Shifting Responsibilities and Eroding Autonomy in Tax Compliance: Impact of the Directive on Administrative Cooperation on the Evolving Roles of Tax Authorities, Taxpayers and Third Parties

The evolution of the European Union (EU) Directive on Administrative Cooperation (DAC) marks a fundamental shift in the dynamics of tax compliance and EU tax governance, redefining the roles and responsibilities of taxpayers, third parties and tax authorities. Originally designed to reduce information asymmetry and enhance tax transparency, the DAC framework now relies heavily on third-party data collection. This transformation has introduced new reporting obligations that constrain the autonomy of both taxpayers and intermediaries, effectively outsourcing functions traditionally performed by taxpayers and tax administrations. Taxpayers are becoming increasingly passive participants, often relying on pre-filled returns generated from the vast amounts of data available to the tax administration. Meanwhile, intermediaries face growing legal obligations without corresponding safeguards, raising concerns about professional independence and legal liability. Tax authorities, operating in a digital environment, must now recalibrate their assessment powers to ensure proportionality and respect for fundamental rights. These developments expose all parties to new risks. This article, grounded in classic legal research, addresses the following pressing questions: How is the DAC transforming the relationship between tax authorities, taxpayers and third parties? How should the resulting shifts in responsibility, autonomy and risk be managed? By mapping the evolving roles of each stakeholder and examining the legal mechanisms available to mitigate emerging risks, such as legal professional privilege and data protection legislation, this article argues for a more balanced and coherent model that upholds transparency while safeguarding individual autonomy and legal certainty.