COVID-19 Coronavirus: Tax
DAC6 (sometimes referred to as "MDR" – the Mandatory Disclosure Rules) requires the identification and reporting of cross-border arrangements involving at least one EU Member State (for these purposes, including the UK) and which feature one or more 'hallmarks' which the EU considers to be indicative of potentially aggressive tax arrangements. If formally adopted, and subject to the discretion of each Member State as to whether to adopt the postponement, the Council agreement will extend the deadlines of new and historical tax arrangements.
Read our guidance: Proposed Six-Month Extension of the DAC6 Reporting Deadlines (Europe) - June 9, 2020
Due to the uncertainty caused by COVID-19, the European Commission has decided to postpone the Mandatory Disclosure Regime deadline by three months. While the EU's proposal is welcome, and will relieve some of the immediate pressure upon organizations and their advisers, many will consider the extension period insufficient.
Read our guidance: EU Commission Proposes Extension of the DAC6 Reporting Deadlines (Europe) - May 12, 2020
A new IRS initiative will temporarily allow RICs and REITs to conserve capital and enhance their cash liquidity during the current COVID-19 coronavirus pandemic.
Read our guidance: Reduced Cash Requirement in Part Stock and Part Cash Dividends: New IRS Guidance on RIC and REIT Distributions (U.S.) – May 11, 2020
New guidelines from the German Tax Administration confirm that a passive breach of investment thresholds/limitations between 1 March 2020 and 30 April 2020 is generally not considered to be a “substantial breach” of the investment restrictions, and so will not impact the tax exemptions available to German investors in the investment fund.
Read our guidance: German Tax Administration Provides COVID-19 Coronavirus Temporary Relief for Investment Restrictions of German and Foreign Investment Funds (Germany) – April 21, 2020
The HMRC has published guidance on the corporate residence issues posed by COVID-19. While the agency has not announced any changes or relaxations in the law, it has indicated that the existing law permits some degree of latitude for UK directors of offshore funds to participate in, or even hold board meetings in, the UK without being in violation as a result of the COVID-19 coronavirus pandemic.
Read our guidance: UK Tax Residence Risks for Offshore Funds and Related Entities – HMRC Update (UK) - April 9, 2020
Below is a list of global tax measures in response to COVID-19 - March 27, 2020:
COVID-19 related travel restrictions and self-isolation will present practical challenges for non-UK resident fund vehicles and related offshore entities with UK based directors. Care should be taken to ensure that the participation of such directors in board meetings and other strategic decision making does not inadvertently bring the entities onshore for corporation tax or VAT purposes. This OnPoint provides a high-level reminder of the key issues in this area and explains why they remain of critical importance when considering how to resolve board-level logistical challenges arising out of the COVID-19 crisis.
Read our guidance: UK Tax Residence Risks for Offshore Funds and Related Entities (UK) - March 27, 2020
The U.S. Internal Revenue Service extended the Federal income tax payment deadline for any person with a Federal income tax payment otherwise due April 15, 2020.
Read our guidance: Federal Tax Filing Deadline Now Extended (U.S.) – March 19, 2020 (Updated March 20, 2020)