On 13 September 2023, the French tax authorities (FTA) made important updates to their administrative guidelines regarding hallmark D.1.b. of the EU DAC 6 directive. This specific hallmark pertains to the automatic exchange of information and beneficial ownership. The FTA’s guidelines aim to provide clarity on the scope and rules of application of France’s DAC 6 rules and hallmarks, which were implemented into law at the end of 2019. The recent amendment by the FTA specifically focuses on the transfer of financial accounts or assets to, or the use of, financial institutions in jurisdictions that do not participate in the automatic exchange of financial account information with the taxpayer’s country of residence.
In order to better illustrate the absence of a reportable arrangement within hallmark D.1.b., the FTA revised an example in their guidelines. According to the updated guidelines, an arrangement is not reportable if it does not involve the transfer of an account, a financial asset, or a payment that is part of a reportable cross-border arrangement known by the financial institution. This clarification aims to provide taxpayers and financial institutions with a clearer understanding of their reporting obligations under this specific hallmark.
It is worth noting that the FTA also highlighted the possibility of an intermediary being involved in such arrangements without the knowledge of the financial institution. In such cases, the reporting obligations would fall on the intermediary or the relevant taxpayer, provided that the intermediary is exempt from reporting. However, it is important to emphasize that disclosure under DAC 6 does not exempt the account holder or financial institution from their obligations under DAC 2, CRS (Common Reporting Standard), or anti-money laundering measures.
These updates to the FTA’s administrative guidelines come as part of their ongoing efforts to ensure compliance with the EU DAC 6 directive. The directive aims to enhance transparency and combat tax avoidance by requiring the reporting of certain cross-border arrangements that meet specific hallmarks. By implementing these guidelines and providing clarifications, the FTA aims to facilitate accurate reporting and discourage tax evasion.
The FTA’s guidelines are of significant importance to taxpayers and financial institutions operating in France. Compliance with these guidelines is crucial to avoid penalties and reputational risks. Therefore, it is advisable for taxpayers and financial institutions to carefully review the updated guidelines and assess their reporting obligations under hallmark D.1.b. of the EU DAC 6 directive.
It is important to note that the information provided in this article is based on the FTA’s updated administrative guidelines as of 13 September 2023. As regulations and guidelines may evolve over time, taxpayers and financial institutions are encouraged to stay informed about any future updates or amendments to the FTA’s guidelines regarding hallmark D.1.b. and other hallmarks under the EU DAC 6 directive.
In conclusion, the FTA’s recent updates to their administrative guidelines regarding hallmark D.1.b. of the EU DAC 6 directive provide important clarifications for taxpayers and financial institutions operating in France. These updates aim to ensure accurate reporting and compliance with the requirements of the directive. It is essential for taxpayers and financial institutions to familiarize themselves with the revised guidelines and assess their reporting obligations to avoid penalties and reputational risks.
