EU Commission proposes extension of the DAC6 reporting deadlines

May 12, 2020

On Friday 8 May 2020, the European Commission announced a proposal to postpone by three months the initial reporting deadlines for “DAC6”, the incoming mandatory disclosure regime for potentially aggressive tax arrangements.

By way of brief reminder, 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.

Under the current rules:

  • Arrangements that become reportable on or after 1 July 2020 (i.e. arrangements that are, or continue to be, made available for, or ready for implementation on or after 1 July 2020, the “New Arrangements”), must be reported within 30 days of their first becoming reportable.
  • Arrangements for which the first step was implemented between 25 June 2018 and 20 June 2020 (the “Historical Arrangements”) must be reported by 31 August 2020.

Under the Commission’s proposal:

  • The 30 day period for reporting New Arrangements would start on 1 October 2020 (i.e. so that arrangements that become reportable in July, August and September need not be reported until 31 October 2020).
  • For the Historical Arrangements, reporting would be due by 30 November 2020.

Recognising the continuing uncertainty caused by COVID-19, the proposals include a power for the European Commission to extend the deferral period once more by a maximum of three months.

Crucially, this is not a postponement of the entry into force of the rules, but rather a deferral of the reporting deadlines.

The EU proposals follow requests for a delay in implementation submitted by a large number of professional bodies and representatives of the financial industry. While the EU’s proposal is welcome, and will relieve some of the immediate pressure upon organisations and their advisers, many will consider the extension period insufficient.

The European Directive behind DAC6 entered into force on 25 June 2018 and has been transposed into the domestic law of EU Member States through domestic implementing regulations. If the proposals are approved, the domestic implementing regulations may require amendment to reflect the deferral.

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