Service Sector Employers Palta

…1 (6) 10 February 2026 Palta - Service Sector Employers Eteläranta 10, 6.krs, P.O.Box 62, 00131 Helsinki Business ID 0773798-8 palta.fi/en +358 20 595 5000 [email protected] Palta - Service Sector Employers’ contribution to the public consultation on the Recast of the Directive on Administrative Cooperation in the field of direct taxation (Directive 2011/16/EU) 1 Summary Palta welcomes the Commission’s initiative to simplify and declutter tax legislation, by recasting the Directive on Administrative Cooperation (DAC). Administrative burden is a major cost for companies operating in the EU and also a barrier when trying to enter the Single Market. Simplification efforts should always lead to concrete and measurable reductions in compliance costs and the time required for fulfilling tax obligations.

…lead to concrete and measurable reductions in compliance costs and the time required for fulfilling tax obligations. Clearer and more streamlined legislation benefits both businesses and tax administrations by reducing unnecessary complexity and making obligations easier to manage. Palta fully supports the Commission’s ambitious target to reduce administrative burdens by 25% for businesses and 35% for small and medium-sized enterprises. High per centage of our member companies are SMEs, operating locally. However, from our perspective, a “home market” for an European company should always be the European Single Market. Administrative tax burdens should never become a barrier to doing business within the EU.

…the European Single Market. Administrative tax burdens should never become a barrier to doing business within the EU. • It should be possible to do DAC reporting centrally within a group through the authorities of a single country for all group companies • Taxation procedures would be simpler and more effective by using digital taxation tools, harmonising and digitalising the tax reporting & process. • Secure and interoperable digital identity wallets under eIDAS 2, such as the forthcoming European Business Wallet, would significantly improve DAC reporting by enabling reliable cross-border taxpayer identification, reducing duplication and errors, and allowing companies to authenticate once and reuse verified information without new identifiers or added administrative burden.

…to authenticate once and reuse verified information without new identifiers or added administrative burden. 2 Simplification proposals for DAC4, DAC6 and DAC7 The recast of the DAC should prioritise measures that genuinely eliminate duplication, legal uncertainty and excessive administrative workload. Technical consolidation or minor adjustments alone will not deliver meaningful improvements unless they clearly reduce the administrative burden faced by taxpayers. Here are some proposals from Finnish companies. Ref. Ares(2026)1505290 - 10/02/2026 2 (6) 10 February 2026 Palta - Service Sector Employers Eteläranta 10, 6.krs, P.O.Box 62, 00131 Helsinki Business ID 0773798-8 palta.fi/en +358 20 595 5000 [email protected] 2.1 DAC4 • National legislation is stricter than the directive and varies in many Member States causing administrative costs and uncertainty.

…is stricter than the directive and varies in many Member States causing administrative costs and uncertainty. CBCR requirements should be harmonized. • The parent/other EU resident group company should be able to do CBCR centrally within a group through the authorities of a single country for all group companies. • Example could be also taken from the reporting model in Germany and Norway, where reporting is done on the corporate income tax return form. 2.2 DAC6 • DAC6 reporting obligation should be removed. DAC6 is very burdensome and costly, but the results on getting information to tackle tax avoidance have been very low. In fact, the companies are of the opinion that the DAC6 represents the single largest source of administrative burden within the DAC framework. • Basically, the DAC6 is causing unreasonably high administrative costs to compliant companies already paying their taxes.

…the DAC6 is causing unreasonably high administrative costs to compliant companies already paying their taxes. The DAC6 is ineffective and not targeting the law breakers. • OECD Pillar 2 GloBE-rules and Minimum Tax Directive reporting requirements address the potential no- or low-taxed structures, making the DAC6 reporting unnecessary and overlapping. • The hallmarks have been drafted so broadly that a large amount of data is required to be analysed, assessed against the hallmark tests and provided to tax authorities, in a short time frame. Also, double reporting is caused. There is not clarity to what purpose the vast amount of data is used. • If the DAC6 reporting is not entirely deleted, at least the amount of hallmarks should be decreased significantly.

• If the DAC6 reporting is not entirely deleted, at least the amount of hallmarks should be decreased significantly. • The poor guidance and inconsistent interpretation and implementation of the DAC6 legislation also causes uncertainty and risk of tax disputes and penalties. • The effectiveness of DAC6 was analysed in 2022 (i.e. before minimum taxation was implemented). The report made by the Ministry of Finance of Finland1 indicated that DAC6 reporting has created significant additional administrative workload and costs for intermediaries and taxpayers. Collecting and assessing the required information (especially due to hallmark criteria) has been resource-intensive and unclear. While the authorities estimate they have gained some useful information about cross-border arrangements, the overall benefits for the authorities have been limited.

…some useful information about cross-border arrangements, the overall benefits for the authorities have been limited. The report didn’t indicate any meaningful increase in tax revenues as a result of the reporting obligations, and the effectiveness of DAC6 was considered low relative to the burden it creates. 2.3 DAC7 • Palta wishes DAC7 reporting could be enabled to be done centrally within a group through the authorities of a single country for all group companies. Current regulations allow reporting in one country in situations where the same legal entity is required to report in multiple 1 Seurantaraportti rajat ylittävien järjestelyjen raportoinnin kokemuksista.PDF 3 (6) 10 February 2026 Palta - Service Sector Employers Eteläranta 10, 6.krs, P.O.Box 62, 00131 Helsinki Business ID 0773798-8 palta.fi/en +358 20 595 5000 [email protected] countries.

…10, 6.krs, P.O.Box 62, 00131 Helsinki Business ID 0773798-8 palta.fi/en +358 20 595 5000 [email protected] countries. However, when operating in multiple countries with a subsidiary model, each subsidiary has to do the reporting separately to its own country's tax authorities. The administrative burden and financial cost of reporting are significant in these situations, especially because there are large differences between countries in the required file format. • Each country's tax authority should accept a unified XML standard template for reporting. Currently, the XML schema used in several EU countries differs significantly from the OECD model schema, and this makes reporting very laborious for platforms operating in multiple countries.

…from the OECD model schema, and this makes reporting very laborious for platforms operating in multiple countries. 3 Overarching simplification proposals • Centralised EU reporting As mentioned above, Palta is of the opinion that it should be possible to do DAC reporting centrally within a group through the authorities of a single country for all group companies. This would be one of the most impactful improvements to reducing administrative burden. A single EU-level reporting portal would streamline the exchange of information between tax authorities and remove the need for taxpayers to navigate multiple national interfaces. This would also encourage the development of fully integrated end-to-end reporting solutions, reducing fragmentation and ensuring that technical updates or schema changes are implemented consistently across the Union.

…fragmentation and ensuring that technical updates or schema changes are implemented consistently across the Union. Similar centralised models already exist in other EU policy areas, e.g. customs. which have demonstrated that unified digital entry points can significantly simplify compliance processes for both administrations and businesses. By adopting a comparable approach for DAC reporting, the EU could reduce administrative burden, improve data quality and enable more efficient cross-border cooperation. A central portal would also support interoperability, ensuring that reporting standards are applied uniformly and preventing Member State–specific technical formats from re-emerging. • Harmonised deadlines for reporting Member States apply different reporting deadlines, and the underlying legislation also enters into force at varying times across countries.

…different reporting deadlines, and the underlying legislation also enters into force at varying times across countries. As a result, companies must have their reporting processes and tools ready as soon as the first relevant national legislation becomes applicable. The differing deadlines further complicate compliance. In many cases, the timelines are not workable in practice and place disproportionate time pressure on businesses. Reporting schedules should also be aligned more closely with the complexity of the required assessment and the practical realities of business operations.

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