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The European Commission has unveiled a proposal to recast the Directive on Administrative Cooperation (DAC), bringing together more than a decade of amendments into a single legal framework.
Since its introduction in 2011, the DAC has been expanded several times (DAC1 through DAC8), introducing new reporting and information exchange requirements covering areas such as cross-border tax arrangements, financial accounts, digital platforms and crypto-assets. While these updates have strengthened tax transparency across the EU, they have also created a complex legislative framework that can be difficult for tax authorities and businesses to navigate.
The proposed recast brings the nine DAC directives together into a single legal instrument. While it does not introduce any major new reporting regimes, it goes beyond simple consolidation by introducing a range of simplification measures aimed at reducing compliance burdens and improving the effectiveness of information exchange.
One of the most significant changes is the reduction of reporting obligations for around 3,000 multinational groups already subject to the OECD’s 15% global minimum tax (Pillar TwoPillar Two is the second of the OECD’s two-pillar scheme, originally agreed on in 2021 to tax the digital economy framework.). These groups would no longer need to report certain cross-border tax arrangements under DAC rules, generating estimated annual compliance savings of €300 million.
Additional measures include the removal of certain reporting requirements deemed to have limited value for tax administrations, higher reporting thresholds for online sellers, and streamlined notification requirements for country-by-country reporting and Pillar Two filings.
According to the Commission, the combined effect of these measures could reduce compliance costs for EU businesses by more than €1 billion annually while preserving the effectiveness of the EU’s tax transparency framework.
For businesses, the proposal signals the EU’s continued commitment to tax transparency and cross-border cooperation, while also acknowledging the need for simplification as reporting requirements continue to expand. Although the recast is not a VAT-specific measure, it forms part of the broader trend towards greater digitalisation, data sharing and regulatory coordination within the EU tax landscape.
The proposal will now be considered by the Member States before any final legislation is adopted. As discussions progress, businesses should be watching closely for any changes that could affect existing reporting obligations, particularly in areas such as DAC6 and digital reporting frameworks.
