EU Council agrees on the postponement of certain tax rules
EU Council agrees on postponement of certain tax rules
Agreement reached by EU Council to defer certain deadlines under Mandatory Disclosure Rules and CRS. The VAT e-commerce package also to be delayed.
As noted in the press release of 24 June, the Council of the EU announced that the EU will give EU Member States the option of more time to comply with certain rules on cross-border information reporting (MDR and CRS). Preliminary agreement has also been reached on postponing the application of the VAT e-commerce package to 1st July 2021. The deferral is in response to the COVID-19 pandemic and follows the proposal made by the EU Commission on 8 May and the compromise agreement reached by Member States on 3 June.
More specifically, the Council of the EU announced that it has:
- adopted an amendment to the Directive on Administrative Cooperation (DAC) allowing EU Member States an option to defer the time limits for:
- Automatic exchanges of information on financial accounts of which the beneficiaries are tax residents in another Member State - i.e. the EU common reporting standard (CRS) for reporting financial institutions (DAC2), and
- Filing and exchange of information with respect to mandatory disclosure requirements (MDR) for intermediaries and relevant taxpayers under the Directive on Administrative Cooperation (DAC6);
- reached a preliminary agreement on postponing by 6 months the application of the VAT e-commerce package - as of 1 July 2021, instead of 1 January 2021. The postponement should be formally adopted by the Council, without further discussion, once the text has undergone a legal and linguistic review.
With respect to DAC6 / MDRs, the amendments as adopted give EU Member States the option to delay the deadlines for filing information on reportable cross-border arrangements by up to 6 months, as follows:
- By 28 February 2021 (previously 31 August 2020) for arrangements the first step of which was implemented between 25 June 2018 and 30 June 2020 (so-called “historical arrangements”)
- The start date for the 30 days reporting deadline to begin by 1 January 2021 (originally 1 July 2020), including with respect to cross-border arrangements for which the reporting trigger occurs between 1 July 2020 and 31 December 2020
- The new deadline for the first periodic report on marketable arrangements will be 30 April 2021.
The amendment will enter into force on the day after its publication in the Official Journal of the EU, which is expected shortly. It is up to each EU Member State to decide the (length of the) deferral. You may wish to follow the KPMG’s EU Tax Centre and the latest Tax Alert for more insight into these developments across the EU.
MDR / DAC6 has been transposed into Maltese law last December. It obliges both primary intermediaries, that is promoters, (including any person who designs, markets, organises or makes available for implementation), and secondary intermediaries, that is service providers (including anyone who knows or could reasonably be expected to know) of a reportable cross-border arrangement (as defined) to report such information to the local tax authorities. Taxpayers may also be affected by MDR in the event that the reportable cross-border arrangement is not reported by the involved intermediaries (for example when there is no EU based intermediary, when no intermediary is involved, or when the intermediary relies on legal privilege).
With respect to the VAT e-commerce package, on 2 June, a set of 8 legal notices were published which introduce the necessary amendments to the Maltese VAT Act to implement such package. The legal notices will enter into force on a date to be announced in the Government Gazette.
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