Luxembourg Tax Alert 2020-09

Luxembourg Tax Alert 2020-09



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Deferral of DAC 6 and CRS reporting and of VAT e-commerce package

On 8 May 2020, the European Commission (EC) issued a press release announcing proposals to defer certain deadlines for filing and exchanging information under the amended EU Directive on Administrative Cooperation (DAC 2 and DAC 6) by three months and to postpone the entry into application of the VAT e-commerce package by 6 months. This addresses the difficulties that businesses and member states are currently facing due to the Covid-19 crisis. 

DAC 6 and CRS reporting

The initiative comes in the form of a directive amending the DAC:

  • In regard to the EU mandatory disclosure rules (MDRs) introduced by Council Directive 2018/822/EU (DAC6) which will continue to enter into force as of 1 July 2020:
    • Change the date for the beginning of the 30-day period for reporting cross-border arrangements from 1 July 2020 to 1 October 2020: the 30-day period for arrangements triggering the reporting obligation between 1 July 2020 and 30 September 2020 under DAC 6 would be delayed until 1 October 2020
    • Change the date for the reporting of cross-border arrangements that became reportable from 25 June 2018 to 30 June 2020 (the so-called “historical” arrangements) from 31 August 2020 to 30 November 2020
    • Change the date for the first exchange of information on reportable cross-border arrangements by EU Tax Authorities from 31 October 2020 to 31 January 2021

New timeline under EC proposal

(click on the image to enlarge it)

New timeline
  • In regard to the EU common reporting standard (CRS) for reporting financial institutions, transposed into EU law via Council Directive 2014/107 (DAC2), defer the time limit for exchanges of information by EU Tax Authorities on “reportable financial accounts” by three months, until 31 December 2020.

    Luxembourg financial institutions are required to provide information on “reportable financial accounts” to the Administration des Contributions Directes (ACD) annually, until 30 June after the end of the calendar year to which the information relates. Subsequently, the ACD exchanges this information with other jurisdictions by 30 September. The latter deadline applies to all EU Tax Administrations and the Commission is proposing to provide a 3 months extension (until 31 December 2020) for the exchange between EU Tax Authorities.

    It is however, up to the local jurisdictions (including Luxembourg) to decide on an extension of deadline for financial institutions. In addition, the ACD exchanges with jurisdictions other than EU jurisdictions. For the time being, the deadline for Luxembourg financial institutions remains 30 June. We continue to monitor the situation closely.

The EC also proposes an option to further extend the deferral period once for a maximum of three additional months, if during the initial period of deferral the exceptional circumstances of severe risks for public health caused by the Covid-19 pandemic persist and the EU member states are forced on implementing lockdown measures.

VAT e-commerce package

The European Commission proposes a council regulation amending Directive 2017/2455 and (EU) 2019/1995 Directive, and a council decision amending Regulation 2017/2454. Both texts[1] have as the objective to defer the entry into force of e-commerce related measures.

Consequently, the VAT e-commerce package should apply as of 1 July 2021 instead of 1 January 2021.

Next steps

The EC proposals mentioned above are subject to approval of the EU Parliament and Ecofin Council (Economic and Financial Affairs Council). 

The amendment of DAC must be implemented by EU member states into their domestic law by 31 May 2020 at the latest based on the EC’s proposal.  

This implies that the law voted of 25 March 2020 implementing DAC 6 (see our tax alert) will have to be duly amended. It remains to be confirmed that the start date for notification obligations of intermediaries covered by legal professional privilege would also be deferred until 1 October 2020.

As mentioned above, it also remains to be checked whether, as a result of the DAC 2 amendment, the Luxembourg tax authorities will also postpone the deadline for the CRS reporting for Luxembourg financial institutions beyond 30 June 2020, i.e. 30 September 2020.

KPMG Luxembourg’s comment

This deferral of tax filing and reporting deadlines should be more than welcomed by the business community. As far as DAC 6 is concerned, both intermediaries and taxpayers will have more time to adapt to the new rules but should still continue to actively review their reportable arrangements. KPMG provides tailor-made assistance to get you DAC 6 ready, including our innovative MDR IT solution – KPMG DAC 6 Processor – to help you categorize arrangements, monitor deadlines and streamline the reporting process based on EU-wide domestic rules.

[1] aim at making the electronic platforms liable for the payment of the VAT and informing Member States through the exchange of the related information

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