Global Daily Tax Update

 Sign up for tax alert emails    TNU homepage    Tax newsroom    Email this document    Print this document

October 21, 2019
2019-6300

Ireland publishes draft legislation on Mandatory Disclosure Rules

Executive summary

On 17 October 2019, the Irish Government published draft legislation in Finance Bill 2019 implementing the European Union (EU) Directive on the mandatory disclosure and exchange of cross-border tax arrangements (referred to as DAC6 or the Directive). Under DAC6, taxpayers and intermediaries are required to report cross-border reportable arrangements from 1 July 2020. However, reports will retrospectively cover arrangements where the first step is implemented between 25 June 2018 and 1 July 2020.1

The Irish draft legislation is subject to the formal legislative process and may be amended before final enactment which is expected in late December 2019.

If implemented as currently proposed, the Irish Mandatory Disclosure Rules (MDR) legislation will be broadly aligned with the requirements of the Directive.

The key highlights of the Irish draft legislation are summarized below.

Key highlights

  • The scope of taxes covered follows those covered by the Directive.
  • Key definitions including “reportable cross-border arrangement,” “intermediary” and “relevant taxpayer” also broadly follow those of the Directive.
  • The hallmarks, which apply only apply to cross-border arrangements, are transposed directly from the Directive.2
  • Time limits for filing reports are aligned to those in the Directive. In addition, periodic reporting by intermediaries of marketable arrangements may also apply on a three-month basis.
  • Taxpayers are required to include the reference number assigned to a reportable cross-border arrangement in their annual tax return in each of the years for which they use it in accordance with Article 8ab, paragraph 11 of DAC6.
  • Where an intermediary or relevant taxpayer fails to report an arrangement within the 30-day reporting period a penalty not exceeding €500 per day per arrangement can be imposed.
  • Where an intermediary or relevant taxpayer fails to meet their obligations under the transitional provisions for arrangements implemented before 1 July 2020, a penalty of up to €4,000 per arrangement can be imposed. If the failure continues after a penalty is imposed there is a further penalty of €100 per day per arrangement.
  • Where an intermediary fails to meet its obligations relating to a marketable arrangement, or as a result of a claim for legal professional privilege a penalty of up to €4,000 per arrangement can be imposed. If the failure continues after a penalty is imposed there is also a further penalty of €100 per day per arrangement.
  • Where a taxpayer fails to the include the reference number assigned to a reportable cross-border transaction in its annual tax return, a penalty not exceeding €5,000 can be imposed.

Next Steps

Determining if there is a reportable cross-border arrangement raises complex technical and procedural issues for taxpayers and intermediaries. Taxpayers and intermediaries who have operations in Ireland should review their policies and strategies for logging and reporting tax arrangements so that they are fully prepared for meeting these obligations.

A detailed Global Tax Alert will be issued shortly.

Endnotes

1. See EY Global Tax Alert, EU publishes Directive on new mandatory transparency rules for intermediaries and taxpayers, dated 5 June 2018.

2. Ireland has had a domestic mandatory disclosure regime since 2011 which will continue to operate separate and alongside this new cross-border regime.

For additional information with respect to this Alert, please contact the following:

Ernst & Young (Ireland), Dublin
  • David Smyth | david.smyth@ie.ey.com
Ernst & Young (Ireland), Cork
  • Sinead Murray | sinead.murray@ie.ey.com

ATTACHMENT

 

 


 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2020, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct