The Impact of DAC6 on Private Equity Managers

Published 17 January 2020



This article is delivered in collaboration with CORIT Advisory.
See our previous updates on DAC6 here and here.

On 1 July 2020 the EU Mandatory Disclosure Rules (DAC6) will enter into force – including in Denmark.


According to DAC6, intermediaries with a nexus in the European Union are imposed an obligation to report certain cross-border arrangements. An intermediary is broadly defined as a person that designs, markets, organizes, makes available for implementation or manages the implementation of reportable cross-border arrangements.

Private equity managers whose primary function is to invest its clients’ pooled funds may be considered a person who designs, markets, organizes or makes cross-border arrangements available on behalf of the funds to its investors and thereby qualify as an intermediary under DAC6. In this regard it should be considered whether it is the manager itself or the fund that should be considered the intermediary, which may depend on to what extent the fund is a taxable entity or the manager acts as the general partner of a fund established as a limited partnership.

The intermediary is only exempt from the reporting obligation to the extent that it proofs that the information has been filed by another intermediary. Only if no intermediaries with a nexus in the European Union exist or the domestic laws prevent the reporting by an intermediary, the obligation to disclose the relevant information shifts to the relevant taxpayer.

A relevant taxpayer is defined as any person to whom a reportable cross-border arrangement is made available for implementation, is ready to or has implemented the first step of such an arrangement. Private equity managers who are a part of a larger financial service company with operational activities in several jurisdictions, may qualify as a relevant taxpayer. In this situation the reporting obligation only falls on the manager if no intermediary (with a reporting obligation) exists.

The size of the fines for non-compliance are determined to be effective, proportionate and dissuasive. Therefore, the penalties are determined on the basis of the economic size of the intermediary. Similarly, for non-compliant taxpayers, the penalties are determined on the basis of the economic size of the taxpayer but is reduced by 50 % compared to the fines imposed on intermediaries.

Accordingly, when assessing the impact of DAC6 on private equity managers it is important to determine whether they qualify as intermediaries or relevant taxpayer as the reporting obligations and fines for noncompliance differs. In addition, private equity managers should develop a policy and guidance/strategy to ensure compliance with DAC 6 and prevent inconsistent disclosure, or under or over-reporting.