DAC6: Is My Arrangement Cross-Border?
The concept of an “arrangement” is deliberately broad. The law does not define an arrangement. The legislator considered a definition neither necessary nor desirable, because an arrangement can take many forms. A loan, an agreement, a restructuring, a series of transactions or a combination of these can all be an arrangement. Nothing about it needs to be artificial. In practice, therefore, the question of whether something is an arrangement is rarely decisive. What matters is whether the arrangement is cross-border and whether a hallmark is present.
Five ways to be cross-border
An arrangement is cross-border if it concerns more than one EU Member State, or an EU Member State and a country outside the EU. The directive sets out five criteria, any one of which is sufficient:
The fourth and fifth criteria are the ones most often overlooked. The fifth criterion means that an arrangement can be cross-border without a second country featuring in the transaction itself. It is sufficient that the arrangement affects international information exchange or the identification of the beneficial owner.
Mind the Kingdom
Aruba, Curaçao, Sint Maarten and the BES islands (Bonaire, Sint Eustatius and Saba) are treated as separate jurisdictions for the purposes of these rules. A structure involving only the Netherlands and Curaçao is therefore already cross-border.
Who and which taxes?
The rules apply to individuals, legal entities and legal arrangements such as trusts and foundations. They cover all taxes, with the exception of, among others, VAT and excise duties. Gift and inheritance tax and dividend withholding tax are therefore within scope as well.