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As welcome as it was inevitable, on 8 May the European Commission (EC) proposed a postponement to the dates for report submissions under the Amendment to Directive 2011/16/EU on administrative cooperation in the field of taxation (known colloquially as “DAC6”), which is–in part–the EU version of the OECD’s Mandatory Disclosure Requirements (“MDRs”). Originally, the EU had scheduled 1 July 2020 as the pivotal date for DAC6: 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. While these dates no longer apply, the general reporting structure remains intact.
According to the notification issued on 11 May 2020, everything is pushed back by 3 months (or less, depending on the date of the specific trigger event), as set forth below:
Additionally, the EC proposal sought authorization to postpone the DAC6 reporting deadlines further, if warranted by an on-going novel coronavirus outbreak or attendant lock-down measures. According to the proposal provisions, at the sole discretion of the EC, the deadline may be postponed again, but only one more time and for another three months.
By retaining the overall reporting structure, the EU ensures that all information intended to be reported still needs to be reported. However, as a core aim of DAC6 is to identify an “aggressive” tax-planning scheme before it spreads widely, the delay saps some force from the DAC6 regime. Nonetheless, as was made clear in the preamble to the proposed delay, 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
In light of the analytical and operational demands of DAC6 disclosures–including new, sweeping definitions, strict liability standards and rapid turn-around times–many affected parties are seeking outside support. In addition to offering consulting services through Millen Tax & Legal, I co-founded BlueBridge, a company dedicated strictly to DAC6 and MDR reporting services. We at BlueBridge offer three distinct services, each tailored to the willingness and capacity of our clients to become experts themselves in DAC6, as follows:
Please visit our website to learn more about how BlueBridge can lighten or fully assume your DAC6 disclosure compliance burden so that you can focus your team’s resources on core business matters with complete peace of mind.
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The Corporate Transparency Act: