Update on Spanish Mandatory Disclosure Regime – D.A.C.6

Volume 8 No 2    /    Read Article

By José María Cusi, Juan Roda Moreno, and Cristina Rodríguez Lluch (Guest Authors)

After the implementation of #D.A.C.6, all Member States of the European Union were obliged to transpose the contents of the Directive into national law. This means that each Member State was required to establish a regime of mandatory disclosure of cross-border arrangements, establish a procedure for the automatic exchange of information among Member States.

The transposition of the Directive into Spanish Law followed a bare approach, using the wording of the Directive without elaboration. This approach has raised questions surrounding interpretation of both the Spanish Law and the draft Spanish Regulation, yet to be adopted in final form. Given the lack of definitions in the Spanish Law and the provisional status of the Spanish Regulation, there is neither administrative doctrine nor jurisprudence that shed light on the correct interpretation of the D.A.C.6 as implemented by Spain.

In their article entitled “Update on Spanish Mandatory Disclosure Regime – D.A.C.6,” José María Cusi, Juan Roda Moreno, and Cristina Rodríguez Lluch of CHR Legal, Barcelona, explain the problems encountered when Spanish law adopts D.A.C.6 terms that have no legal meaning in Spain, and do so without definition. Examples include:

• The Spanish term for “#cross-border arrangement” is “mechanism” (mecanismo), which is not defined in the Directive nor the Spanish Law.
• An arrangement is a cross-border arrangement when it affects two or more Member States or an Member State and a State outside the E.U., but the term for affect is the Spanish word for “concerns,” which is not a tax term and has extremely broad meaning.
• The method of determining the “main benefit” of a mechanism is not explained.
• The application of D.A.C.6 to specific provisions enacted by the Spanish legislator is not clear, especially as it relates to the E.T.V.E rules, which were enacted to attract the use of Spain as a holding company.
• The scope of reporting by an intermediary when a transaction has a clearly acceptable business purpose but has an element revised in a minor way to obtain a tax benefit.
• The scope of legal professional privilege in D.A.C.6 to extend beyond the legal profession when Spanish law does not provide legal professional privilege beyond the legal profession.

In sum, the situation in Spain in connection with D.A.C.6 is that of an orphaned obligation: while D.A.C.6 has been transposed into the Spanish Law and reporting obligations now exist, there are no means to comply with the reporting obligations, as the Spanish Regulation has not yet been approved.

The article is part of a nine-country survey of D.A.C.6 implementation published in the March edition of Insights, the international tax journal of Ruchelman P.L.L.C.   See more →