Compliance
Compliance Overhaul: What the DAC Recast Proposal Means for EU Businesses
The EU’s DAC Recast proposal introduces sweeping changes to administrative cooperation that will demand new processes for reporting, deadlines, and TIN verification.
By NomadicTax Research Team • 5-8 min read • September 6, 2026
## Background: the DAC framework and the need for simplification
The Directive on Administrative Cooperation (DAC) is the EU broad scheme for mutual form of automatic information exchange between tax authorities—covering everything from **DAC1** (income and capital), **DAC4/9** (country-by-country reporting and top-up tax return under Pillar 2), **DAC6** (mandatory disclosure of aggressive tax arrangements), to **DAC7** (platform-sourced income). Over time its complexity has grown, increasing compliance burdens for businesses. The European Commission’s proposal on **24 June 2026** seeks a “recast” to simplify this framework. ([taxation-customs.ec.europa.eu](https://taxation-customs.ec.europa.eu/taxation/tax-transparency-cooperation/administrative-co-operation-and-mutual-assistance/directive-administrative-cooperation-dac_en?utm_source=openai))
## Key proposed changes
- **Tightening DAC6 scope**: Exclude all companies within the scope of the Pillar 2 Directive from reporting under DAC6; remove “Category A” hallmarks judged low value; issue guidance on the remaining ones. • **DAC7 threshold adjustment**: Remove activity threshold; increase monetary threshold to **EUR 3,000** for reporting income through digital platforms. • **Streamlining DAC4 and DAC9**: Introduce a single notification obligation for multinational groups for both types of reporting (country-by-country and top-up tax returns); harmonise deadlines and use a common notification template. • **TIN (Tax Identification Number) accuracy**: Establish central TIN verification system, compulsory for authorities, voluntary for businesses. • **DAC1 scope change**: Remove life insurance products from reporting; require Member States to automatically exchange info on all remaining six categories of income and capital. ([taxation-customs.ec.europa.eu](https://taxation-customs.ec.europa.eu/document/download/a654ad8e-606b-4ad5-a8ff-3309554224d7_en?filename=Executive+Summary+of+Impact+Assessment_DAC_Proposal+for+a+Council+Directive+-+Taxation%E2%80%99.pdf&utm_source=openai))
## Implications and examples
- A tech platform paying sellers in multiple EU countries must check if seller income above EUR 3,000 triggers new reporting under DAC7. • Auditing firms and legal advisors need to adjust their advice: if you’re a Member of a group subject to Pillar 2, you may no longer need DAC6 disclosure in certain cases. • Businesses must ensure their tax numbers (TINs) across suppliers, clients and contractors are accurate to avoid mismatches during info exchanges.
## Action steps for businesses
1. Conduct a **DAC impact audit**—map all current reporting obligations (DAC1 to DAC9), verify hallmarks, thresholds and overlaps. 2. Update internal systems to capture new thresholds, centralised document templates, TIN validation workflows. 3. Plan for administrative adjustments: harmonised filing deadlines, cross-border group reporting, and liaising with local tax authorities for updated forms. 4. Engage with upcoming guidance or transitional rules published by the Commission to help bridge any gaps as DAC Recast moves through legislative process.
## Looking ahead
The DAC Recast, when adopted, could reduce compliance compliance cost by several hundred million EUR/year, while retaining transparency and anti-abuse tools. ([taxation-customs.ec.europa.eu](https://taxation-customs.ec.europa.eu/document/download/a654ad8e-606b-4ad5-a8ff-3309554224d7_en?filename=Executive+Summary+of+Impact+Assessment_DAC_Proposal+for+a+Council+Directive+-+Taxation%E2%80%99.pdf&utm_source=openai)) It's an opportunity to reduce overlap, but until adoption, current rules must still be followed in full. Businesses should stay alert for implementing legislation in their Member States and transitional regimes.