BREAKING: DAC6 deferral of time limits with 3 months

Reading time: 3 minutes | May 9, 2020 | by Hank Moonen

Below is a summary of the EU Commission Proposal on DAC6 timeline deferrals

 

The proposal from the European Commission

  • Change the date for the beginning of the period of 30 days for reporting cross-border arrangements from 1 July 2020 to 1 October 2020. 
  • Change the date for the reporting of the ‘historical’ cross-border arrangements (i.e., arrangements that became reportable from 25 June 2018 to 30 June 2020) from 31 August 2020 to 30 November 2020.

 

Rationale deferral

In light of the COVID-19 outbreak, a number of Member States and persons liable to report information have requested the deferral of certain deadlines for the filing and exchanging of information under DAC6. 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 negatively affect the capacity of Member States’ tax administrations to collect and process the data.

 

This situation required an urgent and coordinated response within the Union and were relevant at a global level. Therefore, the European Commission has proposed for a council directive amending Directive 2011/16/EU to address the urgent need for deferring certain time limits for the filing and exchange of information on cross-border arrangements.

 

This does not mean that tomorrow never comes … deferral is of limited duration

While proposing the deferral, the European Commission stresses that the exchange of information on reportable cross-border arrangements is crucial in the fight against tax avoidance and tax evasion in the Union. 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. While the current crisis calls for adjusting the calendar for filing and transmitting some tax data, it should not lead to relinquishing the efforts of national administrations for ensuring fair taxation.

 

The length of the deferral should be of limited duration, in proportion to the practical difficulties caused by a temporary lockdown aiming at containing the pandemic.

 

Possibility of 1 further extension

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. 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 the Member States have to either implement new or continue existing lockdown measures.

 

No change with regard to the retroactive effect

The extension should not affect the essential elements of the obligation to report and exchange information under this Directive. It may merely extend the deferral of the deadline for complying with such obligations while ensuring that no information remains without eventually being exchanged.

 

Source: https://ec.europa.eu/taxation_customs/sites/taxation/files/08-05-2020-proposal_for_a_council_directive_amending_directive_201116eu.pdf

 

More information

Visit www.tax-model.com/dac6pro for more information about the MDR/DAC6 regulation and DAC6pro. Ask your questions through our live chat or via the contact form below.