As the 31 December 2019 deadline for the implementation of DAC6 into the national legislation of EU Member States draws closer, legislators across the EU little by little shed more light on the scope of application of DAC6. 

In the most recent explanatory notes to the law proposal for the implementation of DAC6 into Dutch law, the Dutch government clarified that an in-house tax department of an MNE qualifies as an intermediary and, therefore, is subject to the reporting requirements imposed by DAC6 if it renders services to a group company in a transaction that qualifies as a reportable cross-border arrangement.  So how will this work in practice?

Suppose MNE A has a tax department in the Netherlands. All staff of the tax department of MNE A is employed by MNE A Tax Services BV. One of the in-house tax lawyers of MNE A Tax Services BV renders advice in a transaction that involves the transfer of a hard-to-value intangible between two EU companies within the MNE A group. This transaction is covered by Hallmark E of the Annex to DAC6. According to the Dutch government, MNE A Tax Services BV is an intermediary and must report the transaction under DAC6 to the Dutch tax authorities (unless the transaction is reported by another intermediary). 

One could say that this is an overly broad interpretation by the Dutch government of the term 'intermediary', because DAC6 is generally understood to impose a reporting requirement on outside advisors (see for example recital 5 of DAC6 which refers to advisors and their clients).

 In our view, however, this broad interpretation is not necessarily a bad result for MNE A, because it enables MNE A to take full control over the content and the process of the DAC6 filing. 

If MNE A Tax Services BV would not be an intermediary, other intermediaries involved in the transaction would have the DAC6 filing obligation. In that case MNE A would be advised to ensure that it retains control over the content and the process of the DAC6 filing (including the question of who should bear the costs of the filing) by making appropriate arrangements in the terms of engagement with each of the third party intermediaries involved in the transaction. Now that MNE A Tax Services BV is an intermediary itself, it will only have to agree with other intermediaries involved in the transaction that MNE A Tax Services BV will do the filing itself, full stop. 

This is much easier, saves time consuming discussions with other intermediaries and eliminates the risk that DAC6 filings are made outside of the control of MNE A.