May 18 2020

European Commission to postpone DAC6 reporting rules

The European Commission (EC) is proposing to defer the deadlines for reporting and exchanging taxpayer information under the mandatory tax planning disclosure rules set out by Council Directive (EU) 2018/822 (DAC6) due to the coronavirus crisis

The delay will give EU Member States an extra three months to exchange information on cross-border tax planning arrangements. The current DAC6 timetable requires taxpayers and intermediaries to disclose arrangements effective from 1 July 2020 to their national tax authorities, with exchange of cross-border tax arrangements between EU jurisdictions planned to start on 31 October 2020. Although the EC still intends the directive to take effect in July, reportable cross-border arrangements will now not be exchanged until 31 January 2021. New arrangements made during the postponement period will have to be notified once the deferral has ended.

Moreover, the cross-border exchange of disclosed information on financial accounts beneficially owned by tax residents of another Member State will now not begin until the end of 2020.

Specifically:

• the time limit for exchanges of information on reportable financial accounts is deferred by three months until 31 December 2020;
• the date for the first exchange of information on reportable cross-border tax arrangements has been moved from 31 October 2020 to 31 January 2021;
• the date for the beginning of the period of 30 days for reporting cross-border arrangements has been deferred from 1 July 2020 to 1 October 2020; and
• the date for the reporting of 'historical' cross-border arrangements (i.e. arrangements that became reportable from 25 June 2018 to 30 June 2020) has changed from 31 August 2020 to 30 November 2020.

The postponement has been requested by a number of Member States and persons liable to make reports, especially as concerns the automatic cross-border exchange of information on financial accounts.

'The severe disruption caused by the COVID-19 pandemic hampers the timely compliance of financial institutions and of the persons liable to report cross-border arrangements and affect[s] negatively the capacity of Member States' tax administrations to collect and process the data', said the EC. 'Member States will need tax revenues to finance their considerable efforts to contain the negative economic impact of the measures against the COVID-19 pandemic...ensuring tax fairness by preventing tax avoidance and tax evasion becomes more important than ever.'

Moreover, it said, a further deferral may be needed depending on the progress of the pandemic. 'Considering the current uncertainty about the evolution of the COVID-19 pandemic, it is useful to provide for the possibility of one further extension of the deferral period for filing and exchanging information', it said. 'This would be necessary if during part or all of the period of deferral, the exceptional circumstances of severe risks for public health caused by the COVID-19 pandemic persist and Member States have to either implement new or continue existing lockdown measures.’

EU Member States' ministers have already agreed to the postponement at an informal meeting on 29 April. The EC says it is now counting on both the European Parliament and the Council to formally adopt its proposals as soon as possible in order to provide legal certainty to all stakeholders.

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