The European Commission is willing to introduce Mandatory Disclosure Rules (MDR) for intermediaries designing and promoting potentially aggressive cross-border tax planning arrangements. Who will have to notify these arrangements? What about tax intermediaries whose advice are legally privileged? Which arrangements fall within the scope of this proposal? Will this new set of rules have an impact in Belgium?


On 21 June 2017, the European Commission submitted a proposal for a Council Directive introducing MDR for intermediaries regarding reportable cross-border tax planning arrangements. The proposal also provides for an automatic exchange of the reported information to other Member States. The proposal forms part of the many EU initiatives to tackle tax abuse and ensure fairer taxation in the EU.

Potentially aggressive tax arrangements

Under the proposed rules, intermediaries are obliged to report potentially aggressive, cross-border tax planning arrangements that they designed or promoted. A strict definition of what falls within the meaning of an “aggressive tax planning arrangement” is not provided. Instead, a list of features in transactions (referred to as “hallmarks”) is included, which could potentially enable tax avoidance or abuse. Any cross-border arrangement that contains one or more hallmarks listed in the proposal needs to be reported to the tax authorities of the Member State by the intermediary.

The Commission made the list of hallmarks as wide-ranging as possible to avoid any loopholes. It includes both generic and specific features. Some examples of the specific listed hallmarks are (i) situations where the intermediary charge a fixed percentage of the tax avoided as a fee, (ii) the conversion of income into another type of lower taxed revenue, (iii) deductible cross-border transactions based on the residency of the taxpayer, (iv) the use of jurisdictions with inadequate or weak anti-money laundering rules, etc. More generally, also arrangements that do not conform to the arm’s length principle or to OECD transfer pricing guidelines need to be reported.


An intermediary is any person being responsible vis-à-vis the taxpayer for designing, marketing, organising or managing the implementation of the tax aspects of a reportable cross-border arrangement. Intermediaries are covered by this proposal if they are a incorporated, resident for tax purposes or based in a Member State or registered with a professional association related to legal, taxation or consultancy services in a Member State.

We understand that tax attorneys-at-law could be seen as “intermediaries” within the meaning of the proposal and are therefore required to notify potentially aggressive tax planning arrangements. But what about the disclosure of advice covered by the legal privilege? How can the MDR coexist with the fundamental right to fair trial (article 6 of the European Convention on Human Rights)?

The reporting obligation switches to the taxpayer in three cases: (i) the intermediary is based outside the EU, (ii) there is no intermediary or (iii) the intermediary asserts legal professional privilege.

Notification procedure

The arrangement must be reported within five days after the reportable cross-border tax planning arrangement is made available to the taxpayer for implementation. In case the disclosure is shifted to the taxpayer, the arrangement must be reported within five days after such arrangement is implemented. The Member States must ensure proper penalties are in place for intermediaries that fail to meet the reporting obligations.

Subsequently, the tax authorities of the Member State will automatically exchange the reported information they receive with the tax authorities of all the other Member States.

Impact in Belgium

We believe that in Belgium the impact of MDR will be marginal as the Belgian legislator has, year after year, come up with various new anti-abuse provisions, be it general of numerous specific ones. Over the decades the Belgian legislator also worked out a set of rules to combat tax avoidance in well-specified cases.

Entry into force

As for the timing, the proposal is now submitted to the European Parliament for consultation and to the Council for adoption. The provisions of the proposed measure foresee to apply as per 1 January 2019 with the first information being disclosed by the end of the first quarter of 2019 (being 31 March 2019).