Luxembourg Tax Alert 2020-15
Luxembourg Tax Alert 2020-15
Deferral of DAC 6, CRS and FATCA deadlines in Luxembourg: get prepared!
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).
DAC 6 transposition law
The 6-month deferral provided by the bill leads to the following deadlines:
- 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 is extended from 1 July 2020 to 1 January 2021, including with respect to arrangements triggering the reporting obligation between 1 July 2020 and 31 December 2020. The reporting deadline remains unchanged for reportable arrangements triggering the reporting obligation as from 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 is extended from 31 August 2020 to 28 February 2021. As per the commentary to the Bill, intermediaries and relevant taxpayers still have the possibility to provide the tax authorities with the requested information before 28 February 2021.
- 30 April 2021 Ι First exchange of information and marketable arrangements
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. The new deadline for the first periodic report on marketable arrangements is also 30 April 2021.
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.
FATCA and CRS transposition laws
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:
- 30 September 2020 and 31 December 2020 Ι FATCA and CRS deadline
For the year 2019, the deadline for Luxembourg financial institutions is extended to 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
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.
Getting prepared with our modular approach
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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