DAC6 Webcast How to control DAC6?...DAC6 Webcast June 2020 8 Versie 2 - met foto, of Methodology to...

How to control DAC6?

DAC6 Webcast

Mark van Daalen, Femke van Dijk, Wybe Mebius, Robert

Jan Meindersma, Arne Schnitger, Hein Vermeulen

11 June 2020

Webcast series 'State of Tax’

1

PwC

DAC6 Webcast June 2020

1. Welcome and introduction

2. Potential deferral DAC6 reporting deadlines

3. Hallmarks examples

4. International perspective

5. Next steps

6. Closing

2

Agenda

PwC


3

Versie 2 - met foto, of

illustratie in de banner

PollWelcome and introduction

Question:

How would you describe your current

DAC6 status?

1. Not aware

2. Aware

3. Determining impact on organisation

4. Designing processes and controls

5. Ready for the first DAC6 report

PwC


4



PollWelcome and introduction

Answer:

How would you describe your current

DAC6 status?

1. Not aware

2. Aware

3. Determining impact on organisation

4. Designing processes and controls

5. Ready for the first DAC6 report

PwC






5. Next steps

6. Closing

5

Agenda

PwC


Potential deferral DAC6 reporting deadlines

6

2018 2019 2020 2021

1 January

28 February

Directive

in force

Potential deferral31 August

1 July

Toda

y

25 June

PwC






5. Next steps

6. Closing

7

Agenda

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8


illustratie in de bannerMethodology to assess arrangements

Questions

1. Is there an arrangement?

2. Is the arrangement cross-border?

3. Is there EU nexus?

4. Which hallmark is met?

5. Is the Main Benefit Test met?

6. Who is relevant taxpayer?

7. Who will report?

Main Benefit Test

Is obtaining a tax advantage the main

purpose (or one of the main purposes) of

the arrangement?

• EC 2012 Recom. aggressive tax planning

• Apply comparison test

• NL guidance: disregard tax laws

• No tax advantage, no arrangement

• No tax advantage, different arrangement

• Tax advantage according to policy intent

PwC


9



PollDAC6 Example: Capitalization of an interest-free loan within the group

Company X

(Netherlands)

Company Y

Question:

Does this capitalization fall under

the scope of B2, converting income

into capital which is taxed at a lower

level or exempt from tax?

1. Yes

2. No

PwC


10



DAC6 Example: Capitalization of an interest-free loan within the group

Assessment questions

1. Arrangement? Yes

2. Cross-border? Yes

3 EU-nexus? Yes

4. Income converted into a

category which is taxed at a

lower level or exempt from tax? Yes, B2

5. Is the MBT satisfied?

Company X

(Netherlands)

Company Y

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PollDAC6 Example: Capitalization of an interest-free loan within the group

Answer:

Does this capitalization fall under

the scope of B2, converting income

into capital which is taxed at a lower

level or exempt from tax?

1. Yes

2. No

Company X

(Netherlands)

Company Y

PwC


12



DAC6 Example: Capitalization of an interest-free loan within the group

What if interest is not imputed in

jurisdiction of creditor?

Company X

(Netherlands)

Company Y

PwC


13


illustratie in de bannerPollDAC6 Example: Round-tripping

Question:

Could a dividend payable by a

subsidiary to its parent company

fall under the scope of hallmark B3,

circular transactions resulting in

round-tripping?

1. Yes

2. No

Company X

(Netherlands)

Company Y

(Belgium)

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illustratie in de bannerDAC6 Example: Round tripping


1. Arrangement? Yes


3 EU-nexus? Yes

4. Circular transaction resulting

in the round-tripping of funds? Yes, B3

5. Is the MBT satisfied? Hallmark B3

is connected

to the MBT

Company X

(Netherlands)

Company Y

(Belgium)

PwC


15


illustratie in de bannerPollDAC6 Example: Round tripping

Answer:

Could a dividend payable by a

subsidiary to its parent company

fall under the scope of hallmark B3,

circular transactions resulting in

round-tripping?

1. Yes

2. No

Company X

(Netherlands)

Company Y

(Belgium)

PwC


16



Poll DAC6 Example: Deduction for the same depreciation on an asset

Question:

Does the deduction for depreciation

fall under hallmark C2, deductions

for the same depreciation on an

asset claimed in more than one

jurisdiction?

1. Yes

2. No

Relief of double

taxation by credit

-/- Deduction for

depreciation claimed

at the level of the PE

Head office

(Netherlands)

PE

(another

country)

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DAC6 Example: Deduction for the same depreciation on an asset


1. Arrangement? Yes

2. Cross-border element? Yes

3 EU-nexus? Yes

4. Are deductions for the

same depreciation on an

Asset claimed in more than

one jurisdiction? No

5. Is the MBT satisfied? N/A

Relief of double

taxation by credit

-/- Deduction for



Head office

(Netherlands)

PE

(another

country)

PwC


18



PollDAC6 Example: Deduction for the same depreciation on an asset

Answer:

Does the deduction for depreciation

fall under hallmark C2, deductions

for the same depreciation on an

asset claimed in more than one

jurisdiction?

1. Yes

2. No

Relief of double

taxation by credit

-/- Deduction for



Head office

(Netherlands)

PE

(another

country)

PwC


19



What if the PE is a Hybrid?Relief of double

taxation by credit

-/- Deduction for


at the level of the Hybrid

Head office

(Netherlands)

DAC6 Example: Deduction for the same depreciation on an asset

Hybrid (other

country)

PwC


20


illustratie in de bannerPoll DAC6 Example: recharge of salary costs

Question:

Could the recharge of salary costs

fall under hallmark C3, relief from

double taxation claimed in more than

one jurisdiction?

1. Yes

2. No

X BV

(Netherlands)

Y AB

(Sweden)

PwC


21


illustratie in de bannerDAC6 Example: recharge of salary costs


1. Arrangement? Yes


3 EU-nexus? Yes

4. Relief from double taxation

claimed in more than one

jurisdiction? No


X BV

(Netherlands)

Y AB

(Sweden)

PwC


22


illustratie in de bannerPoll DAC6 Example: recharge of salary costs

Answer:

Could the recharge of salary costs

fall under hallmark C3, relief from

double taxation claimed in more than

one jurisdiction?

1. Yes

2. No

X BV

(Netherlands)

Y AB

(Sweden)

PwC


23



PollDAC6 Example: Migration of place of management and control

Question:

Does the migration fall under

hallmark C4, material difference in

the amount being treated as payable

for the assets in involved

jurisdictions?

1. Yes

2. No

Migration

X BV

(Ireland)

Y BV

(Netherlands)

ROW

X BV

(Netherlands)

Y BV

(Netherlands)

ROW

Dutch CIT fiscal unity

PwC


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DAC6 Example: Migration of place of management and control


1. Arrangement? Yes

2. Cross-border? Yes (or no?)

3 EU-nexus? Yes

4. Migration considered transfer

of assets? No


Migration

X BV

(Ireland)

Y BV

(Netherlands)

ROW

X BV

(Netherlands)

Y BV

(Netherlands)

ROW


PwC


25



PollDAC6 Example: Migration of place of management and control

Answer:

Does the migration fall under

hallmark C4, material difference in

the amount being treated as payable

for the assets in involved

jurisdictions?

1. Yes

2. No

Migration

X BV

(Ireland)

Y BV

(Netherlands)

ROW

X BV

(Netherlands)

Y BV

(Netherlands)

ROW


PwC


26



DAC6 Example: Migration of place of management and control

Migration

X BV

(Ireland)

Y BV

(Netherlands)

ROW

X BV

(Netherlands)

Y BV

(Netherlands)

ROW

Could hallmark E3, transfer of

functions, risks, assets leading to a

decrease of more than 50% of

projected annual EBIT in the next 3

years, be relevant?


PwC




3 Hallmarks examples


5. Next steps

6. Closing

27

Agenda

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28



Assessment questions NL DE1. Arrangement? Yes Yes

2. Cross-border? Yes Yes

3 EU-nexus? Yes Yes

4. Transfer of hard-to-value intangibles,

E2/ transfer of functions, risks, assets

leading to a decrease of more than

50% of projected annual EBIT in the

next 3 years, E3? ? Yes

5. Is the MBT satisfied? N/A N/A

6. Decrease of more than 50% of

projected annual EBIT in the next

3 years ? ?

DAC6 Example Netherlands - Germany Merger

Company X

(Germany)

Company Y

(Netherlands)

Merger

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3 EU-nexus? Yes Yes

4. Transfer of functions, risks,

assets leading to a decrease

of more than 50% of projected

annual EBIT in the next 3

years, E3? ? Yes


6. Decrease of more than 50%

of projected annual EBIT in

the next 3 years ? Yes

DAC6 Example Netherlands - Germany Transfer

Sale of

shares

Subsidiary 1

(Germany)

Parent Company

(Netherlands)

Subsidiary 2

(Netherlands)

Subsidiary 3

(Germany)

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3 EU-nexus? Yes Yes

4. Circular transaction resulting

in the round-tripping of

funds, B3? ? Yes

5. Is the MBT satisfied? ? ?

DAC6 Example Netherlands - Germany B3

Company X

(Germany)

Company Y

(Netherlands)

Sale of goodsLicensing

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31





3 EU-nexus? Yes Yes

4. Transfer of assets material

difference in amount being

treated as payable, C4? ? Yes


DAC6 Example Netherlands - GermanyTransfer of shares

X BV

(Germany)

Y BV

(Netherlands)

C Ltd

(UK)

Qualified

share swap

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32





3 EU-nexus? Yes Yes

4. Payment related to

preferential tax

regime, C1d? No Yes

5. Is the MBT satisfied? N/A ?

DAC6 Example Netherlands - GermanyLicenses

Company X

(Germany)

Company Y

(Netherlands)

PaymentLicensing

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5. Next steps

6. Closing

33

Agenda

PwC


34


illustratie in de bannerRoadmap to DAC6 compliance

Ongoing

Monitoring

1 2 3 4 5

Project management

TrainingToolingRisk and

Control

Impact

Assessment

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35


illustratie in de bannerDAC6 control framework

01 02

0305

04

DAC6 Control

Framework

1. Communication

2. Policy

3. Risk Management

4. Procedures

5. Record Keeping

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36

Poll

Why would you like to control what intermediaries

report about your organisation?

A) To ensure consistent reporting across jurisdictions

B) Local tax authorities might start a tax audit based on the

report

C) Taxpayer knows best

D) DAC6 reports are managed as any other tax report/filing

E) None of the above

PwC



illustratie in de bannerDAC6 Tooling / Reporting infrastructure

Filing

Analyse arrangements

(directive vs. local legislation)

Create

Reports

Review and monitor

arrangements

PwC


DAC6 technical & tool training

38



Who What How Provide

training

Why

DAC6 Training

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39


illustratie in de bannerMonitoring and continuous improvement

01

02

03

Evaluate process and identify improvements

Controls testing and monitoring

Annual review of ‘standard arrangements’

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40

Agenda





5. Next steps

6. Closing

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41

Closing

1. Questions

2. View this webcast at a later stage

3 We keep you informed about DAC6 guidancehttps://www.pwc.nl/nl/dienstverlening/tax/belastingnieuws.html

4. ‘State of Tax’ Webcast series continueshttps://www.pwc.nl/en/evenementen/webcast-series-state-of-tax.html

5. Evaluation

https://www.pwc.nl/nl/dienstverlening/tax/belastingnieuws.html

https://www.pwc.nl/en/evenementen/webcast-series-state-of-tax.html

pwc.com

Thank you

© 2020 PwC. All rights reserved. Not for further distribution without the permission of PwC. “PwC” refers to the network of member

firms of PricewaterhouseCoopers International Limited (PwCIL), or, as the context requires, individual member firms of the PwC

network. Each member firm is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not

provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it

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omissions of any other member firm nor can it control the exercise of another member firm’s professional judgment or bind ano ther

member firm or PwCIL in any way.

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DAC6 Webcast How to control DAC6?...DAC6 Webcast June 2020 8 Versie 2 - met foto, of Methodology to...

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