Executive summary

On June 24, 2026, the European Commission published a proposal to recast the Directive on Administrative Cooperation in the field of taxation (DAC) as part of an ambitious tax simplification package designed to simplify existing EU tax rules and reduce compliance for businesses. It is part of the Commission's wider simplification agenda under the 2026 Work Programme to simplify Union legislation, reduce unnecessary administrative burdens and strengthen the competitiveness of the EU. The proposal follows the special legislative procedure (Articles 113 and 115 of the Treaty on the Functioning of the European Union) and requires unanimity in the Council, with the European Parliament and the European Economic and Social Committee consulted. The recast consolidates the DAC and its eight subsequent amendments (DAC1 through DAC9) into a single instrument and introduces targeted changes across the following areas:

• Consolidation (DAC1, Council Directive 2011/16/EU, and its eight subsequent amendments): DAC1 through DAC9 are consolidated into one directive, with structural renumbering, updated definitions, and a more centralized framework for technical implementation.
• Mandatory disclosure rules (DAC6, Council Directive (EU) 2018/822): hallmarks are streamlined, the definition of “reportable cross-border arrangement” is narrowed, a carve-out for MNEs within the scope of Pillar Two is introduced, the legal professional privilege concept is updated, and the reporting deadline is increased to 90 days.
• Digital platform reporting (DAC7, Council Directive (EU) 2021/514): the 30-transaction activity threshold for the sale of goods is removed and the monetary threshold is increased to EUR 3,000.
• CbCR and Pillar Two notifications (DAC4, Council Directive (EU) 2016/881, and DAC9, Council Directive (EU) 2025/872): the separate DAC4 and DAC9 notifications are merged into a single combined notification with a harmonized deadline on the last day of the group’s reporting financial year, a common template, and a central filing.
• Automatic exchange of income and capital (DAC1, Directive 2011/16/EU): the life insurance-products category is removed, beneficial-ownership information for real estate is added, and tax-authority access to AML, real-estate, and pension registers is enhanced.
• Data quality (TIN verification): a centralized Taxpayer Identification Number verification tool is introduced for tax administrations and, on a voluntary basis, for reporting entities.

The Commission estimates the targeted measures would result in total compliance cost savings for businesses of around EUR 1.3 billion per year [3]. All application dates remain subject to change during Council negotiations, but the Proposal currently envisages Member States must transpose targeted simplifications (principally covering DAC6 and DAC7) by 31 December 2027, with application from 1 January 2028. The remaining targeted simplifications, structural amendments and codification measures must be transposed by 31 December 2029 and apply from 1 January 2030, the date on which the recast replaces the existing DAC.

Although this is an EU proposal, it directly affects US-headquartered MNEs operating in the EU, US-based digital platform operators, and US advisors acting on EU cross-border arrangements. As the proposal expressly links some DAC simplifications to the existence of the Pillar Two framework, it will be especially relevant to US-parented MNEs to determine how the proposed DAC6 carve-outs interact with the qualified side-by-side regime and EU Pillar Two implementation.

Detailed discussion

Background and context

Over the past 15 years, the EU’s DAC framework has evolved from a tax-authority cooperation tool into a broad cross-border tax-transparency regime. What began with automatic exchange for selected income and capital categories now also covers financial accounts, tax rulings, country-by-country reporting, AML-derived information, reportable cross-border arrangements, digital-platform income, crypto-assets, and Pillar Two top-up tax information returns. That expansion has given tax authorities significantly more visibility, but it has also made the framework harder to navigate.

The Commission’s concern (based on their own evaluation,[4] European Court of Auditors findings, and stakeholder feedback) is that parts of the regime now generate high-volume, low-value or duplicative reporting, while data-quality issues continue to limit the usefulness of exchanged information. The Proposal responds by consolidating DAC1 through DAC9 into a single directive, narrowing selected reporting obligations, improving taxpayer identification and data matching, and modernizing the exchange framework without lowering existing anti-abuse standards.

Most provisions are carried over unchanged in substance. As part of the recast, the articles are rearranged and renumbered, the various one-off (spontaneous/on-request) exchange provisions and article-by-article implementation references are removed and replaced with a single empowerment for the Commission to adopt implementing acts on technical matters. Existing implementing acts remain in force, and current technical exchange arrangements are unchanged. The CbCR template (currently Annex III) and the top-up tax information return template (currently Annex VII) are removed from the directive itself and replaced with references to templates adopted by implementing acts.

1. DAC6 (Council Directive (EU) 2018/822)

DAC6 attracts the most substantive changes, aimed at narrower, slower, and more focused reporting. The Commission is responding to long-standing complaints that DAC6 produces high volumes of reporting with limited practical value, especially where arrangements are routine, low-risk, or already visible through other regimes.

• Pillar Two carve-out. Certain groups within scope of the Pillar Two framework are carved-out, reflecting the view that a 15% minimum tax reduces the incentive for aggressive structures and that such groups are already subject to enhanced scrutiny. The carve-out is narrow and targeted, intended to apply only where the arrangement does not produce benefits that would lower taxation below the 15% minimum.
• Deletion of Category A hallmarks. The “generic” hallmarks are removed, which would materially reduce defensive reporting of broadly framed, low-value arrangements.
• Other hallmark adjustments. In Hallmark C1, the reference to OECD work on non-cooperative jurisdictions is replaced by reference to the EU Code of Conduct Group assessment. The substance criteria in Hallmark D2 are to be developed further in a Council implementing act.
• Narrower “reportable arrangement.” The definition is streamlined to focus on arrangements that are implementable. The concept of “relevant taxpayer” is narrowed to the taxpayer starting implementation. Finally, the “marketable” and “bespoke” arrangement definitions are deleted.
• Reporting trigger. The reporting period starts when the first step of implementation is taken. The Proposal describes this as a concrete, verifiable act that makes execution irreversible or legally binding, such as signing implementation-enabling contracts.
• Extended deadline. The intermediary reporting deadline is extended from 30 to 90 days to improve data quality.
• Legal professional privilege (LPP). The privilege rules are aligned with recent CJEU case law[5] by limiting the waiver concept to lawyers and other professionals legally authorized to provide legal representation. Privileged intermediaries must still notify their clients of reporting obligations, but do not need to notify other (non-client) intermediaries.

The Pillar Two carve-out especially should be assessed carefully for US-parented MNEs, particularly in light of the US qualified side-by-side regime. Eligibility may depend on the status of the relevant EU or non-EU jurisdictions, whether a qualified domestic top-up tax applies, and whether any related benefits could reduce taxation below the intended minimum level.

2. DAC7 (Council Directive (EU) 2021/514)

The Proposal adjusts reporting thresholds for platform-operators facilitating the sale of goods, reducing reporting on low-value goods transactions. The current activity threshold of 30 transactions per seller would be removed, and the monetary threshold would increase from EUR 2,000 to EUR 3,000.

The proposed changes also introduce clarification on platform and platform-operator concepts, notably as regards intermediary sellers, and add certain simplifications and exclusions, including treatment for very small operators and certain related entities.

Although the direction is simplification, platform operators should not assume implementation will be light-touch. The annexes also refine due diligence, verification, registration, and enforcement rules, including information-sharing between Member States on non-compliant non-EU platform operators.

3. DAC4 and DAC9 (Council Directive (EU) 2016/881, and DAC9, Council Directive (EU) 2025/872)

One of the clearest burden-reduction measures is the proposed streamlining of notifications for country-by-country reporting and the top-up tax information return framework. Currently, each constituent entity of an in-scope MNE must separately notify its tax authority, under both DAC4 (Country by Country Reporting) and DAC9 (central filing of the Pillar Two top-up tax information return), which entity files on the group’s behalf and by when.

The Proposal introduces a single combined notification covering both regimes, with a harmonized filing deadline (the last day of the reporting fiscal year of the group), a common notification template, and central filing. US-parented MNEs with both an EU CbCR footprint and EU Pillar Two top-up filing obligations should see a reduced and better-coordinated EU notification workload.

4. DAC1 (Council Directive 2011/16/EU)

The proposal would make DAC1 both broader and more operational. It removes life insurance products from the list of categories to be exchanged as only a limited number of Member States currently exchange such information, and there is a significant overlap with financial-account reporting.

At the same time, Member States are required to automatically exchange information available on the remaining six categories of income and capital. The proposal also introduces exchange of beneficial-ownership information for real estate, in line with OECD developments, and enhances tax-authority access to AML-related registers (notably the interconnected real-estate register) and to national pension registers.

5. A centralized TIN verification tool

To improve the accuracy of reported Taxpayer Identification Numbers and the automatic matching of exchanged information to national databases, the Proposal introduces a centralized TIN verification system accessible to both Member State tax administrations and reporting entities. Use by reporting entities is voluntary.

6. Penalties, data protection and other updates

Member States must lay down penalties for infringements that are effective, proportionate and dissuasive, with coordinated enforcement encouraged for platform obligations given their cross-border reach.

The proposal reiterates GDPR-aligned safeguards in several instances, notably encrypted exchange through a secured system, restricted access for authorized officials, joint-controller responsibilities, and data-breach procedures. A number of definitions and templates are clarified or moved to implementing acts as part of the codification.

7. Entry into force and transposition

The proposal rests on Articles 113 and 115 of the Treaty on the Functioning of the European Union and takes the form of a Council directive under the special legislative procedure (CNS): it requires unanimity in the Council after consultation of the European Parliament and the Economic and Social Committee. While subject to negotiation, based on the Commission’s proposed timeline implementation would be following the below timeline.

Implications – What MNEs should do now

• Reassess DAC6 footprint against Pillar Two status. In-scope MNEs should map which EU entities could fall within the Pillar Two carve-out and confirm that no benefit reduces effective taxation below 15%.
• Refresh DAC6 processes. The updates to DAC6 hallmarks, the “implementable” arrangement test, the new implementation-based trigger, and the extended deadline all change when and what must be reported. Internal playbooks and intermediary engagement terms should be revisited.
• Re-scope platform reporting. Platform operators should reconfigure seller due diligence and reporting for the removed activity threshold and the EUR 3,000 monetary threshold.
• Consolidate group notifications. MNEs should prepare to move to a single DAC4/DAC9 notification and harmonized deadline.
• Watch the privilege change. Advisers, including US firms operating in the EU, should confirm how the narrowed legal professional privilege concept applies to them and to client-notification obligations.
• Plan around the timeline and unanimity risk. Because adoption requires Council unanimity, the substance and dates may shift; the bracketed 2028 and 2030 application dates should be treated as indicative.

As the proposal moves through the Council and the parallel Omnibus on Taxation advances, MNEs should monitor changes closely—particularly the final scope of the Pillar Two carve-out and the confirmed application dates—because they will directly affect EU compliance operating models and cross-border structuring.

Conclusion

The DAC Recast is the most significant attempt yet to streamline the EU's tax-transparency and administrative-cooperation framework, pairing consolidation of over 15 years of fragmented amendments into a single instrument with targeted burden reduction (narrower DAC6 reporting and a Pillar Two carve-out, lighter DAC7 thresholds, a merged DAC4/DAC9 notification) and better alignment with the Pillar Two minimum-tax regime. For most MNEs the impact is expected to be positive, and, unlike the Tax Omnibus, the headline reliefs arrive first: the DAC6 and DAC7 changes are slated to apply from 1 January 2028, ahead of the broader consolidation on 1 January 2030. The main caveats are that the proposal requires unanimous Council agreement and all dates remain provisional, and that the central simplification — the DAC6 carve-out — is narrow and conditional, so its practical reach will depend on the final text. A&M will continue to track the developments, and issue further alerts as it advances.

Key references

[1] European Commission, Proposal for a Council Directive on administrative cooperation in the field of taxation (recast), COM (2026) 308 final, 2026/0168 (CNS), (Jun. 24, 2026), together with Annexes 1 to 9 and accompanying documents SEC (2026) 186 final and SWD (2026) 164, 165, and 166 final.

[2] Council Directive 2011/16/EU of 15 February 2011, on administrative cooperation in the field of taxation (DAC1), as amended by Council Directive 2014/107/EU (Dec. 9, 2014) (DAC2), Council Directive (EU) 2015/2376 (Dec. 8, 2015) (DAC3), Council Directive (EU) 2016/881 (May 25, 2016) (DAC4), Council Directive (EU) 2016/2258 (Dec. 6, 2016) (DAC5), Council Directive (EU) 2018/822 (May 25, 2018) (DAC6), Council Directive (EU) 2020/876 of (Jun. 24, 2020) (DAC6 amendment), Council Directive (EU) 2021/514 (Mar. 22, 2021) (DAC7), Council Directive (EU) 2023/2226 (Oct. 17, 2023) (DAC8), Council Directive (EU) 2025/872 (Apr. 14, 2025) (DAC9).

[3] Information Note, European Commission, Questions and Answers on the Tax Simplification Package, QANDA/26/1440 (Jun. 24, 2026)

[4] European Commission, Commission Staff Working Document: Report from the Commission to the European Parliament and the Council on the evaluation of Council Directive 2011/16/EU on administrative cooperation in the field of taxation, SWD (2025) 365 final (Nov. 19, 2025)

[5] Case C-694/20, Orde van Vlaamse Balies and Others, ECLI:EU:C:2022:963 (Dec. 8, 2022)
Case C-623/22, Belgian Association of Tax Lawyers and Others, ECLI:EU:C:2024:639 (Jul. 29, 2024)

Contacts

For further information or to discuss how the DAC Recast affects your organization, please contact your usual A&M Tax advisor or one of the following:

Matt Andrew, Managing Director Hong Kong | m.andrew@alvarezandmarsal.com

Bruno Aniceto da Silva, Senior Director Hong Kong | banicetodasilva@alvarezandmarsal.com

Willy van Exel, Senior Director United States | wvanexel@alvarezandmarsal.com 

Maaike Muit, Senior Director United States | mmuit@alvarezandmarsal.com 

This alert is general in nature and is provided for information only. It is based on a legislative proposal that may change before adoption and does not constitute legal, accounting or tax advice. It may not be applicable to, or suitable for, specific circumstances and should not be relied upon as a substitute for professional advice tailored to the facts. Recipients should consult a qualified Alvarez & Marsal professional before taking any action. A&M assumes no obligation to update this material for subsequent developments.