Introduction to European Tax Law on Direct Taxation

S. 251I. The Directive on Administrative Cooperation in the Field of Direct Taxation

A. Background and History

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The first Directive on mutual assistance in the assessment of direct taxes dated back to 1977 and was drafted with a view to providing for an efficient exchange of information between the Member States on request only and was revised several times.

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In 2011, provoked by successive financial crises, the Council adopted a completely new Directive on Administrative Cooperation in the field of taxation (hereinafter: “DAC”). The DAC improved effectiveness in many areas: in particular, mandatory automatic exchange was introduced for new categories of income (see m.no. 668 et seq.) and bank secrecy could no longer justify refusing information requests (see m.no. 727). Since then, the DAC has been amended several times to address specific challenges Member States’ tax administrations were facing. The amending Directives are known as DAC 2 to DAC 8 and were mostly inspired by international developments.

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In 2014, the Council agreed on DAC 2, which introduced automatic exchange of financial account information (see m.no. 672 et seq.). The driving force behind these developments was internationa...