ABBL responds to European Commission’s public consultation on the Directive on Administrative Cooperation (DAC)

The Luxembourg Bankers’ Association (ABBL) has recently submitted its feedback in response to the European Commission’s public consultation on the Directive on Administrative Cooperation (DAC). This consultation is part of the EU’s ongoing efforts to strengthen tax transparency and combat tax evasion across member states.

A robust framework for tax transparency

The ABBL recognises the significant steps the European Union has taken to create a comprehensive framework aimed at enhancing tax transparency and fostering international cooperation.

However, the ABBL emphasises that the obligations regarding the exchange of information must remain proportionate, coherent, and harmonised.

Key areas of concern

In its feedback, the ABBL highlights four key areas that should be addressed in any reassessment of the DAC framework:

Disproportionate compliance costs

The ABBL notes an imbalance between the cost of compliance with DAC 6, particularly for financial institutions, and the volume of the data reporting. The costs incurred by these institutions are significant and should be proportionate to the volume of the data exchanged.

Need for better coordination

The association calls for improved coordination between the DAC and other European and international regulations. Harmonising these rules would reduce the burden on financial institutions and ensure a more streamlined and consistent approach to regulatory compliance.

Data protection and privacy

The ABBL stresses the importance of assessing the potential data protection implications of the DAC. The directive should strike a balance between the need for tax transparency and the privacy rights of individuals under the General Data Protection Regulation (GDPR). A long-term, sustainable approach to data disclosure is essential.

Effective use of exchanged data

Finally, the ABBL calls for an effective and appropriate use of the data exchanged under the DAC framework.

Looking ahead

The ABBL will continue to monitor developments at the European Commission level closely. The association is also committed to supporting its members in understanding and complying with the new DAC 8 provisions as they come into effect. This will ensure that Luxembourg’s financial institutions remain at the forefront of tax transparency while operating within a balanced and sustainable regulatory framework.

For more details on the ABBL’s feedback, please refer to the position paper below.

ABBL response to the 2024 European Commission public consultation on the Directive on Administrative Cooperation (DAC) 30/07/2024