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Last month, some EU Member States determined that a one-time deferral of the 2020 DAC6 reporting deadlines is preferable to the contingent measures and extendable delays proposed by the European Commission (EC). In response to the EC’s 8 May proposal to postpone the key 2020 reporting dates for three months with an option to extend the postponement for another three months, if necessitated by the novel coronavirus crisis, several EU Member States (e.g. Belgium, France, Holland, Luxembourg) streamlined the process, adopting a single, six-month delay from the onset.
Originally, the EU had scheduled 1 July 2020 as the pivotal date for 2020 DAC6 reporting: Reports for Reportable Cross-Border Arrangements (RCBAs) entered into on or after 1 July were due within 30 days of the trigger event, whereas those RCBAs initiated between 25 June 2018 and 30 June 2020 were due in bulk by 31 August 2020. These dates no longer apply, at least in some EU Member States. Pursuant to their announcements of last week, 2020 DAC6 reporting in those jurisdictions is pushed back by 6 months (or less, depending on the date of the specific trigger event). Accordingly, the new onset date is 1 January 2021 and the bulk report are due on or before 28 February 2021.
The outstanding question is whether the other EU Member States will follow the lead of Belgium, France, Holland and Luxembourg or adopt another set of mooted deadlines. Alternative packages of deadlines could include the original deadlines with 1 July 2020 as the pivot date or the 8 May EC proposal deadlines with 1 October 2020 as the pivot date. Ideally, however, the other EU Member States will adopt the full 6-month delay as it will preserve cohesion across the regime, avoiding uncertainty in the rules, delays in reporting and needless complications for RCBAs involving multiple EU jurisdictions. However, as we have already seen that Germany and Austria opted for their own shorter delays, the possibility of fragmentation cannot be excluded.
By retaining the overall reporting structure, the EU ensures that all information intended to be reported still needs to be reported in spite of the shifting deadlines. However, as a core aim of DAC6 is to identify an “aggressive” tax-planning scheme before it spreads widely, the longer delay saps more force from the DAC6 regime. Nonetheless, as was made clear in the preamble to the EC’s delay proposal, the pandemic and consequent EU-wide lock-downs left few alternatives as the reporting preparations of the affected parties–essentially, financial intermediaries and the tax authorities–were severely impaired due to emergency work limitations and personnel re-allocations.
For those not yet versed in the incoming disclosure regime, now is the time to ready yourself for it. DAC6 specifies sets of characteristics indicative of aggressive tax planning–labelled “Hallmarks”–and compels the disclosure of any cross-border transactions or other activities evidencing these Hallmarks. DAC6 mandates that for any reportable arrangements, the EU intermediaries involved in the transaction–such as tax advisors, lawyers, accountants and fiduciaries–or the taxpayers affected by it (if no intermediary qualifies) must:
● Disclose specified information
● About the arrangement and the parties involved in it
● To their local competent authority
● Within 30 days
● For exchange on an automatic basis with other EU member states
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The Corporate Transparency Act: