Search for:

On Saturday 21 March 2020, the Luxembourg Parliament passed the law implementing the Council Directive (EU) 2018/822 of 25 May 2018 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements (the DAC 6 Law). The DAC 6 Law will be in force on 1 July 2020.

What disclosures to the tax authorities?

The DAC 6 Law introduces a new obligation for intermediaries to disclose to the Luxembourg tax authorities any cross-border arrangements that meet a hallmark. Hallmarks are listed in appendix to the DAC 6 Law and are characteristics or features of cross-border arrangements that present an indication of a potential risk of tax avoidance. There is no precise definition of arrangements, which has been explained in the past by the EU Commission by the fact that the precise scope the EU Directive has been primarily designed around the concept of “hallmarks”.

The identification of a reportable cross-border arrangement is to be performed on a case-by-case basis with the assistance of someone with knowledge in international tax law. If a cross-border arrangement is found reportable under the DAC 6 Law, the information to be disclosed to the Luxembourg tax authorities will include the following (as applicable):

  • the identification of intermediaries and relevant taxpayers, and, where appropriate, the persons that are associated enterprises to the relevant taxpayer;
  • a detail of the hallmarks that made the arrangement reportable;
  • a summary of the content of the arrangement;
  • the date of the first step of implementation;
  • details of the domestic provisions forming the basis of the arrangement;
  • the value of the arrangement;
  • the identification of the Member State of the relevant taxpayer(s) and any other Member States which are likely to be concerned by the arrangement; and
  • the identification of any other person in a Member State, if any, likely to be affected by the arrangement.

The Luxembourg tax authorities will exchange the information reported automatically with other Member States through a centralized database. The EU Commission will have access only to the data necessary to monitor the implementation of the rules.

Who will file the reporting to the tax authorities?

The reporting obligations primarily lies with intermediaries. The DAC 6 Law envisages two distinct types of intermediaries:

  1. Primary intermediaries are persons (individuals or companies) that are involved in designing, marketing, organizing or managing the implementation of an arrangement; and
  2. Secondary intermediaries are persons (individuals or companies) who provide aid, assistance or advice in relation to the designing, marketing, organizing or implementation of reportable cross-border arrangements, or know, or could reasonably be expected to know, that they have undertaken to provide such aid, assistance or advice.

The concept of intermediary in not limited to tax experts but may include inter alia lawyers, domiciliation companies, consultants, accountants, banks, insurance companies, management companies or investment managers if they qualify as intermediaries within the meaning of the DAC 6 Law. The intermediaries that benefit from an exemption under professional privilege are lawyers, chartered accountants and auditors acting within the boundaries of their profession. Intermediaries with professional privilege will not have the obligation to file the reporting. In this case the responsibility for filing the reporting will rest with the other intermediaries, or falling such intermediaries, will be shifted to the taxpayer.

Also, in situations where there is no intermediary either because the taxpayer designs and implements a scheme in-house or there is no intermediaries with a sufficient nexus with an EU Member State as foreseen by the DAC 6 Law, the taxpayer will have to file the reporting himself.

What are the obligation of intermediaries such as Baker McKenzie?

Intermediaries with professional privilege such as Baker McKenzie Luxembourg will not have to file the reporting themselves but will have the obligation to notify any other intermediaries, or if there is no intermediary without professional privilege, the taxpayer (who will be responsible for filing the report to the tax authorities).

In the latter situation, intermediaries with professional privilege such as Baker McKenzie Luxembourg will have the additional obligation to provide taxpayers with all information available for them and under their knowledge to comply with their DAC 6 Law reporting obligations. Intermediaries with professional privilege such as Baker McKenzie Luxembourg can help for the reporting by taking care of the filing to the tax authorities for the account of their clients (even if they have the status of intermediaries benefitting from a legal privilege).

When is reporting due?

Two distinct periods are considered in the DAC 6 Law:

  • The period beginning after 1 July 2020 (“Business-as-Usual” period) ; and
  • The period from 25 June 2018 to 30 June 202 (“Look-back” period).

1) Business-as-Usual period (as from 1 July 2020)

Intermediaries qualifying as primary intermediaries will have to file a reporting with the tax authorities within 30 days beginning the day after the reportable cross-border arrangement is made available for implementation, is ready for implementation or when the first step in implementing the reportable cross-border arrangement is made, whichever occurs first. Intermediaries qualifying as secondary intermediaries (e.g. domiciliation companies) will be required to file reporting within 30 days from the day after they provided, directly or by means of other persons aid, assistance or advice. In situations where the taxpayer has to report himself, he will be subject to the same deadlines. Baker McKenzie Luxembourg (we) and other intermediaries falling under professional privilege will have to comply with the notification to other intermediaries or taxpayer requirements within 10 days.

Those deadlines will apply once the Luxembourg DAC 6 law will be in force, i.e. from 1 July 2020 onwards.

2) Look-back period (at the latest 31 August)

Intermediaries and taxpayers now have all visibility required to finalize their due-diligence exercise on past files in relation with the Look-back period. This will include the identification of reportable cross-border arrangements and relevant notification/reporting with the tax authorities for any arrangement which first step of the implementation has occurred between 25 June 2018 and 1 July 2020. Reporting to the Luxembourg tax authorities has to be done on 31 August 2020 at the latest.

An amount up to EUR 250,000 of penalties may be levied in case of failure to report, late reporting or incomplete reporting for intermediaries or taxpayers, or failure to notify or incomplete notification for intermediaries. It remains to be seen if the current context of the COVID-19 crisis could entail a postponement of the deadlines or even a public policy of leniency for fines. Let’s be optimistic.

Technical clarifications

The DAC 6 Law contains some additional measures upheld by the Finance and Budget Commission of the Parliament helping experts to determine whether arrangements would be reportable.

  • In particular, it is confirmed that the main benefit test (MBT)1 is not met when the main tax advantage obtained by means of the arrangement is in accordance with the object and purpose of the applicable law and in line with the legislator’s intention.
  • In addition, the DAC 6 Law validates the “holistic approach” according to which the MBT should be applied with overall regards to a series of arrangements as a whole and not through an isolated step-per-step analysis.

There has been no clarification or additional precision despite requests from certain parliamentary comments concerning the “hallmarks”. If you wish to have more information on the scope of the hallmarks as originally designed by the EU Commission, you can access our contribution “The genesis of hallmarks under the DAC6 Directive (PART I)”, available on Wolters Kluwer, ACE Magazine, January 2020.2

Our previous communication on DAC 6 can be found here.

How can Baker McKenzie Luxembourg assist?

How can we help you to meet the deadlines and be compliant with the DAC 6 Law?

  • We can help you to analyse and detect the arrangements that must be reported (e.g. identify hallmarks), either for a primary review or in the course of a second opinion.
  • We can take charge of the reporting for you, and communicate the relevant information to the tax authorities (upon your consent).
  • We can advise on the implementation process and help you to assess your status (“am I an intermediary?”) and your reporting obligations.
  • We can help you to prepare and respond to audits and levy of penalties in case of audit or levy of penalties.

1 Arrangements involving certain hallmarks must fulfill the “main benefit test” to be reportable under these hallmarks. The main benefit test will be satisfied if it can be established that the main benefit or one of the main benefits that a person may reasonably expect from a cross-border arrangement is a tax advantage.
2 Do not hesitate to contact us for more details.


Diogo Duarte de Oliveira is a partner in charge of the Tax Department of Baker McKenzie's Luxembourg office. He has over 16 years of experience. Prior to joining Baker McKenzie in 2019, Diogo was tax partner and head of tax at the top-ranked practice of a Benelux leading law firm. He was also an international corporate tax manager with a Big Four audit firm in Luxembourg (and in Mexico City as a secondee).


Amar Hamouche is a tax director in the Tax Group of Baker McKenzie's Luxembourg office. He has over 16 years of experience. Prior to joining the Firm's Tax team in 2011, Amar was Senior Tax Manager at Ernst & Young Luxembourg for over seven years and a member of the Financial Services Organization tax group, which focuses on Financial Institutions.


Antonio A. Weffer is a tax principal in Baker McKenzie's Tax Practice Group and the head of the firm's transfer pricing practice in Luxembourg. Antonio is an active member of several international professional tax organizations, and regularly publishes articles on international tax issues and speaks at worldwide seminars and conferences. He was ranked Band 2 in the World Transfer Pricing 2017 guide.


Olivier Dal Farra is Counsel in the tax group of Baker McKenzie's Luxembourg office. He is specialized in corporate tax and international tax planning. He has more than 10 years of experience in Luxembourg. Before joining the Firm in 2019, Olivier worked as a senior tax manager for an audit firm in Luxembourg and several international law firms in Paris and Luxembourg.