Proposed six month extension of the DAC6 reporting deadlines
Following the recent European Commission proposal to postpone the initial reporting deadlines for “DAC6” by three months, EU Commission proposes extension of the DAC6 reporting deadlines, a political agreement has now been reached by the COREPER of the Council of the European Union (the “Council”) to postpone the initial reporting deadlines by six months. The Council will now formally adopt a directive to enact this proposal.
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; and
- 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.
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 as follows:
- The 30 day period for reporting New Arrangements would start on 1 January 2021 (i.e. so that arrangements that become reportable in July, August and September need not be reported until 31 October 2020); and
- For the Historical Arrangements, reporting would be due by 28 February 2021.
It is important to understand that this is not a postponement of the entry into force of the rules, but rather a potential deferral of the reporting deadlines.
Luxembourg Government announcement to implement this postponement into Luxembourg Law.
The Luxembourg Government announced on 4 June 2020 its intent to transpose into Luxembourg law the postponement, subject to the decision of the Council being formalised. Accordingly, it is expected that as soon as the decision of the Council has been formalised, a bill of law to this effect will be lodged with the Luxembourg Parliament.
It is expected that the majority (if not all) of Member States (including the UK) will adopt the proposed six month postponement. However, until such time as the Council’s decision is formalised and Member States adopt the proposal it would be prudent to continue to operate on the original timeline.