June 14, 2021

Volume XI, Number 165

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June 14, 2021

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COVID-19: DAC 6 Reporting Delayed

In light of COVID-19, and in response to requests from European trade associations, the European Commission has published its proposal to amend Directive 2011/16/EU which deals with various strands of administrative co-operation in the field of taxation. Significantly, the proposal includes an extension to the time limit for reporting information under the new rules on cross-border tax arrangements know as DAC 6 (implemented by Council Directive 2018/822/EU).

Many member states have already implemented DAC 6 in domestic legislation. However, a lack of detailed guidance, the potential for differences in interpretation of key terms in DAC 6 between member states and the first reporting deadline looming at the end of August were causing considerable concern, exacerbated by the current COVID-19 crisis. Accordingly, the European Commission has published its proposal to defer certain reporting deadlines. In doing so it acknowledges that the COVID-19 disruption will hamper compliance with reporting obligations and the ability of tax authorities to collect such data. However, the Commission also cautions that the deferral is of limited duration and is proportionate to the practical difficulties of the temporary lockdown.

The Commission’s proposal covers three elements of reporting under DAC 6. It changes:

the date for reporting ‘historical’ cross-border arrangements (these are, broadly, arrangements that were implemented or made available for implementation between 25 June 2018 and 30 June 2020) to local tax authorities from 31 August 2020 to 30 November 2020;
the start of the 30-day period for cross-border arrangements which become reportable after 30 June 2020 from 1 July 2020 to 1 October 2020; and
the date for the first mandatory exchange of information about reportable cross-border arrangements between member states from 31 October 2020 to 31 January 2021.
Member states must approve the above changes and update their domestic filing deadlines accordingly. The amendments will enter into force on the day after their publication in the Official Journal of the European Union.

The Commission has not ruled out a further extension. However, the deferral of reporting does not change the fundamental requirement for organisations to comply with DAC 6. Therefore financial institutions and organisations subject to DAC 6 should continue to introduce and implement procedures and systems to ensure compliance with the new deadlines.

The UK’s tax authority (HMRC) has stated that it will consider its response to the proposal once it is adopted.

 

© 2021 Proskauer Rose LLP. National Law Review, Volume X, Number 135
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About this Author

Stephen Pevsner UK Tax law partenr Proskauer Rose private fund formation eorganisations, structured finance, investment funds
Partner

Stephen Pevsner is a tax partner and a member of the Private Investment Funds and Private Equity M&A groups. Stephen's practice covers the broad range of corporate and individual tax advice, with particular emphasis on private fund formation across a wide range of buyout, debt and infrastructure asset classes, as well as UK and international M&A transactions (often private equity backed). He has wide experience in corporate reorganisations, structured finance, investment funds and new business set-ups, and also advises regularly on a wide range of employee and fund manager...

44.20.7280.2041
Associate

Philip Gilliland is an associate in the Tax Department.

Prior to joining Proskauer, Philip trained in the London office of a major international law firm where he worked on restructuring and insolvency, corporate M&A and tax matters. During his training contract he undertook a secondment at Unilever.

Philip earned his B.A. from St Catharine’s College, University of Cambridge.

+44-20-7280-2236
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