) are less than 50% of the projected annual EBIT of such transferor(s) if the transfer had not been made.

Timing and entry into force

Intermediaries or taxpayers shall be required to file information on the reportable cross-border arrangements within thirty days beginning:

a. on the day after the arrangement is made available for implementation; or
b. on the day after the arrangement is ready for implementation; or
c. when the first step in the implementation has been made, whichever occurs first.

Intermediaries providing aid, assistance or advice shall also be required to file information within thirty days beginning on the day after they provided aid, assistance or advice.

Member States have to implement the Directive by 31 December 2019 at the latest and shall apply the provisions from 1 July 2020 onwards.

The Directive shall enter into force on 25 June 2018. Please note ,the Directive will have retroactive effect for all reportable arrangements the first step of which was implemented in the time frame between 25 June 2018 and 1 July 2020.The deadline to file these arrangements is 31 August 2020.

Due to the potentially wide scope of the Directive, clarification and extensive guidance will be required upon implementation of the Directive into domestic rules of the EU Member States.

Information to be disclosed

The information that shall be disclosed to the tax authorities includes:

a) identification of intermediaries and relevant taxpayers;
b) details of the relevant hallmarks;
c) summary of the content of the arrangement;
d) date of first step of implementation;
e) details of the national provisions forming the basis of the arrangement;
f) value of the arrangement;
g) Member States involved in the arrangement;
h) identification of any other person in a Member State likely to be affected by the arrangement.


Member States shall lay down rules on penalties applicable to infringements of national provisions adopted pursuant to the Directive. The penalties provided for should be effective, proportionate and dissuasive.

Please contact your advisor at Loyens & Loeff N.V. in case of queries or in case you require more detailed information. Of course, we will inform you on further relevant developments.

1. Each Member State may take the necessary measures to give intermediaries the right to a waiver from filing information on a reportable cross-border arrangement where the reporting obligation would breach the legal professional privilege under the national law of that Member State. Intermediaries may only be entitled to a waiver to the extent that they operate within the limits of the relevant national laws that define their professions.