The Directive on Administrative Cooperation (“DAC”) is a series of directives setting out a comprehensive programme for the exchange of tax-related information between EU Member States.
What is the DAC Recast?
The Directive on Administrative Cooperation (“DAC”) is a series of directives setting out a comprehensive programme for the exchange of tax-related information between EU Member States. The type of information that must be exchanged under the DACs varies from financial account information, to information in respect of transactions effected on online platforms, to information in relation to tax rulings issued by tax authorities of EU Member States, to country-by-country reporting information.
Published on 24 June 2026, the proposed DAC Recast forms part of the Commission’s wider tax simplification agenda. The purpose of the DAC Recast is to consolidate the existing nine DACs into a single text that is more user-friendly, while also making some effort to remove certain reporting requirements and reduce administrative burdens for stakeholders.
What are the key legal and political challenges?
Delivering meaningful simplification without undermining transparency in tax matters. Transparency in tax matters is regarded as one of the significant successes of the OECD Base Erosion and Profit Shifting project which prompted many of the DACs. EU Member States will be reluctant to reduce the levels of information reported to them and exchanged between them under the DAC framework. That is apparent from the approach taken in the DAC Recast to reporting under DAC4 (which requires country-by-country information to be reported) and DAC9 (which requires the same taxpayers to file Pillar Two returns). Rather than eliminating country-by-country reporting entirely where a Pillar Two filing obligation exists, the DAC Recast combines the two reports into a single filing obligation. In practical terms, that approach will not deliver meaningful simplification for business.
The DAC Recast incorporates proposals which EU Member States have already failed to agree. The DAC Recast includes a proposal based on the abandoned so-called “Unshell” directive. That proposal attempted to define criteria to identify shell companies which in turn would be denied tax benefits under double tax treaties and EU directives. EU Member States failed to reach agreement on the proposal over a five year period. The DAC Recast attempts to incorporate principles based on the Unshell directive. The provision has already received pushback from EU Member States.
The unanimity requirement creates a material risk to the proposed timetable. As the legal basis for this Directive is Article 115 TFEU, its adoption requires unanimous approval by all 27 Member States in Council, following consultation with the European Parliament. This is a materially more demanding procedural threshold than the ordinary legislative procedure and means that a single Member State can, in principle, veto the file. The Irish Presidency’s ambition to reach political agreement by the end of 2026 is considered ambitious against that background.
At a glance: the DAC Recast
| What it is | A proposed recast of the Directives on Administrative Cooperation in the field of taxation (the “DAC”), consolidating the existing nine DACs into a single, more user-friendly legal text to update the EU’s exchange of information programme. |
| The legal instrument | A Council Directive recasting the DACs into a single instrument. |
| Common name | “DAC Recast” |
| Who it targets | Taxpayers operating in the EU, EU tax authorities responsible for exchanging tax-related information, together with advisers, intermediaries and other stakeholders subject to reporting obligations under the DAC framework. |
| Proposal date | Commission proposal published 24 June 2026, as part of the Commission’s wider EU Tax Simplification Package alongside a separate Taxation Omnibus Directive. |
| Current stage | Council negotiations are ongoing under the Irish Presidency of the Council of the EU (July–December 2026). The Irish Presidency has scheduled nine meetings of the Working Party on Tax Questions to discuss the proposal, two of which have already taken place, with early reports identifying a number of areas of disagreement between Member States. The Presidency is targeting political agreement before the end of 2026, with the next Council discussion scheduled for 4 September 2026 and a targeted political agreement at the ECOFIN meeting of 11 December 2026. |
| Key institutional lead | Commissioner Wopke Hoekstra (EPP / Netherlands) is leading the work on this legislative file at Commission level. |
| Key Matheson Contacts | Olivia Long and Caroline Austin. |
Who is impacted by the DAC Recast?
- Taxpayers operating in the EU whose information is reported to EU tax authorities and exchanged under the existing DAC framework. This includes financial institutions, large multinational groups, online platform operators and crypto service providers; and
- Taxation authorities in each EU Member State, who administer and rely on the DAC exchange of information framework.
What does this mean for your business?
With Council negotiations ongoing and political agreement targeted for December 2026 at the earliest, the DAC Recast remains at a relatively early stage of the legislative process, and the unanimity requirement under Article 115 TFEU means the timetable and final content both remain subject to material uncertainty. The following points are most relevant for businesses operating in the affected sectors:
- Continue complying with current DAC obligations. Existing reporting obligations under the DACs are unaffected unless and until the DAC Recast is agreed and enters into force; businesses should not deprioritise current compliance build work on the assumption that reporting obligations are about to shrink.
- Monitor the interaction with country-by-country and Pillar Two reporting. Groups subject to both DAC4 and DAC9 reporting should track the proposed move to a single reporting notification. If the DAC Recast is passed as currently drafted, this change will have the effect of reducing the time available to submit country-by-country reports from 15 months to 12 months after the end of the relevant financial year.
- Digital platform operators should review reporting scope changes. Platform-on-platform operators should be aware that they will have new reporting obligations should the draft as proposed be passed into law. This will require a significant investment in reporting systems and is likely to be replicated in other jurisdictions operating the OECD Model Rules on Reporting for Platform Operator.
- Track the unanimity risk to the negotiating timetable. Because the Directive requires unanimous Council approval, businesses should treat the Irish Presidency’s end-2026 target for political agreement as indicative rather than assured, and should monitor Council discussions (including the 4 September 2026 meeting and the targeted 11 December 2026 ECOFIN agreement) for signs of delay or substantive change, particularly around the DAC6 Pillar Two carve-out and the economic substance provisions.
Frequently Asked Questions
The DAC Recast is presented as a central part of the EU’s tax simplification agenda. Since its introduction, the DAC framework has expanded significantly through eight successive amending directives (DAC2 to DAC9), each adding a further category of reportable information, from financial account information, to information on cross-border arrangements, to country-by-country reporting and digital platform transactions.
The Commission’s stated objective is to consolidate the existing DAC framework into a single, coherent legal instrument that is more user-friendly for both taxpayers and tax administrations, while removing certain reporting requirements and reducing administrative burdens for stakeholders.
- 21 October 2025: European Commission publishes its Work Programme for 2026, including a proposal for an Omnibus on taxation aimed at simplifying rules and reducing bureaucracy, with existing legislation such as the DAC and the Anti-Tax Avoidance Directive identified as potentially being included.
- 24 June 2026: European Commission formally publishes its legislative proposal for the DAC Recast (COM(2026) 308 final), consolidating the existing nine DACs into a single text, alongside a separate Taxation Omnibus Directive.
- 25 June – ongoing (Cypriot Presidency, to 30 June 2026): Initial technical consideration of the proposal begins in the Council’s Working Party on Tax Questions.
- 1 July 2026: Irish Presidency of the Council of the EU begins (H2 2026); the Irish Presidency identifies the DAC Recast as a priority taxation file and states its intention to significantly progress and aim to conclude negotiations by the end of 2026.
- July – December 2026: Irish Presidency schedules nine meetings of the Working Party on Tax Questions to discuss the proposal; two have already taken place, with early reports identifying a number of areas of disagreement between Member States.
- 4 September 2026: Next scheduled Council discussion on the DAC Recast.
- 11 December 2026: Targeted ECOFIN meeting at which the Irish Presidency aims to reach political agreement on the DAC Recast.
- Following political agreement: As the central Council legal basis for this file is Article 115 TFEU, the Directive will require unanimous approval by all Member States in Council, together with consultation of the European Parliament, before formal adoption. No indicative date for formal adoption, publication in the Official Journal, or national transposition deadlines had been confirmed as at the time of writing.
- Council:
- Under the Cypriot Council Presidency (to 30 June 2026), Minister Makis Keravnos led the work on this file
- From 1 July 2026, under the Irish Council Presidency (H2 2026), Tánaiste, Simon Harris leads the work on this file; the Irish Presidency has identified the DAC Recast as a priority taxation file and aims to significantly progress and conclude negotiations by the end of 2026
- Technical deliberations are led by the Council’s Working Party on Tax Questions, with the Economic and Financial Affairs Council (“ECOFIN”) providing political direction
European Commission:
- Commissioner Wopke Hoekstra (EPP / Netherlands) is leading the work on this legislative file
European Parliament:
- In the European Parliament, work on the file is likely to be led by the Economic and Monetary Affairs Committee (“ECON”) and the Tax Matters Subcommittee (“FISC”)
- As this is a Consultation (CNS) procedure, the committee referral and rapporteur appointment were pending final decision as at the time of writing; it is not yet known which MEPs will lead the work on behalf of the Committees (as stated in source; may require verification)
