Association des Banques et Banquiers, Luxembourg

ABBL response to the 2026 European Commission public consultation on the possible recast of the Directive on Administrative Cooperation in Direct Taxation (DAC) Luxembourg, 10 February 2026 The Luxembourg Bankers’ Association (ABBL) is the largest association of the financial sector in Luxembourg with more than 260 members, representing the majority of financial institutions as well as market infrastructures, e-money and payment institutions and other regulated financial services providers operating in Luxembourg. Its primary mission is to promote the sustainable development of regulated, innovative and responsible banking services in Luxembourg. The ABBL is fully committed to tax transparency and is providing its members assistance in a compliant and consistent implementation of the underlying exchange of information standards in Luxembourg.

…in a compliant and consistent implementation of the underlying exchange of information standards in Luxembourg. The ABBL welcomes the opportunity to contribute to the public consultation launched by the European Commission on the possible recast of the Directive on Administrative Cooperation in Direct Taxation (“DAC”). Overall, the ABBL is supportive of initiatives aimed at simplifying, harmonising and clarifying reporting obligations under the DAC and in this context, the ABBL is supporting the European Commission initiative at hand. In particular, we call for greater proportionality of the reporting obligations for the financial institutions and for a greater harmonisation in the implementation of the DAC framework across the European Union, with a specific focus on DAC 6.

…harmonisation in the implementation of the DAC framework across the European Union, with a specific focus on DAC 6. In this context, we remind notably that financial institutions are unlikely to qualify as primary intermediaries under DAC 6 and that they should not be expected to go beyond providing tax authorities with factual indicators derived from information readily available to them in digital form and under their Know You Customer (“KYC”) obligations. A more consistent and balanced approach across Member States would enhance legal certainty, reduce operational complexity, mitigate compliance costs, ensure level playing field, improve the effectiveness of the reporting regime and the quality of the data exchanged.

…ensure level playing field, improve the effectiveness of the reporting regime and the quality of the data exchanged. At the same time, any potential changes to the DAC framework must take into account that financial institutions have made significant investments in the implementation of the automatic exchange of information. These processes are now well embedded in banking operations and can be considered “business as usual”. Financial institutions continue to bear substantial recurrent costs, including those related to the control and compliance framework put in place, to the due diligence work, to the notification processes and to the audit trail requirements. Against this background, it is essential that any reforms avoid unnecessary disruption to existing frameworks and processes.

…this background, it is essential that any reforms avoid unnecessary disruption to existing frameworks and processes. Changes should build on what is already in place, preserve operational stability, and ensure that compliance remains proportionate to the objectives pursued. Ref. Ares(2026)1509959 - 10/02/2026 ABBL response to the 2026 European Commission public consultation on the possible recast of the DAC Page 2 of 6 Finally, the DAC recast should not be used to broaden existing rules or to introduce new reporting requirements by indirect means. 1. DAC general Reporting format Generally, we are in favour of greater harmonisation within the European Union of rules in the area of information exchange.

…we are in favour of greater harmonisation within the European Union of rules in the area of information exchange. This includes not only the interpretation of the legal provisions but also technical rules including reporting format, with the objective of avoiding unnecessary administrative burdens for all stakeholders involved. In this context, we initially found it interesting to consider a proposal aimed at standardising the reporting schemas used by the different Member States and aligning them with the schema currently applied for information exchanges between the competent authorities of the Member States. Such an approach could, in principle, contribute to greater consistency and efficiency across the European Union (“EU”). However, unfortunately, at this stage, the proposal no longer appears desirable.

…across the European Union (“EU”). However, unfortunately, at this stage, the proposal no longer appears desirable. The reporting schemas for information exchange by financial institutions are already in place and have already been implemented. Any change at this point would inevitably create additional administrative burdens, require costly and time-consuming IT developments, and potentially disrupt existing processes without delivering commensurate benefits for the financial institutions. Cost of the reporting Financial institutions have invested massively in the implementation of the automatic exchange of information. It emerges notably from a report issued by the Commission1 that one-off estimates for the implementation of DAC 2 by financial institutions in five European countries (FR, UK, DE, AT, LU) total around EUR 340 million which could be qualified as a very high cost.

…five European countries (FR, UK, DE, AT, LU) total around EUR 340 million which could be qualified as a very high cost. Regarding “recurrent costs”, we understand that the “recurrent costs” associated with reporting do not only relate to the reporting activity as such. They also encompass a broader range of tasks and processes that financial institutions are required to perform on an ongoing basis. These include, in particular, the due diligence work carried out by financial institutions, the control and compliance framework that has been put in place, the preparation of the reporting data, the dispatch of notifications to clients, and the management of client feedback and queries following the issuance of those notifications.

…to clients, and the management of client feedback and queries following the issuance of those notifications. These additional tasks have been integrated into the day-to-day activities of teams that are not directly responsible for the reporting itself, such as KYC, control / risk management, tax and compliance teams. 1 Report from the Commission to the European Parliament and the Council on overview and assessment of the sta8s8cs and informa8on on the automa8c exchanges in the field of direct taxa8on, 17 December 2018.

…assessment of the sta8s8cs and informa8on on the automa8c exchanges in the field of direct taxa8on, 17 December 2018. ABBL response to the 2026 European Commission public consultation on the possible recast of the DAC Page 3 of 6 As a result, the recurrent costs reflect a wider operational impact across the institution, rather than being limited to the technical production of the reports alone and taking into account the breadth of activities and resources involved, the recurrent costs associated with reporting are necessarily high. Cost of the current annual notification regime The cost of the notification framework primarily depends on the number of clients concerned. While the actual sending of the notification is not costly in itself, as it is standardized and automated, the recurring cost cannot be reduced to the mere transmission of the notification.

…as it is standardized and automated, the recurring cost cannot be reduced to the mere transmission of the notification. Indeed, this recurring cost also includes the preparation of the notification, notably the verification of the data included in the notification letters and in the reporting itself. It further covers multi-channel delivery, the management of client responses following receipt of the notifications, including, where applicable, the process of reviewing client responses and supporting documentation evidencing the retroactive correction requests, correcting client data, as well as the archiving and retention of the notification letters in accordance with applicable requirements. Finally, it is to be noted that the management of client feedback is even more time-consuming and costly in the context of DAC 6.

…is to be noted that the management of client feedback is even more time-consuming and costly in the context of DAC 6. Due to the very vague description / definition of the hallmarks, it opens to challenge by identified customers and other parties, and where conclusions may be difficult to find between the intermediaries and the identified parties (see dedicated paragraph on DAC 6 below). 2. DAC 4 / DAC 9 Combination of the notifications for the purposes of DAC 4 and Pillar Two Directive We consider the proposal to combine DAC 4 and Pillar Two Directive notifications to be an interesting initiative. However, it will be important to ensure that the combined notification clearly specifies its scope of application, i.e. whether it relates to DAC 4, Pillar Two, or both. In addition, such combined notifications should be harmonised and applied consistently across Member States. 3.

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