As a consequence of the outbreak of the coronavirus, the implementation of DAC6 has been postponed by the Commission for a period of three months until October 2020. The need to report on cross-border arrangements related to the previous two years has also been delayed from 31 August to 30 November.
This directive applies retroactively from 25 June 2018 and necessitates the disclosure of arrangements that aim to garner a tax advantage or that show clear signs of tax avoidance.
The law implementing the Council Directive (EU) 2018/822 of 25 May 2018 (“DAC6”) regarding the compulsory exchange of information in the field of taxation in relation to reportable cross-border arrangements was adopted by the Luxembourg parliament on 21 March 2020.
DAC6 states that EU taxpayers (or “intermediaries”) are required to report cross-border arrangements that could have the potential to lead to tax avoidance or abuse. Once ratified by the Luxembourg Parliament, this bill will come into effect. Each intermediary must assume the responsibility to disclose their individual arrangements.However, in the event that an intermediary is covered by legal professional privilege, he must notify the other intermediaries and ensure that one of them, or the client itself, is effectively in charge of filing the mandatory disclosure reporting.
If there are no intermediaries, the relevant taxpayer is required to report.
Under the directive, if the reporting is insufficient, inexact, overdue or not submitted at all, intermediaries and taxpayers are exposed to fines of up to EUR 250,000.