EU Tax Round-Up: DAC6 Dropped, DAC8 Advances, IAS 12 Amended
A cluster of EU and international tax decisions landed in quick succession, touching mandatory disclosure rules, crypto-asset reporting under DAC8, deferred tax accounting for Pillar Two, and legislative moves in Italy, Estonia, and Ireland. Each item carries direct compliance consequences for accounting firms and finance teams with EU exposure.
French DAC6 Case Withdrawn from the CJEU
What the Belgian ruling established
The CJEU had already ruled in the Belgian case Orde van Vlaamse Balies and Others (C-694/20) that the DAC6 obligation requiring a legally privileged intermediary to notify other intermediaries of their own reporting duty is invalid. The basis was Article 7 of the Charter of Fundamental Rights of the EU, which protects lawyer-client communications. That ruling effectively settled the legal question.
Why the French referral was dropped
The parallel French case, Conseil national des barreaux and Others (C-398/21), raised the same compatibility issue. After the CJEU's Registry asked the referring French court whether it wished to continue, the court confirmed it did not. The case was removed from the Registry on 8 March 2023. Firms that had been monitoring this referral as a potential further source of guidance should note that no additional CJEU ruling will follow: the Belgian judgment stands as the definitive authority on this point.
For legal professional privilege holders acting as DAC6 intermediaries, the practical implication is clear: the notification-to-other-intermediaries mechanism cannot be enforced where it would breach that privilege. Member states that have not already adjusted their domestic rules in response to the Belgian ruling should be watched closely.
DAC7 Equivalence Regulation Adopted
Eliminating double reporting for non-EU platform operators
On 13 April 2023, the European Commission adopted a regulation establishing the criteria for deciding whether information exchanged between a member state's tax authority and a non-EU country's authority is equivalent to what DAC7 (Council Directive (EU) 2021/514) requires. Where equivalence is confirmed, non-EU digital platform operators that already report under a comparable regime (for example, under the OECD's multilateral competent authority agreement) are relieved of the obligation to report separately to EU member states, removing the risk of duplicating the same data in two jurisdictions.
A point the Commission clarified in the regulation's recitals: automatic exchange of information is required between the non-EU country and the EU member state. Bilateral arrangements that do not provide for automatic exchange will not satisfy the equivalence test. Platform operators with non-EU headquarters should map their existing OECD-based reporting against this standard before assuming relief applies.
EESC Endorses DAC8 Crypto Reporting Proposal
Core positions the committee adopted
On 22 March 2023, the European Economic and Social Committee adopted an opinion supporting the extension of the DAC framework to cover crypto-asset information exchange, which is the substance of DAC8. The committee's view is that DAC8 reporting obligations are an effective tool for discouraging non-compliance by crypto-asset holders and are consistent with fair and effective taxation principles.
Several specific positions in the opinion are worth tracking for firms building or reviewing their crypto compliance reporting infrastructure:
- Although tax should apply only to actual gains, the EESC recommends extending reporting obligations to overall holdings of crypto assets, not just disposals, in the interest of transparency.
- The tax identification number system proposed in DAC8 is considered the most effective compliance mechanism.
- Penalty provisions should be proportionate, not purely punitive, while still creating adequate deterrence.
- Data protection must be robust: the opinion calls for an exhaustive list of the purposes for which exchanged data may be used and a harmonised maximum retention period after which data must be deleted.
What the opinion does not do
The EESC's opinion is not binding. Final agreement on DAC8 rests with EU member states in the Council. Nonetheless, it signals political direction: the committee's backing for full-holdings reporting, not just gains, suggests that firms configuring their digital asset accounting software for DAC8 should plan for a broader data collection scope than a pure gains-only model would require. How your crypto bookkeeping software handles unrealised position data will matter.
The DAC8 proposal also covers automatic exchange of tax rulings for high-net-worth individuals, broadening its reach beyond crypto assets alone.
IASB Amends IAS 12 for GloBE: Deferred Tax Relief
The temporary exception and why it matters
On 11 April 2023, the IASB published amendments to IAS 12 Income Taxes in response to the OECD's GloBE (Pillar Two) rules. The core change is a temporary exception to the requirement to recognise and disclose deferred tax assets and liabilities arising from the GloBE rules. Groups operating in jurisdictions where Pillar Two legislation has been enacted or substantively enacted would otherwise face the complex task of calculating deferred tax impacts in circumstances where the rules were still being finalised and interpreted across jurisdictions. The exception removes that requirement on a temporary basis.
The amendments are not purely a relief measure: they also introduce targeted disclosure requirements. Groups will need to disclose their exposure to local Pillar Two legislation, and where that exposure is known or reasonably estimable, both qualitative and quantitative information must be provided at the end of the reporting period. Finance teams and auditors should treat this as an active disclosure obligation, not merely an accounting relief.
Final amendments were expected to be issued by the end of May 2023. For groups already navigating the interaction between GloBE and domestic tax positions, this connects directly to the EU Pillar 2 qualified status and IIR implications that have been confirmed at member-state level.
UN Tax Committee: Subject-to-Tax Rule draft approved
Running in parallel, the UN Committee of Experts on International Cooperation in Tax Matters approved a revised provision and draft commentary for a subject-to-tax rule at its twenty-sixth session in late March 2023. The proposed rule would sit in Article 1 of the UN Model Convention and would allow a contracting state to tax income that is subject to a low level of taxation in the other contracting state. Income qualifies as lightly taxed either because the statutory rate falls below a bilaterally negotiated threshold, or because the beneficial owner benefits from exemptions or reductions that bring the effective rate below that threshold, even if the headline rate is higher. Further technical work was flagged as necessary to address outstanding concerns from committee members.
Member-State Developments: Italy, Estonia, Ireland
Italy transposes DAC7
Italy published its DAC7 implementing legislation on 25 March 2023. The provisions closely follow the EU Directive text. Key penalty thresholds in the Italian rules:
| Breach type | Penalty range |
|---|---|
| Failure to meet reporting obligations | EUR 3,000 to EUR 31,500 |
| Inaccurate communication of information | EUR 1,000 to EUR 10,500 |
| Violation of registration requirements | EUR 10,000 |
Digital platform operators must also retain records in line with the Directive's requirements. The penalty structure is graduated: the steepest exposure sits with outright non-reporting, not inaccuracy, which creates a clear hierarchy for remediation priority if a platform operator discovers gaps in its DAC7 data.
The EU ViDA implementation roadmap adds another layer of digital reporting obligations for Italian-based platforms to track alongside DAC7.
Estonia proposes corporate tax changes
On 10 April 2023, the Estonian government published a coalition programme for 2023 to 2027. Among the key fiscal proposals is the elimination of the reduced corporate income tax rate of 14 percent (applied as 14/86 of net distributions) that was introduced in 2019 and currently applies to regularly paid dividends. Firms with Estonian structures or clients holding Estonian entities should model the impact of this change on dividend policy and distribution planning.
Ireland consults on the Bank Levy
Ireland's Minister for Finance launched a consultation on 6 April 2022 on the future of the Bank Levy. The levy was introduced in 2014 to support post-crisis revenue recovery and has been extended repeatedly. As of the consultation, it was due to run through the 2023 financial year. The consultation asked for views on several options for the levy's future. Firms advising Irish banking clients, or financial institutions with Irish branches, should check the outcome of that consultation and the levy's current status.
Compliance Priorities for Accounting Firms
Mapping obligations across the DAC family
DAC6, DAC7, and DAC8 are now at very different stages: DAC6 has open privilege-related questions resolved by the Belgian CJEU ruling; DAC7 equivalence relief is now defined and Italy has transposed; DAC8 is in the final legislative stages with the EESC's opinion published. A firm advising EU clients needs a clear map of which obligations apply to which entities and in which jurisdictions, given the variation in member-state transposition timelines and penalty regimes.
For DAC8 specifically, the EESC's preference for reporting on overall holdings (not just realised gains) has implications for how data is collected from crypto custodians and exchanges. Firms reviewing their digital asset accounting software should confirm whether the systems in use can capture and export unrealised position data in a format that would satisfy a full-holdings reporting requirement if it makes it into the final text.
Source: KPMG EU Tax Centre, E-News 175
What is the DAC8 proposal and when does it take effect?
DAC8 extends the EU's Directive on Administrative Cooperation to require automatic exchange of information on crypto-asset holdings and transactions between member-state tax authorities. It also covers tax rulings for high-net-worth individuals. The EESC published a supportive opinion in March 2023, but the final text and effective date remain subject to Council agreement among member states. Firms should monitor Council negotiations for the confirmed implementation timeline.
Does the Belgian CJEU ruling on DAC6 affect all EU member states?
Yes. The CJEU's judgment in Orde van Vlaamse Balies and Others (C-694/20) invalidated the DAC6 obligation requiring legally privileged intermediaries to notify other intermediaries of their reporting duties, on the grounds that it breaches Article 7 of the EU Charter of Fundamental Rights. Because this is a CJEU ruling, it applies across the EU. The subsequent removal of the French referral confirms no further ruling is expected: member states must align their domestic rules with the Belgian judgment.
Who qualifies for DAC7 double-reporting relief?
Non-EU platform operators that already report under a regime the European Commission has determined is equivalent to DAC7, such as reporting under the OECD multilateral competent authority agreement, may be relieved of the obligation to report separately to EU member states. The key condition is that information is exchanged automatically between the non-EU country and the relevant member state. Operators should verify that their existing reporting arrangements meet the automatic exchange requirement before relying on the exemption.
What do the IAS 12 GloBE amendments require firms to disclose?
The IASB's amendments introduce a temporary exception to deferred tax accounting for GloBE-related amounts, but they also impose disclosure obligations. Groups must disclose their exposure to local Pillar Two legislation and, where the exposure is known or can be reasonably estimated, provide both qualitative and quantitative information at the end of the reporting period. This is an active obligation, not simply a relief from recognition.
What are the penalties for Italian DAC7 non-compliance?
Italy's implementing legislation sets three penalty tiers: failure to comply with reporting obligations carries a fine of EUR 3,000 to EUR 31,500; inaccurate communication of information carries EUR 1,000 to EUR 10,500; and violation of registration requirements carries a fixed EUR 10,000 penalty. Digital platform operators must also retain records as required by the Directive.