On 6 July, the draft law to postpone tax reporting deadlines under DAC 6, CRS and FATCA was filed with the Luxembourg Chamber of Deputies under bill number 7625 (“the Bill”).
The Bill follows the adoption of the Council of the European Union on 24 June 2020 of an amendment to the Directive on Administrative Cooperation (DAC), to give EU member states the option to defer the time limits for automatic exchanges of information under CRS (DAC 2) and for filing and exchanging information under DAC 6.
The amendment to the DAC was published in the EU Official Journal on 26 June 2020 and became effective on 27 June 2020 (please refer to the Euro Tax Alert from the KPMG EU Tax Center in this respect).
The Luxembourg government already announced its intention to opt for the deferral on 4 June 2020 (outlined in our tax alert 2020-12).
The 6-month deferral provided by the bill leads to the following deadlines:
The Bill also extends the starting date of the 10-day notification period for intermediaries covered by legal professional privilege from 1 July 2020 to 1 January 2021, for any cross-border arrangements for which the reporting trigger occurs between 1 July 2020 and 31 December 2020.
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”).
In line with the amendment of the DAC 2 adopted on 24 June 2020 and with the extended FATCA reporting deadline provided by the IRS for tax year 2019, the Bill introduces a 3-month extension leading to the following deadlines:
As per the Bill, these legislative amendments come into force as of 30 June 2020, which implies that, in line with the announcement made by the Luxembourg government on 4 June 2020, the sanctions for late transmission of the information laid out in the current laws should not be applied until the new deadlines enter into force.
The Bill will now have to follow the usual legislative process before becoming law.
Both intermediaries and taxpayers should continue to actively review their reportable arrangements. KPMG provides tailor-made assistance to get you DAC 6 ready, including our 3-stage modular approach and 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.
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