| Image Credits: Offices of multinational enterprises in Paris, Île-de-France, France by Stas Knop

The European Commission has introduced a new proposal, DAC9, to amend the Directive on Administrative Cooperation in Taxation (Directive 2011/16/EU – DAC). This update is aimed at simplifying compliance for multinational enterprises (MNEs) and large-scale domestic groups (LSDGs) by streamlining the process of filing top-up tax information returns under the Pillar 2 Directive (Directive (EU) 2022/2523).

STRENGTHENING EU TAX COOPERATION

The DAC provides a structured system for EU member states' tax authorities to collaborate on direct taxation, promoting information-sharing and mutual support across jurisdictions. DAC9 builds on this foundation, aligning with the 2022 Pillar 2 Directive, which mandates a minimum tax level for large enterprise groups within the EU.

KEY FEATURES OF DAC9

DAC9 seeks to ease the reporting process for MNEs under Pillar 2 by eliminating the need for each company within a group to file individual top-up tax information returns in every country where it operates. Instead, MNEs can submit a single top-up tax return at the group level. This consolidation will reduce administrative workloads and improve efficiency for both businesses and tax authorities.

To achieve this, the proposal will:

1. Facilitate Information Exchange: Enable tax authorities across EU countries to share relevant tax information effectively.

2. Introduce a Standardized Reporting Form: Aligned with the OECD and G20’s Inclusive Framework, this form will ensure that MNEs and LSDGs report their tax information uniformly, simplifying compliance and supporting tax authorities in assessing and exchanging data.

The European Commission will retain the ability to update this form in response to changes at the international level, ensuring that EU reporting remains consistent with global standards.

NEXT STEPS AND IMPLEMENTATION TIMELINE

Once the EU Council adopts the DAC9 proposal, member states will have until December 31, 2025, to implement it. For countries delaying Pillar 2 implementation, DAC9 will follow the same deadline. The first top-up tax returns under DAC9 are expected by June 30, 2026, with tax authorities required to exchange this information by December 31, 2026.

SOURCE/ RECOMMENDED READ: 

• Administrative cooperation in taxation - European Commission

• EUR-Lex - COM:2024:497:FIN - EN - EUR-Lex