The Amendments to the Directive on administrative cooperation in the field of taxation (DAC6), which impose disclosure obligations on intermediaries and taxpayers, entered into force on 25 June 2018. The EU Commission now proposes to postpone the reporting deadlines under DAC6 by three months.
What is DAC6 about?
- To deter intermediaries (e.g. tax advisors, lawyers, trustees, banks, insurance companies) from supporting aggressive tax planning by requiring disclosure.
- To gain knowledge about tax optimization in order to close possible "loopholes" in the laws.
These new rules cover not only intermediaries who support aggressive tax planning, but also a number of intra-group transactions that are fully in line with local tax rules.
In addition, all EU countries will have to impose fines for non-compliance with these rules. In some countries these fines can exceed several hundred thousand euros. Failure to comply with the reporting requirements is punishable by law, i.e. a fine may be imposed even if the EU company concerned fully complies with local tax obligations.
Which arrangements must be reported under DAC6?
The following requirements must be met for a DAC6 reporting obligation:
- There must be an arrangement/transaction,
- which has been implemented since 25 June 2018,
- and has a connection to at least one EU state and one other country,
- a Hallmark must be fulfilled
- and concerning certain Hallmarks the Main Benefit Test must be fulfilled in addition.
You can find further information on the reporting requirements for transactions in our factsheet.
When will these new rules come into force?
The EU Member States had until 31 December 2019 to implement the new rules, which will be applicable in all EU countries from 1 July 2020.
DAC6 also covers transactions implemented from 25 June 2018 onwards. Thus, even a restructuring implemented in autumn 2018 may trigger a reporting requirement under DAC6.
As explained below, the entry into force of DAC6 will not be postponed, only the reporting deadlines.
When must the first notifications under DAC6 be made?
Against the background of the COVID-19 pandemic, the EU Commission has proposed postponing the DAC6 reporting deadlines by 3 months (with the possibility of a further postponement of 3 months):
- The start of the 30-day period for reporting new transactions will be postponed from 1 July 2020 to 1 October 2020.
- Accordingly, agreements implemented from 1 July 2020 onwards must be reported for the first time by 31 October (instead of 31 July) 2020.
- "Historical agreements" (i.e. arrangements implemented between 25 June 2018 and 30 June 2020) will have to be reported by 30 November (instead of 31 August) 2020.
This postponement can then be extended again by a maximum of three months if the COVID-19 situation in the EU Member States requires a further delay of the reporting deadlines.
Following the publication of this proposal, there were discussions on whether this postponement would be sufficient and whether it would be mandatory for EU countries to adopt it. According to our current understanding, a postponement of the reporting deadlines by 6 months is currently discussed, which will, however, not be mandatory for the individual EU Member States.