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EU Allows Delay in Reporting Cross-Border Arrangements

Posted on June 25, 2020

EU member states will be permitted to delay by six months deadlines for the filing and exchange of cross-border financial account information and tax planning arrangements required by the sixth directive on administrative cooperation (DAC6).

The EU Council on June 24 adopted an amendment to Directive 2011/16/EU (the administrative cooperation directive) “to address the severe disruptions created by the COVID-19 pandemic,” according to a council release. The amendment includes a provision that would allow the council to extend the deferral period once by up to three months. The European Commission began considering delaying these reporting deadlines after receiving feedback from financial intermediaries.

EU ambassadors also reached a preliminary agreement to postpone the application of the VAT regime for online companies by six months, pushing the start date from January 1, 2021, to July 1, 2021. The commission had proposed delaying the implementation of the e-commerce VAT package in May. The council is expected to formally adopt, without further discussion, a measure postponing implementation after its text is reviewed.

The amendment adopted by the council allows delays in deadlines for filing and exchanging information on reportable cross-border tax planning arrangements, and for automatic exchanges of information on financial accounts for beneficiaries that are tax residents in another member state.

For reportable cross-border arrangements made between June 25, 2018 (when DAC6 entered into force), and June 30, 2020, the deadline to file may be extended to February 28, 2021, according to the amendment.

Intermediaries should communicate information on these arrangements to member states’ tax administrations by April 30, 2021, the amendment says. The 30-day filing period would begin January 1, 2021, in cases in which reportable cross-border arrangements were implemented or ready to be implemented between July 1 and December 31, 2020.

“Any deferral should not affect the essential elements of the obligation to report and exchange information under Directive 2011/16/EU and it should be ensured that no information which becomes reportable during the period of the deferral remains unreported or unexchanged,” the amendment says.

The application date of DAC6 will still be July 1, meaning that reportable cross-border arrangements made during the deferral period will have to be reported after that period.

On July 15 the European Commission is set to propose a new amendment to the administrative cooperation directive to require digital platform providers to collect and report user transaction data to EU tax authorities and allow those authorities to exchange those data with their counterparts in other member states.

Approved EU Council conclusions on what would be DAC7 encourage the update to the administrative cooperation directive to address distortion, build on international consensus led by the OECD, and improve data and information security in information exchanges.

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