Luxembourg Tax Alert 2020-12

Luxembourg Tax Alert 2020-12

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DAC 6, CRS and FATCA reporting deadlines postponed

On 4 June, the Luxembourg government announced that EU member states had reached an agreement on tax reporting deadlines, giving individual countries the option to postpone DAC 6 and CRS reporting. The concession was granted to alleviate pressure on businesses and member states as a result of the Covid-19 crisis. 

This optional deferral grants an extra three months to submit CRS reporting for the year 2019, and an extra six months for DAC 6—a three-month increase on the initial EC proposal of three months (outlined in our tax alert 2020-09). 

Luxembourg has opted to postpone the deadline and is expected to issue a bill in this respect in the coming weeks. The bill is also expected to include a similar concession for FATCA reporting, with deadlines expected to be pushed back by 3 months for the year 2019.

What will this mean for Luxembourg?

Luxembourg law of 25 March 2020 implementing DAC 6

The text of the EU compromise proposal has not yet been made public, meaning that the precise details are, as yet, unknown. However, we expect a number of DAC 6 deadlines to be updated in the proposal:

  • 1 January 2021 Ι 30-day period for reporting cross-border arrangements starts
    The beginning of the 30-day period for reporting cross-border arrangements will likely be extended from 1 July 2020 to 1 January 2021.
  • 28 February 2021 Ι Reporting of historical cross-border arrangements
    The deadline for the reporting of historical arrangements - implemented between 25 June 2018 and 30 June 2020 (assuming these dates remain unchanged) – will likely be extended from 31 August 2020 to 28 February 2021. 
  • 30 April 2021 Ι First exchange of information
    The first exchange of information on reportable cross-border arrangements between EU Tax Authorities should take place on 30 April 2021 instead of 31 October 2020.

DAC 6: key dates for your diary

DAC 6: key dates for your diary

FATCA and CRS

Under the EU Common Reporting Standard (“CRS”) and the Foreign Account and Tax Compliance Act (“FATCA”), Luxembourg financial institutions provide the Administration des Contributions Directes (“ACD”) with information on “reportable financial accounts”. Tax information is to be submitted annually, on 30 June, covering the preceding calendar year. The ACD has until 30 September of the same calendar year to exchange this information with other relevant authorities, namely other CRS reportable jurisdictions and/or the U.S. Internal Revenue Service (“IRS”). 

The 3-month extension would lead to the following new deadlines:

  • 31 December 2020 Ι CRS directive (“DAC 2”) exchange of information
    Member states can postpone the exchange of information for the year 2019, by three months so that it takes place on 31 December 2020 instead of 30 September 2020.
  • 31 December 2020 Ι FATCA Model 1 IGA exchange of information
    In response to the COVID-19 virus, the IRS has extended the deadline for Model 1 IGA jurisdictions (including Luxembourg) to provide FATCA data for tax year 2019 to the U.S. Competent Authority to 31 December 2020 at the latest.
  • 30 September 2020 and 31 December 2020 Ι FATCA and CRS deadline
    For the year 2019, the Luxembourg government has announced that it will introduce a bill extending the CRS and FATCA deadlines by 3 months as soon as possible. Further to the above bill, the deadline for Luxembourg financial institutions will likely be 30 September 2020 (instead of 30 June 2020) and the ACD would then exchange the received information by 31 December 2020 (instead of 30 September 2020).

Penalties for late submission under DAC 6, CRS and FATCA

Until these legislative amendments come into force, the sanctions for late transmission of the information laid out in the laws should not be applied.

Next steps

The Luxembourg bill will likely be issued as soon as the EU Council formally approves the revised proposal for a new directive to amend the DAC (Directive on Administrative Cooperation) directive. It will then have to follow the usual legislative process. It remains to be confirmed whether the start date for the notification obligations of intermediaries covered by the legal professional privilege would also be deferred until 1 January 2021.

Get in touch

Do you have questions on FATCA, DAC 6 or CRS reporting? Our tax advisory team is ready to help with the new timelines and requirements.

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