What Is the Directive on Administrative Cooperation?
The Directive on Administrative Cooperation is an EU tax transparency law under which Member States exchange taxpayer information, applied through national transposing legislation.
Also known as: DAC, Council Directive 2011/16/EU.
How Directive on Administrative Cooperation works
The Directive on Administrative Cooperation, Council Directive 2011/16/EU, sets the rules under which EU tax authorities exchange information foreseeably relevant to taxation, on request, spontaneously and automatically, so the country of tax residency receives data on income and assets held in other Member States. The original text, applicable from 1 January 2013, replaced Directive 77/799/EEC and created mandatory automatic exchange on five categories: employment income, director's fees, life insurance products, pensions, and immovable property and its income. Successive amendments widened the scope: DAC2 (Directive 2014/107/EU) added financial account information consistent with the OECD Common Reporting Standard from 1 January 2016; DAC6 (Directive (EU) 2018/822) required intermediaries, or failing them taxpayers, to report reportable cross-border arrangements from 1 July 2020; DAC7 (Directive (EU) 2021/514) added reporting by digital platform operators on sellers from 1 January 2023; and DAC8 (Directive (EU) 2023/2226) added reporting by crypto-asset service providers from 1 January 2026. Each Member State transposes the Directive into domestic law, so reporting deadlines, penalties and the identification of the taxpayer's residence follow national rules, generally based on self-certification and tax identification numbers.
Directive on Administrative Cooperation vs Common Reporting Standard (CRS)
Unlike the Common Reporting Standard, which is an OECD global standard for financial account reporting, the Directive on Administrative Cooperation is binding EU law covering financial accounts and several other information categories.
| Directive on Administrative Cooperation | Common Reporting Standard (CRS) | |
|---|---|---|
| Legal nature | Binding EU directive transposed into national law of each Member State | OECD standard implemented through domestic law and multilateral or bilateral agreements |
| Scope | Financial accounts, employment and pension income, property, cross-border arrangements, platform sellers, crypto-assets | Financial account information held by reporting financial institutions |
| Geographic reach | Exchanges between EU Member States | Exchanges among all participating jurisdictions worldwide |
Example
Illustrative example: A freelancer tax resident in Member State A holds a bank account in Member State B, rents out a flat in Member State C through an online platform and holds crypto-assets with a provider authorised in Member State D. Under the Directive on Administrative Cooperation, the bank's account data flows to Member State A under DAC2 rules, the platform reports rental income under DAC7 and the crypto-asset provider reports under DAC8 from 2026, each depending on the residence information held. Member State A can then compare the exchanged data with the freelancer's tax return and open enquiries where amounts are missing. If the freelancer has moved to Member State E but the bank still records Member State A as the residence, the data continues to reach Member State A until the self-certification is updated.
Common misconception
Myth: Moving to another EU country and keeping accounts in the former country means the new residence country never learns about the accounts.
Reality: Under the Directive on Administrative Cooperation, financial institutions generally report accounts held by residents of other Member States, and the information is exchanged with the Member State of residence recorded on the account through self-certification and due diligence.
Frequently asked questions
What is the Directive on Administrative Cooperation?
The Directive on Administrative Cooperation is Council Directive 2011/16/EU, the EU law under which Member State tax authorities exchange information on request, spontaneously and automatically, extended by amendments known as DAC2 to DAC8.
What are DAC6, DAC7 and DAC8?
DAC6, DAC7 and DAC8 are amendments to the Directive on Administrative Cooperation covering, respectively, reportable cross-border arrangements from July 2020, digital platform sellers from January 2023 and crypto-asset service providers from January 2026.
What information do EU tax authorities exchange automatically?
Under the Directive on Administrative Cooperation, EU tax authorities automatically exchange financial account data, employment income, director's fees, pensions, life insurance products, property income, cross-border arrangements, platform seller income and crypto-asset transactions, within each amendment's scope.
Who has to report under DAC7?
Under the DAC7 amendment to the Directive on Administrative Cooperation, digital platform operators report information on sellers and the income sellers earn through the platform, with provisions applying from 1 January 2023 under national transposing law.
Related terms
- Common Reporting Standard (CRS) — OECD standard which DAC2 mirrors for financial accounts
- Automatic Exchange of Information (AEOI) — Exchange method at the core of the directive
- EU Mandatory Disclosure — DAC6 reporting of cross-border arrangements
- Exchange of Information on Request — Older exchange route also covered by the directive
- FATCA (Foreign Account Tax Compliance Act) — US counterpart for financial account reporting
Related guides
- Digital nomad tax setups guide — Residence set-ups where exchanged data is matched
- Accounting and bookkeeping for digital nomads — Record-keeping relevant to reported income
Sources
- Council Directive 2011/16/EU, EUR-Lex
- Council Directive 2014/107/EU (DAC2), EUR-Lex
- Council Directive (EU) 2018/822 (DAC6), EUR-Lex
- Council Directive (EU) 2021/514 (DAC7), EUR-Lex
- Council Directive (EU) 2023/2226 (DAC8), EUR-Lex
Last verified: 2026-10-08. This entry is general information, not tax or legal advice; rules vary by country and change over time.
