DAC 7: An Entire New Framework for Joint Audits in the EU: How Do the Taxpayers Fare?

Joint audits have the potential to facilitate tax collection and at the same time enhance tax certainty for taxpayers. However, the several European
Union (EU) pilot projects initiated by certain Member States made it evident that a better regulatory framework was urgently needed. The EU
legislator therefore used the opportunity of the sixth amendment of the Directive on administrative cooperation, known as DAC 7, to devise a new
legal framework for joint audits. In this contribution the authors discuss this latest development. They analyse some key clarifications and novelties
to be found in the new Article 12a DAC regarding joint audits. The article furthermore highlights the remaining open issues and inadequacies of
the joint audit provisions in DAC 7, with a particular focus on taxpayer rights.
Among the issues that are analysed in depth in this article are the initiation of joint audits at the taxpayer’s request, the possibility to
conduct a joint audit without the taxpayer’s consent, and the legal instruments at the disposal of the taxpayer against the initiation of a joint
audit or certain audit activities. Further issues concerning the applicable law, data protection standards as well as legal instruments against the
findings ensuing from a joint audit are also part of the analysis.