Invest Europe

…10 February 2026, Brussels Invest Europe’s Response to the Public Consultation on the EU Rules on Administrative Cooperation in the Field of Taxation - Recast On behalf of Invest Europe, the voice of Europe’s private equity and venture capital industry and their investors, we welcome the opportunity to provide additional input on the evaluation of the DAC framework. Over the years, the DAC has evolved through several iterations, each expanding its scope with the aim of enhancing transparency and combating aggressive tax planning by multinational enterprises. In our response, we focus on the evaluation of DAC6 and provide our reflections on Lessons learned and Way forward sections of the European Commission Report published in November 2025, as well as the potential inclusion of the Unshell Directive as an integral part of a simplified DAC framework.

…2025, as well as the potential inclusion of the Unshell Directive as an integral part of a simplified DAC framework. Lessons Learned The DAC legal framework is robust, but fragmentation of application across the EU increases the administrative burden on business. Invest Europe acknowledges that the DAC legal framework is fundamentally robust and serves an important role in promoting tax transparency and combating aggressive cross-border tax planning. However, practical experience has demonstrated that the inconsistent application of DAC6 rules across Member States significantly increases the administrative burden on intermediaries and taxpayers. This fragmentation arises primarily from divergent interpretations of key concepts, differences in the implementation of hallmarks, and variations in procedural obligations and penalty regimes.

…concepts, differences in the implementation of hallmarks, and variations in procedural obligations and penalty regimes. A core challenge relates to the interpretation of the Main Benefit Test and the definition of a tax advantage. While the MBT is central to DAC6’s identification of potentially reportable arrangements, Member States apply it differently. Some jurisdictions limit the scope to tax benefits within the EU, while others extend it to third countries. Certain Member States explicitly exclude tax outcomes that comply with the legislative intent of the relevant rules, whereas others provide no such clarification. These inconsistencies create uncertainty for intermediaries and investors, who must assess the same cross-border arrangement under multiple national frameworks to determine whether reporting obligations arise.

…the same cross-border arrangement under multiple national frameworks to determine whether reporting obligations arise. This not only increases legal risk but also leads to disproportionate compliance costs. The hallmarks themselves also contribute to fragmentation. Certain hallmarks are complex and open to divergent interpretations: • Hallmarks E2 and E3, which relate to cross-border transfers of hard-to-value intangibles and intragroup transfers of functions, assets or risks, lack clear EU-wide definitions of critical terms such as “cross-border,” “intragroup,” and “EBIT.” Ref. Ares(2026)1492623 - 10/02/2026 • Hallmark A3, which captures “substantially standardised” documentation or structures, is applied inconsistently across jurisdictions, with some Member States maintaining whitelists of approved arrangements and others imposing more restrictive interpretations.

Member States maintaining whitelists of approved arrangements and others imposing more restrictive interpretations. • Other hallmarks, such as B2 and B3, overlap with existing EU anti-abuse legislation, creating duplicative reporting obligations. Many hallmarks are not subject to the MBT, meaning that even tax-neutral or commercially motivated transactions can trigger reporting requirements, further inflating the administrative burden. Procedural fragmentation also intensifies the problem. Under Article 8ab, paragraph 9, multiple intermediaries involved in the same arrangement are jointly liable to report, and exemptions based on legal professional privilege shift reporting obligations to other intermediaries or taxpayers.

…and exemptions based on legal professional privilege shift reporting obligations to other intermediaries or taxpayers. This creates duplication and requires intermediaries and taxpayers to dedicate significant resources, including internal teams, training, control processes, and IT systems, simply to comply with DAC6 reporting obligations. The penalties framework for non-compliance with reporting obligations under the DAC varies considerably between Member States DAC6 requires Member States to implement penalties that are effective, proportionate, and dissuasive. In practice, however, there is significant divergence in the levels and types of sanctions applied across the EU, creating inconsistencies and potential inequities for taxpayers and intermediaries. For example, Luxembourg imposes some of the highest penalties, with fines of up to €250,000 per transaction.

For example, Luxembourg imposes some of the highest penalties, with fines of up to €250,000 per transaction. In France, non-compliance, such as failing to report or, in the case of intermediaries with client privilege, failing to notify, is punishable by a fine of €10,000, or €5,000 for a first infringement, subject to a maximum of €100,000 per calendar year. The Netherlands applies substantially higher penalties, with fines of up to €1,030,000 in 2024, and criminal prosecution is possible in serious cases. In Italy, omitted reporting can result in fines between €3,000 and €31,500, while incorrect or incomplete reporting carries penalties ranging from €1,000 to €10,500. This lack of harmonisation means that the same behaviour can trigger vastly different sanctions depending on the Member State, potentially creating competitive distortions and inequities.

…vastly different sanctions depending on the Member State, potentially creating competitive distortions and inequities. Moreover, there is little evidence that DAC6 penalties are applied in a way that systematically supports the objectives of the Directive. While DAC6 filings can alert tax authorities to cross- border arrangements, their use in substantive audits or enforcement actions is limited. Some authorities, such as in the Netherlands, review DAC6 filings in the context of tax returns, but guidance and clarifications on hallmarks and reporting obligations remain insufficient to fully mitigate uncertainty for intermediaries and taxpayers.

…hallmarks and reporting obligations remain insufficient to fully mitigate uncertainty for intermediaries and taxpayers. There is little evidence on the effective use of DAC6 data by EU Member States to achieve the objective set by the directive, namely, to improve the functioning of the internal market by discouraging the use of aggressive cross-border tax-planning arrangement. DAC6 indeed serves to alert tax authorities to cross-border tax arrangements and allow them to react to certain tax practices by changing tax legislation and/or allow Member States to raise concerns with each other (including through the European Semester) and has arguably impacted taxpayer and certain tax intermediaries’ behaviour. This impact should be effectively assessed through an appropriate analysis, fact finding and data gathering to ensure that DAC6 is proportionate to the objective pursued.

…an appropriate analysis, fact finding and data gathering to ensure that DAC6 is proportionate to the objective pursued. However, experience learns that the Dutch tax authorities have raised questions based on DAC 6 filings and review DAC 6 filings when assessing relevant tax returns. Some tax authorities have published guidelines and FAQs on DAC6, where interpretations of certain notions and hallmarks have been made, these clarifications appear insufficient to dissipate all questionings that intermediaries and taxpayers may have about the application of the rules. To the best of our knowledge, there has been little use of reported transactions by tax authorities as part of their duties.

…best of our knowledge, there has been little use of reported transactions by tax authorities as part of their duties. However, increased administrative and judicial practices could provide further clarification on the functioning and interpretation of the DAC6 rules, which would be beneficial to the protection of taxpayers’ rights. The quality of data has improved, but identifying taxpayers is still an issue for some exchanges The absence of a standardised approach to identifying taxpayers also undermines the efficiency of risk analysis. Without unique identifiers or consistent data structures, authorities face difficulties in matching information across multiple Member States and in integrating DAC6 data with domestic tax records.

…in matching information across multiple Member States and in integrating DAC6 data with domestic tax records. For investment funds and other intermediaries, this uncertainty requires additional internal procedures, monitoring systems, and resources to ensure compliance and reduce the risk of misreporting. A key procedural issue relates to exemptions from reporting obligations. Under current rules, an intermediary is exempt only if another intermediary has already submitted the relevant information, but no exemption applies when the taxpayer has filed the disclosure. This can lead to duplicative filings and unnecessary compliance costs for intermediaries, even when full disclosure has already been made. To address these challenges, DAC6 reporting should be standardised and coordinated.

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Brussels, 11 September 2024 Call for evidence on the functioning of the EU’s Anti-Tax Avoidance Directive (ATAD): A Private Equity & Venture Capital Perspective Invest Europe, representing the interests of the private equity and venture capital sectors, is pleased to provide our response to the above Call for evidence on the functioning of the EU’s Anti-Tax Avoidance Directive. We note that several initiatives have already taken place during the recent years in order to tackle tax avoidance. Very commendable and strong anti-tax avoidance rules within the ATAD I and ATAD II have been drawn up in the EU, which has led to significant advances in tackling abusive tax practices. These directives aim to harmonize anti-tax avoidance measures across the EU, ensuring that profits are taxed in the jurisdictions where the economic activities and value creation actually take place.

…that profits are taxed in the jurisdictions where the economic activities and value creation actually take place. While Invest Europe supports the objectives of ATAD, it is imperative to consider the unique characteristics of the PE/VC industry and their structures to avoid unintended negative impacts on legitimate investment activities that drive innovation, growth, and job creation across Europe. Support for ATAD's Objectives Invest Europe agrees with the EU's commitment to ensuring tax fairness and transparency, which is crucial for maintaining a level playing field across the internal market. ATAD I and ATAD II introduced measures such as interest limitation rules, exit taxation, controlled foreign company rules, the general anti-abuse rule and hybrid mismatch rules, all of which are designed to curb aggressive tax planning.

…the general anti-abuse rule and hybrid mismatch rules, all of which are designed to curb aggressive tax planning. Together, these measures contribute to the broader goal of preventing base erosion and profit shifting within the EU, aligning with global efforts led by the OECD. By implementing ATAD I and ATAD II, the EU strengthens its internal market, not only upholds the integrity of the EU’s tax systems but also fosters a more stable and predictable environment for investment. Challenges and Impacts on the PE/VC Sector

…but also fosters a more stable and predictable environment for investment. Challenges and Impacts on the PE/VC Sector 1) Interest Limitation Rule: ATAD I imposes limits on the deductibility of interest expenses to prevent base erosion through excessive interest deductions. However, in the PE/VC industry, leveraged Ref. Ares(2024)6426574 - 11/09/2024 financing is a standard practice, especially in buyouts, where debt is used to finance acquisitions. The fixed ratio rule of 30% EBITDA disproportionately affects PE/VC funds, particularly in cases where the business cycle involves periods of low profitability. This could constrain funds' ability to finance growth and make new investments, ultimately reducing returns for institutional investors such as pension funds.

…finance growth and make new investments, ultimately reducing returns for institutional investors such as pension funds. 2) Hybrid Mismatch Rules: Hybrid mismatch rules, introduced under ATAD II, aim to address the tax discrepancies that arise when different jurisdictions treat the same financial instruments or entities differently. These mismatches can lead to situations where income is either not taxed at all or is double deducted, allowing entities to exploit these differences for tax avoidance purposes. Broadened Scope of Associated Enterprises: ATAD II significantly expands the definition of ‘associated enterprises’, encompassing situations where entities or individuals are considered to be acting together with respect to voting rights or capital.

…situations where entities or individuals are considered to be acting together with respect to voting rights or capital. The ‘acting together’ requirement is specifically aimed at preventing abusive situations where taxpayers would either avoid “the related party or control group requirements by transferring their voting interest or equity interests to another person, who continues to act under their direction in relation to those interests” or “where a taxpayer or group of tax payers who individually hold minority stakes in an entity, enter into arrangements that would allow them to act together (or under the direction of a single controlling mind) to enter into a hybrid mismatch arrangement with respect to one of them” (see §369 of the Recommendation 11.3 contained in the OECD BEPS Action 2 Report).

…with respect to one of them” (see §369 of the Recommendation 11.3 contained in the OECD BEPS Action 2 Report). It follows that otherwise unrelated taxpayers cannot be considered as ‘acting together’ unless they have a common intent to create a hybrid mismatch. This broader definition is particularly relevant for private equity and venture capital structures, where funds are often aggregating multiple unrelated investors. Under the expanded rules, these investors could be aggregated and treated as associated, even if they do not individually meet the ownership thresholds.

…could be aggregated and treated as associated, even if they do not individually meet the ownership thresholds. However, the absence of a clear indication in ATAD II that the ‘acting together’ concept is only meant to tackle abusive Recommendation: Introduce a more flexible framework that considers the specificities of the PE/VC sector, such as higher thresholds for interest deductibility or exemptions for certain types of debt financing used in private equity transactions. arrangements has created unnecessary uncertainty across the entire European Union – with Member States sometimes even taking different views, if at all – as to the application of this requirement to fund investors.

States sometimes even taking different views, if at all – as to the application of this requirement to fund investors. In this context, an extensive reading of the ‘acting together’ requirement could therefore result in all investors in the same fund being automatically considered acting together irrespective of their specific circumstances which could lead to the application of hybrid mismatch rules in bona fide scenarios where there is no intent (or even knowledge) for the investors to be acting together for the purpose of these rules. Such an outcome would be contrary to the purported anti-abuse purpose of the ‘acting together’ requirement as well as potentially – in the presence of what would then be an irrebuttable presumption of abuse – to some of the rights and freedoms protected by EU law.

…of what would then be an irrebuttable presumption of abuse – to some of the rights and freedoms protected by EU law. A recent Finnish Supreme Administrative Court's decision (SAC 2023:31) provides a concrete and compelling example of the matter. In this case, a Finnish private equity fund with a diverse investor base comprising Finnish and non-Finnish unrelated investors owned 66.9% of a Finnish holding company to which it had extended a shareholder loan. In order to assess the application of the Finnish anti-hybrid rules to the shareholder loan, the court had to decide whether the investors of the fund were ‘acting together’ vis-à-vis the Finnish holding company.

…court had to decide whether the investors of the fund were ‘acting together’ vis-à-vis the Finnish holding company. After having carefully considered the circumstances at hand, the court ruled that the investors of the Finnish fund were in fact not acting together1, therefore rejecting – in line with the stated purpose of this concept – a broad and automatic application to all investors in a fund. Third-Country Mismatches: Another critical aspect of ATAD II is the extension of hybrid mismatch rules to include third-country mismatches. This is particularly impactful for funds that operate across multiple jurisdictions, including those outside the Europe.

…is particularly impactful for funds that operate across multiple jurisdictions, including those outside the Europe. The inclusion of third-country mismatches means that transactions between EU entities and non-EU entities are now subject to scrutiny under the hybrid mismatch rules, increasing the complexity and potential tax liabilities for cross-border investment structures. For instance, interest payments made to hybrid entities in third countries that result in non- inclusion or double deduction are now within the scope of the rules. Reverse Hybrid Rules: Effective from January 2022, the reverse hybrid rules under ATAD II impose tax obligations on entities that are considered transparent in their home jurisdiction but opaque by investors in other jurisdictions.

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